Exports to the US: the effects of the post-election

What are the scenarios that will face the’export to the U.S. After the recent elections in the American country? Italian companies are having to deal with the new trade policies announced by the U.S. administration, which include a significant increase in the import duties. Tariffs could go as high as 60% for goods from China and as high as 100% for Chinese cars, while other countries are expected to see an increase of 10%. 

These measures have raised concerns among analysts, who are assessing the repercussions of these policies on inflation and economic growth in the United States, as well as the effects on global trade balances. Against this backdrop of uncertainty, it is natural that the Italian companies will question on the possible consequences and opportunities that could result from the new political situation in the US. While some fear a slowdown in exports, others see opportunities to diversify markets and strengthen trade relations with other countries. It is therefore crucial to analyze not only the challenges, but also the potential positive repercussions that could emerge in this new scenario.

Export to the U.S., what will be the impact of tariffs?

International trade plays a key role in the Italian economy. Italy ranks at the fourth place in the world in terms of export volume, along with Japan and South Korea, and 12th in terms of imports globally. Currently, the’export to the U.S. accounts for about 40% of national GDP, confirming itself as a key driver of economic growth and balance of payments. In 2024, Italian exports increased by 3.7%, with projected growth of 4.5% in 2025 and 4.2% on average in the following two years. Italian exports are estimated to can overcome ii 650 billion by 2024, reaching 679 billion this year. Over the past three years, Italian exports have grown more than other European countries. (Source: Infomercatiesteri)

In particular, the United States represents the second largest market for Made in Italy products, with an expected export of more than 67 billion euros in 2024. Exporting to the United States is therefore crucial for many Italian companies, which have seen a Steady increase in their sales in the U.S. market in recent years.

With the election of Donald Trump to the presidency of the United States, the political “America First” introduced a more protectionist and nationalist approach, raising concerns for Italian companies active in the U.S. market, particularly considering the increase in duties on imported products. But is the situation really that worrisome? 

The revival of ’America First“ and the reaction of the markets

During Trump's first term, tariffs were introduced on many Italian products, to which Europe responded with duties on agricultural and other goods. The Biden administration has maintained these trade barriers and promoted reshoring, implementing policies to support the made-in-the-USA production“.

The new post-election scenario thus heralds a return to the “America First” approach, characterized by protectionist policies that not only increase tariffs and penalize exports, but also aim to reduce taxes e stimulate domestic production. This direction has reassured stock markets, causing U.S. stock prices and the value of the dollar to rise, while U.S. government bond rates have risen.

Some economists argue that markets had already anticipated a Trump victory, generating a positive reaction in the equity sector and a rise in interest rates. U.S. Treasury yields also rose, reflecting expectations of more expansionary fiscal policies.

According to some experts, policy geared toward economic growth through tax cuts and increased tariffs could favor U.S. equities at the expense of the bond market in the near future. However, inflation could rise, leading to a possible “steepening” of the yield curve.

In this context, Europe could suffer significant economic setbacks: it is estimated that a 10% duty on U.S. imports could reduce European GDP by 0.2% by 2026.

The European stock market is already underexposed to international investors, thus limiting Europe's attractiveness to the U.S. market. The United States is one of Italy's most important trading partners, and this situation could actually affect the share of Italian exports to the U.S. market.

Repercussions of increased U.S. tariffs on the international market: the case of commodities

One aspect that is often overlooked is the impact that increased U.S. tariffs have on commodity prices internationally. The United States, as a net importer of many commodities, could face a increase in internal costs, with direct consequences for inflation. If the compensatory measures taken by the government prove ineffective, commodity prices could rise significantly in the U.S. market.

Globally, however, the imposition of duties would reduce the’export to the U.S., increasing supply in international markets and leading to falling prices. The experience of Trump's first term, characterized by tariffs on steel and aluminum, offers valuable insights into the effects of such policies. In 2018, the Trump administration introduced tariffs of 25% on steel and 10% on aluminum in response to an investigation that pointed to national security risks related to imports. 

Data show that between 2018 and 2019, steel prices in the United States increased by 16.2%, while in international markets have remained stable. indicating that international supply was able to offset the reduction in exports to the US. A similar effect was observed for aluminum, with an increase in domestic prices in 2018, but global prices have declined, particularly in China. In Europe, the impact has been mitigated by protective measures taken by the European Union.

This analysis highlights how duties, while intended to strengthen domestic industry, can also affect foreign markets, Altering the global supply and demand balance.. The repercussions of such policies are thus not limited to the domestic market, but extend to an international context, with effects that deserve careful consideration.

Export to the U.S. Of Italian companies: predictions under the “Trump reciprocal trade act”

According to the National Board of Trade Swedish, l’export to the U.S. could experience a 16% reduction, with significant impacts in the mechanical, pharmaceutical and chemical sectors. Prometeia estimates that a 10% increase in tariffs could cost Italy more than $4 billion, affecting the fashion sector in particular. If tariffs were applied across the board, the costs to Italian companies could exceed $9 billion.

The new U.S. duties are part of the “Trump Reciprocal Trade Act”, an initiative aimed at rebalancing trade between the United States and its partners. The introduction of restrictions on European products could trigger a new trade war, with protective measures by the European Union and significant consequences on global supply chains. This exchange of protectionist measures would also inevitably affect the international market, as demonstrated by recent developments in the commodity sector, such as steel and aluminum.

Should the protectionist approach continue, Italian companies could face duties on top products of the Made in Italy, such as wine, cheese and machinery. Already during Trump's first term, these tariffs had a negative impact on the Italian agribusiness sector, reducing exports to the U.S. and creating difficulties for Italian producers interested in exporting food to the United States.

The technology and automotive sectors could also be affected, with problems in the supply of essential components and increased production costs.

However, the Italian government's recent rapprochement with the United States could lead to economic benefits, such as increased U.S. investment in Italy, especially in sectors such as technology and renewable energy. On the other hand, Italy could risk losing influence in Europe, where business interests do not always coincide with U.S. interests.

An excessively close alignment with Washington could isolate Italy, weakening its ability to negotiate favorable terms within the European Union and with other economic powers such as China and Japan.

Challenges and opportunities for Italian companies interested in exporting to the United States

In light of the above, it is important to note that the imposition of indiscriminate tariffs would also hurt the U.S. economy. It is unlikely that industrial goods, which are critical to the’export to the U.S. from our country, precisely because of their relevance in the American market as well.

Indeed, the restrictive measures appear to be aimed primarily at China, despite Beijing's position as the largest lender of U.S. government debt placing limits on U.S. aggression.

Trump's second term presents both challenges and opportunities. While U.S. stocks and the dollar appear to be the main beneficiaries, the investment incentives could create new opportunities for Italian companies, presenting themselves as a quality alternative to Chinese manufacturers. 

In this context, the Italian government will play an essential role in the Balancing relations with the U.S. without compromising European integration, setting out a clear strategy to support Italian companies to thrive in this new global landscape.

In a changing economic scenario involving a country that is crucial to Italian exports, it is crucial That Italian companies focus on internationalization strategies aimed at diversifying target markets, developing local partnerships and adapting their offerings to the peculiarities of the U.S. market.

Successfully seizing all the opportunities this market has to offer requires careful and strategic planning with the goal of achieving a sustainable path not only in access but also in maintaining a competitive position in the market. 

Do you want to approach the U.S. market with awareness, building a strategic action plan to maximize the potential for success and avoid costly mistakes? SAVE THE DATE:

Find out how to do it by following the webinar dedicated to this topic, organized in collaboration with Credem Bank, February 12, 2025. 

Stay tuned for more information and do not hesitate to contact us.