U.S. Tariffs Allegedly Halting Italian Economic Expansion in 2025
The EY Parthenon Bulletin, a trusted source for insights on the Italian economy, has shed light on the potential impact of protectionist measures, particularly the US tariffs on Italian exports. These measures, set to rise up to 30% from August 2025, are estimated to have a significant negative impact on Italy's GDP.
In the medium to long term, the impact is projected to be substantial. The cumulative GDP contraction is estimated at 1.4% between 2025 and 2026, corresponding to an overall loss of about €30 billion. This contraction would nullify the expected GDP growth of 0.6% in 2025 and 0.8% in 2026. Another estimate by Italy’s industrial association suggests a potential GDP reduction of 0.8% by 2027, linked to tariffs resulting in a €38 billion loss in exports.
The agro-food and mechanical industries are among the most exposed sectors, though detailed breakdowns per industry are not specified. The agro-food sector is explicitly noted as vulnerable alongside other significant export components. Italian companies are adapting to these protectionist measures by navigating the complex geopolitical risks and volatile trade environment. They are likely responding by seeking diversification of export markets, enhancing productivity, and managing cost pressures arising from tariffs and dollar depreciation.
Despite the complex scenario and great uncertainty, Italian companies are demonstrating remarkable adaptability. In the first half of 2025, EY has recorded a 17% increase in announced operations, with 143 compared to 122 in the same period last year, and an increase in value from 7.1 billion euros in the first six months of last year to 13.5 billion.
However, the consequences and effects of tariffs would fall on all sectors, as they would slow down the propensity of companies to invest and the propensity of private individuals to consume. According to EY's forecasts, it is unlikely that the amount of tariffs will fall below 20%. If tariffs were confirmed at 20%, the economic impact is estimated at around 20 billion euros, with a contraction of 65% compared to growth expectations (-0.9% cumulative between 2025 and 2026).
The shock of American tariffs may be absorbed by Italian companies, but there are concerns for the next year. Sectors more exposed to the United States, such as pharmaceuticals, agro-food, and some mechanical sectors, may be particularly affected. EY's analyses estimate a homogeneous impact on all EU nations, not just Italy and Germany.
Marco Daviddi, managing partner of EY, has published the second edition of the EY Parthenon Bulletin, which discusses the potential impact of protectionist measures on Italy's economy. The problem lies in the next year, especially for sectors more exposed to the United States, according to Daviddi. The EY Parthenon Bulletin is a publication discussing various aspects of the Italian economy.
In the face of rising US tariffs on Italian exports, various industries such as finance, business, agro-food, mechanical, and pharmaceuticals may experience significant negative impacts. To counteract these costs, Italian companies are seeking diversification of export markets, enhancing productivity, and managing cost pressures.
However, sectors more exposed to the United States, including finance, business, and certain segments of the mechanical and agro-food industries, may face particular challenges in the coming year, potentially affecting their Growth expectations negatively.
