Trump's new tariffs could collapse the Italian GDP According to EY it could reach a contraction of 1.4 %

Tariffs yes, no, maybe. Since the beginning of the year, with the advent of the Trump presidency, the issue of tariffs has become a series of rash headlines that have brought little clarity to the actual plan for the new U.S. import-export rules. China was the first target of the U.S. President, with actions that sparked a real economic war between the two major global powers, triggering consequences across the entire luxury market. Then came the attack on Mexico, which escalated to the point of an abrupt desire to change the original Coca-Cola recipe. Finally, even the old continent – historically seen as the United States’ most reliable ally – was hit by the new wave of tariffs, set to take effect on August 1. A 30% increase on Italian exports to the U.S., which, according to EY estimates, could severely impact the Italian GDP in the medium-to-long term: the EY Parthenon Bulletin report projects a cumulative contraction of 1.4% between 2025 and 2026, amounting to a total loss of around €30 billion. In practice, it would completely wipe out the 0.6% growth forecast for this year, which was expected to rise to 0.8% in 2026.

It’s not just the fashion sector that would be hit hardest; the design and furniture industries, the pharmaceutical sector, and the food & beverage sector – all with high export volumes to the U.S. – would also be among the most affected. This was highlighted by Marco Daviddi, managing partner at EY, in an interview with Il Sole 24 Ore. However, the impact won’t be confined to these industries. As Daviddi explained, a dynamic of this kind would inevitably have systemic repercussions, reducing companies’ willingness to invest and weakening households’ spending capacity. In other words, even the sectors less directly exposed risk being dragged down by the broader economic slowdown. Meanwhile, the Italian fashion supply chain remains under scrutiny. Amid scandals, investigations, and a general institutional collapse, the past year saw thousands of workers put on furlough and an increasingly uncertain climate. The introduction of 30% tariffs would only further worsen an already fragile situation, as emphasized by Luca Sburlati, president of Confindustria Moda, in an interview with WWD. In 2024 alone, the textile and apparel sector exported goods worth over €2.75 billion to the United States, making the U.S. market the third most important for the entire supply chain.

At the beginning of the year, there was even talk of an unlikely “Japan effect”, based on the idea that the new U.S. tariffs might somehow benefit Italian retail. And as paradoxical as it sounds, some data seem to support this hypothesis: according to the most optimistic projections, Trump’s tightening of protectionist measures could drive more American tourists to do their shopping directly in Europe, especially in Italy. A 10% tariff, for instance, could result in a 20% increase in tax-free spending by U.S. visitors. The paradox deepens when considering that just two months ago, President Trump himself stated he had no interest in repatriating textile production, essentially allowing continued reliance on imports to support the domestic market. Now, with less than two weeks to go before the new regulations take effect, the situation remains uncertain. If Trump handles tariffs the same way he did at the beginning of the year with the TikTok controversy, nothing can be taken for granted. But if the 30% tariffs are indeed implemented and directly affect Italy’s GDP, it would mark the first economic contraction since 2022 – a significant blow for a country still bearing the scars of the post-pandemic crisis.