Italian industry warns US tariffs could undermine trade, dent growth

ROME - A proposed new round of tariffs by the United States could result in a 38-billion-euro (44.4 billion US dollars) loss in Italian exports and reduce the country's gross domestic product (GDP) by 0.8 percent by 2027, Italy's largest industrial association said Monday.

The findings were published in a report by the research unit of Confindustria, Italy's main business lobby, amid concerns over rising protectionism and its spillover effects on the global economy.

US President Donald Trump has threatened to triple a basic tariff on imports from the EU to 30 percent if Brussels does not cut a deal by the end of the month.

"A 30-percent tariff would be unsustainable for Italy," the report stated, warning that such a move would not only significantly reduce trade volumes but also have wider macroeconomic consequences.

Ciro Rapacciuolo, senior economist at Confindustria's CSC research center, said the tariff could slash Italian exports by 38 billion euros, equivalent to 58 percent of exports to the United States and around 6 percent of Italy's total exports.

Under this scenario, Italy's GDP in 2027 would be 0.8 percent lower than projected under a business-as-usual trajectory, the report said.

Beyond trade volumes, the tariff plan is also likely to affect exchange rates, inflation trends, and business confidence. According to CSC, the euro has already strengthened against the US dollar in recent months, with the average exchange rate in July reaching 1.17 US dollars per euro, up from a low of 1.04 in January, a 13.3 percent appreciation that could further challenge European exports to the US market.

The report also noted that the anticipated market volatility may push the European Central Bank to consider further interest rate cuts, potentially increasing inflationary pressures. Inflation across the eurozone has stabilized in recent months following the price surges seen during the height of the Russia-Ukraine conflict.

Data from Italy's national statistics agency ISTAT showed consumer prices in Italy rose 1.7 percent year-on-year in June, compared to 2.0 percent in the broader euro area.

Business sentiment remains fragile. Italy's industrial confidence index stood at 93.9 points in June, which was still below the neutral threshold of 100 and indicated subdued optimism among enterprises. The index is likely to decline further if new tariffs are imposed.

Confindustria's warning adds to growing international calls urging Washington to reconsider its protectionist stance and return to multilateral approaches in trade policy.