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Us Italy Trade Agreements

Instead of hoping for very uncertain benefits, limited to a small number of markets, the best strategy for Italy, as for all EU Member States, is to avoid a trade war and its high costs by adopting a strong common negotiating position vis-à-vis the United States, regardless of the specific individual consequences of short-term tariffs. Moreover, U.S. tariffs on steel appear to be only the first step in a broader trade strategy. Trump has already announced an investigation into imported cars that would harm Italian exports far more directly. Another likely objective of U.S. trade policy could be the agri-food sector, where the country is very loss-making and is a very important sector for Italy in this market. Given the issue from a different perspective, some studies suggest that Italy could also benefit from a trade war between the United States and China, since if trade between these two economies shrinks, it may be possible to replace the two countries` exports to these markets. Restricting Chinese exports to the United States, for example, could give way to additional Italian exports of clothing and footwear to the United States, while declining exports – particularly of medium and high-tech products – from the United States to China could help increase Italian exports of machinery, medical and optical products and precision instruments to China. Although Italy is not a major exporter of agricultural raw materials like the United States, it is possible to increase agricultural and food exports to China. But these studies are probably overly optimistic: these substitution effects are unlikely if we arrive at a slowdown in a general situation of increased trade barriers and less open markets and a slowdown in transatlantic relations.

Although the increase in tariffs in the United States does not currently directly affect Italy`s main export sectors and may have little immediate impact on its trade, this does not mean that Italian exports will not be affected by a trade war and the imposition of high tariffs on the US market. Exports are an essential component of total sales in Italy and, over the past ten years, many Italian companies have survived, thanks in part to (relatively) open and stable access to foreign markets around the world. The imposition of tariffs by the United States and the inevitable retaliatory measures, mistrust of the current WTO-controlled system of rules and the resulting high level of tension and uncertainty, even without specific impediments to Italy`s export sectors, could prevent the internationalization of many enterprises, particularly small and medium-sized enterprises. The latest document on Italy`s economic planning (Documento di Programmazione Economica e Finanziaria 2018) estimates the cost of a trade war against Italy at about half a percentage point of GDP for the current year and next year. The United States and Italy cooperate closely on important economic issues, including within the G7. The United States is one of Italy`s largest trading partners, with a share of $103.12 billion in goods and services in 2019.