«For me, the most beautiful word in the dictionary is tariff. And it’s my favorite word,” he said Donald Trump in an interview at the Economic Club of Chicago in mid-October. For him that term, tariff or rather “duty”, does not only represent an economic tool but a strategy to “defend” American interests, a central point in his electoral campaign, which he pursued with conviction during his first mandate and which will probably raise. But the return of Trump in the White House it also means tax cuts for companies, mass repatriations of illegal workers, deregulation in the energy and technological fields.
His pledges to cut corporate taxes and ease fiscal policies are likely to increase liquidity and benefit stock markets. But his promises could lead to more inflation at a domestic level and – at an international level – a slowdown in the economies most dependent on exports to the United States. A dangerous scenario shrouded in uncertainty, because some of the measures waved at rallies could be scaled down or even canceled from the political agenda.
Duties
In his campaign, Trump he described the tariffs as a multifunctional weapon: not only will they punish other countries for trade practices that he considers unfair, but they should also encourage US companies not to relocate production and, at the same time, generate billions of dollars to reduce the federal deficit. Among the measures envisaged, there is talk of a universal tariff of 10 to 20 percent on all imports, which would even reach 60 percent for goods coming from China. This approach aims to “protect American jobs and industries,” according to the president-elect, who firmly believes it will boost domestic production and reduce dependence on foreign products. In his first term, he already applied tariffs on steel and aluminum, justifying the measure as a matter of national security. These duties were set at 25 percent on steel and 10 percent on aluminum, with the intent of protecting American industry. However, the tariffs have generated retaliation from trading partners such as Canada and the EU, which have imposed tariffs on US agricultural exports, damaging the related sector.
Industry
With Trumpsectors such as energy and defense will see significant deregulation, beneficial for oil and gas companies such as Exxon Mobil and Chevron, more uncertain for renewables and companies involved in the green transition. The tech sector could see mixed benefits: while protectionist policies risk hurting companies like Apple and Nvidia, tax cuts and deregulation could boost innovation in artificial intelligence and tech startups. With the financial support of Elon Musk to the campaign of Trumpcompanies like Tesla and SpaceX could benefit from his presidency. Musk he might even get a government role, which would spark obvious discussions about possible conflicts of interest.
Europe
The protectionist policies of Trump will affect the European economy, considering that our continent is highly dependent on exports: according to the European Commission in 2023 the Union exported goods to the United States for 502 billion euros, making the USA the main non-EU partner. Furthermore, Europe would be invaded by Chinese products which would find American markets closed. According to Goldman Sachs, if Trump imposes new duties, Eurozone production could fall by up to 1 percent, with a potential economic loss of 260 billion. Dirk Schumacherhead of European macro research at Natixis Corporate & Investment Banking Germany, suggests that a 10 percent tariff increase could reduce GDP by around 0.5 percent in Germany, 0.4 percent in Italy, 0.3 percent in France and 0.2 in Spain. Other analysts suggest that the impact may be smaller than many expect. A recent report from the London School of Economics estimates a more modest 0.11 percent reduction in eurozone GDP. Italy, meanwhile, may experience minimal effect, with its GDP expected to fall by just 0.01 percent. Furthermore, tariffs could represent an opportunity for Europe to implement more incisive economic reforms to strengthen the competitiveness of the internal market.
Italy
The United States is the first non-EU market for Made in Italy products. The main sectors are industrial machinery and equipment, pharmaceuticals, food and beverages, and fashion and apparel. Obviously the increase in duties could reduce the competitiveness of Italian goods on the American market, damaging strategic sectors. While defense-related companies, such as Leonardo, should benefit from an increase in the relative spending of a Europe “orphan” of the American umbrella. To defend its interests, it will be crucial that Italy, together with the EU, manages to establish a dialogue with Washington.
Inflation
The increase in tariffs risks raising prices, with repercussions on inflation. Trump believes the tariffs will not affect American consumers, as foreign producers will bear the costs. However, many economists counter that tariff costs are often passed on to consumers, leading to higher prices of imported goods. A study by the Peterson Institute for International Economics suggests that with Trump at the White House, the US inflation rate could increase from 6 to 9.3 percent by 2026, compared to the current projection of 1.9 in the absence of his policies.
Taxes
Trump has promised to reintroduce and expand the tax cuts implemented in 2017, which will expire in 2025. His program includes reducing corporate tax from 21 to 15 percent, believing that such a reduction will stimulate economic growth and the creation of new jobs. However, analysts warn that these tax cuts could lead to an increase in government debt, with an estimated $5.8 trillion more within a decade.
Bitcoin
Another significant topic is cryptocurrencies. Trump he would like to put an end to the “persecution” of Bitcoin, declaring that he wants to fire the current presidency of the SEC, the stock exchange supervisory body. This promise could lead to lighter regulation of the sector, opening it up to investments and technological innovations in the US.
