15% use duties on EU products weigh on the European economy. Italy, strong exporter, risks serious consequences in international trade
The triumphal air with which the president of the European Commission greeted the achievement of the commercial agreement with the United States has left many commentators displaced in Europe. And it is not difficult to imagine why. General bodies of 15% on European products, albeit reduced by 30% threatened by Trump, are still a bad blow for Europeeven more for those economies, such as Italy, which make the export of assets one of the strengths of their economies.
Before the start of the “duties war“Last April, the European products (and therefore also the Italian ones) exported to the United States were subject to duties of 4.8%, subsequently this figure was brought to 10%, finally, once the agreement signed yesterday will enter into force, for most of the goods the duties will be raised further to 15%.
What does it mean for Italian exports
The concrete risk is that the natural price increases of the final goods could make Italian products in the American market be too expensive too expensive. The alternative for companies would be to take charge, at least in part, of the higher costs, thus reducing or profit margins for businesses. However, this strategy is difficult to apply, because from April 2 to today the euro has appreciated by about 10% compared to the dollar, thus further increasing the costs for exporting companies.
For Italy, the introduction of the duty will lead to a negative impact equal to about half a point of GDP, i.e. around 10 billion euros. According to the estimates of the Confindustria Study Center, Italian exports to the United States will undergo a contraction of 22.6 billionwith a loss of over a third of their value on the American market. A part of this drop, about 10 billion, can however be compensated by an increase in sales to other markets.
Italian exports to the USA are worth about 65 billion every year. Among the most affected sectors there will certainly be the agri -food onewith the introduction of rates to 15%, some products, such as wine, risk being penalized. Others, like the Parmigiano Reggiano and the Grana Padanothey already suffered a special duty of 15%, it will therefore be necessary to understand if the figure will remain unchanged or if the duties announced yesterday will be added. Some agri -food products, on the other hand, may benefit from total exemption from duties, but the precise list is yet to be defined.
Also the pharmaceutical sector It will be affected partly hit by the duties of 15%. Last year Italy exported pharmaceutical products for a value of 10 billionpartial refreshment could be for drugs not covered by patent, which should instead be exempt from duties. Nothing to do for the steel sectorwhose exports will be subject to rates of 50%; However, it must be said that Italian exports in this sector has significantly reduced in recent years, then the damage will be limited.
Good news instead for the automotive industrywhich will also suffer from 15% duties instead of 25% threatened by Trump. The Italian automotive industry exports about 75 thousand cars every year to the United States, for a total value of 4 billion euros. To these are added about 1.2 billion euros deriving from components exports.
The reasons for the “unmatched agreement” on the duties
If it is true that the agreement reached (which must be approved by all 27 EU states) prevents the risk of a commercial war between the two banks of the Atlantic, it is also true that It is clearly unbalanced in favor of Washington. In fact, the EU agrees to eliminate each duty on American products and also undertakes to buy energy from the USA for a value of 750 billion in the next 3 years. Without forgetting the promised European investments in the United States for 600 billion.
The question arises spontaneously, why did the EU accepted such an unfavorable treatise? Von der Leyen found himself in front of a crossroads: to accept a certain defeat, but (perhaps) partly controllable, or face the risk of a clash with unpredictable and potentially pregnant results of consequences for Europe. In essence, he has chosen to negotiate an “unequal agreement” with Trump, preferring to avoid a direct confrontation from too uncertain consequences.
Going to the “wall against wall” would certainly have generated a financial storm in Europe and probably brought mutual duties to very high figures, as happened a few months ago with China. This would have meant put in crisis both the European financial and industrial sectorcrisis that could have led to a real crisis. It should not be forgotten that the EU remains basically a manufacturing power, Trump then leveraged the power of the American market. Perhaps, a harder response in recent months would have allowed to limit the damage yesterday.
However, there is also an ideological motivation. In motivating the huge (and very expensive) purchases of American energy, Von der Leyen motivated everything with the need to reset the imports of Russian energymuch cheaper than the American one. The reason for the state was therefore sacrificed by the Tecnocrati of Brussels on the altar of “support for Ukraine”, for which Europe has also committed itself to increasing the purchases of American armaments, of which at least one part will certainly be turned to Ukraine, many greetings to the European rearmament plan.
Yesterday’s agreement showed once again that the EU is not, and it will never be, an independent geopolitical actor.
