Understanding and Responding to US Trade Protectionism
In recent years, the protectionist policies of the United States have generated heated debates among economists, politicians, and corporations. The customs duties imposed on European products, including Italian ones, have raised concerns about the future of exports and the competitiveness of European companies. But do these tariffs represent a real problem, or are they an issue overused by the media and markets? And above all, how should Europe and Italy react to mitigate the risks and perhaps even take advantage of this volatility to their advantage?
The Importance of the US Market for Italy
The trade relationship between Italy and the United States is consolidated and continuously expanding. In 2024, the United States was the third-largest export market for Italy, with a value of approximately 72 billion dollars, representing 10% of total Italian exports. Since 2013, Italian exports to the USA have almost doubled, marking an increase of 66.6% in ten years.
In addition to traditional sectors such as food & beverage and fashion, Italian exports to the USA also include advanced machinery, vehicles, mineral fuels, and pharmaceutical products. It is no coincidence that, for example, the helicopters used by US presidents are manufactured by Augusta, controlled by Leonardo. This shows that Made in Italy is not only synonymous with luxury and gastronomy but also with technological innovation and industrial precision. The sophistication of Made in Italy and the American love for Italian products and lifestyle are key factors that will continue to defend Italy’s strength in the market. However, it is true that many Italian companies are shifting part of their production directly to the United States, both to get closer to American consumers and to overcome customs barriers and uncertainties related to tariffs and markets increasingly influenced by the unstable geopolitical context.
The Real Impact of US Tariffs on Italian Exports
The introduction of tariffs on products such as Parmigiano Reggiano, wine, and olive oil will inevitably increase costs for American consumers, reducing profit margins for Italian companies. However, the US market remains a fundamental partner, and exports will not undergo significant corrections, supported by the fact that even during past crises, the demand for Made in Italy has remained solid. Furthermore, for some high-end products, a higher price can even increase the perception of exclusivity and desirability, pushing demand to even higher peaks.
Today, however, the tariff war has intensified. After the tightening of American tariffs, China reacted with 34% tariffs on hundreds of US products. This escalation is already having serious consequences on the markets: international stock exchanges are collapsing, with American stocks heading towards the largest two-day loss in history, with a total loss close to 10 trillion dollars since the President’s inauguration.
According to the Financial Times, the stock market crash on Thursday, April 3rd, represents the 13th time in the last ten years that the S&P 500 has fallen by at least 4% in a single day. This demonstrates how market turbulences are cyclical but also how aggressive trade policies can have sudden and significant impacts on global economic stability.
IPOs (Initial Public Offerings), which were showing signs of recovery, are also suffering setbacks: companies like Klarna, Medline, and StubHub have postponed or canceled their stock market debuts due to strong market instability. According to sources close to the companies, all had already filed documents for listing in confidential form in recent months, but the climate of turbulence has forced a forced pause. In particular, Klarna has frozen plans for a 15 billion dollar IPO in New York following the announcement of the new tariffs.
The rationale behind Trump’s new protectionist measures is clear: the President has stated that the two new tariffs announced, a universal 10% tariff on all imports into the United States and reciprocal tariffs on about 90 nations, will aim to revive American manufacturing, create jobs, and generate federal revenue. However, the immediate effect of these policies seems to be a wave of uncertainty and economic instability globally and inflation in America.
Many observers believe that Trump is once again applying his traditional negotiation playbook: very aggressive initial threats, followed by selective openings with partners willing to negotiate. This pattern is confirmed in recent developments with Vietnam, where Trump stated that the Vietnamese leader had promised him to lower tariffs “to zero” in exchange for a trade agreement with the United States, just two days after imposing a 46% tariff on imports from the Southeast Asian country. It is no coincidence that two American companies like Nike and Lululemon, heavily dependent on manufacturing presence in Vietnam, experienced strong stock market growth of about 3% on Friday, April 4th.
Jerome Powell, Chairman of the Federal Reserve, has stated that such high tariffs are inflationary and can cause economic damage. Despite this, he stressed that it is still too early to intervene on interest rates, signaling the central bank’s intention to maintain the main rate in the current range of 4.25%-4.5% until there is greater clarity on the effects of trade escalation. According to various analysts, if the tariffs were to remain in place, they could add between 1 and 1.5 percentage points to inflation in the short term and subtract a similar share from GDP. The price of oil, which fell to about 60 dollars on Friday, April 4th, reflects market nervousness and fears of financial contagion on the real economy.
During the Biden administration, thanks to the Inflation Reduction Act (2021-2022), a package of subsidies aimed at promoting sustainability, indirect protectionist policies worth almost 400 billion dollars were imposed, often to the disadvantage of Europe and other trade partners. It is true that these indirect tariffs were introduced slowly and without triggering billion-dollar stock market crashes, but it is important to remember that the most damaging tariffs are not always the most visible ones: sometimes, it is the quieter ones that strike with greater effectiveness and duration over time.
The Political Response of Europe and Italy
At the political level, the European Union must adopt a diplomatic strategy that focuses on bilateral negotiations to reduce the impact of tariffs. The recent experience with tariffs on steel and aluminum has shown that political pressure and trade dialogue can lead to compromise solutions. Italy, for its part, has strengthened its ties with the USA under the leadership of Prime Minister Giorgia Meloni, who has promoted a diplomatic approach to avoid trade retaliation and ensure the stability of trade.
In parallel, it is crucial that Europe invests in a common industrial policy to support the competitiveness of its businesses in the long term. This includes incentives for digitization, the cleantech transition, and strategic autonomy in key sectors such as energy, semiconductors, and artificial intelligence. Only with a shared vision and targeted investments can Europe reduce its trade vulnerability and strengthen its position in global negotiations.
Conclusions
US tariffs represent a significant challenge, but not an insurmountable problem. Italy and Europe must respond with diplomacy and intelligent trade policies and, in the meantime, continue to negotiate with the White House. Italian companies, on the other hand, must be ready to innovate, restructure, and diversify, trying to build even stronger partnerships. More than an obstacle, this situation could prove to be an opportunity to strengthen Made in Italy globally, positioning itself in new markets more aggressively.
History teaches that once imposed, tariffs are politically difficult to remove. And trade wars, often underestimated, are much more costly than one thinks.