Donald Trump has announced a new trade-agreement with the EU, imposing 15% tariffs on EU imports while U.S. exports will be tariff-free, after concluding discussions with the European Commission President Ursula von der Leyen in Scotland on Sunday.
Two weeks ago, Trump threatened to impose a 30% tariff on imports from the EU amid negotiations, up from the 10% he had previously suggested. Trump revealed that these tariffs would come into practice on August 1st, warning that he would not take kindly to any trade retaliation from Europe and would subsequently raise import duties further.
Despite this warning, the Foreign Minister of Italy, Antonio Tajani, announced that counter-tariffs against the US worth €21 billion were ready to be imposed if negotiations continued to fall short. This was furthered by Maros Sefcovic, European Trade Commissioner, who recently stated that it would “be almost impossible to continue trading as we are used to in a transatlantic relationship’ if these tariffs were to go ahead. Tajani emphasised, however, that he was confident that this would not be the case, expressing hope that Trump would be willing to compromise.
This hope seems to have since been realised, following Trump’s recent announcement. These new tariffs will have significantly better consequences for Italy than the previously threatened 30%, although the country’s economy will still be affected, with certain sectors particularly at risk.
Italy exports €63 billion worth of goods to the US every year, and almost half of this is in sectors that are required to pay tariffs. For example, 18% of exported pharmaceuticals from Italy are sent to the US, worth €12 billion, and so Trump’s new import duties will affect these greatly, with the sector predicted to lose up to €1.8 billion.
When imposed on August 1, up to 18,000 jobs in Italy are at risk, with 9,000 of these being in Tuscany. ReportAziende, a platform created by financial professionals which offers in-depth analyses of the economy, reports on the risk to Tuscany specifically. The region’s exports that are affected by tariffs are worth €3 billion, and Florence, Siena and Arezzo are expected to be hit the hardest by this increase in duties.
More than a fifth of exported Tuscan wine is sent to the US and so demand is predicted to fall 10-20%. Consequentially, there has been a push by President of the Association of Tuscan PDO and PGI Wines, Andrea Rossi, for the government to implement policies which will soften the impact to this important sector. Other sectors in Tuscany, such as gold jewellery and leather goods, also fear a risk of collapse due to significant increase in prices.
The new 15% tariff rate, however, will lessen the blow on the domestic impact faced by locals compared to the expected 30%, with consumer prices in Tuscany expected to increase by an average of 5%, down from a previously possible 10%. Just as Tajani said, ‘Tariffs hurt every one, starting with the United States’, and so it seems that, for now, Trump has realised the truth in this statement, deescalating this trade conflict in order to avoid such difficult economic outcomes for all involved. (Scarlet Claydon-Jones)
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