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 US administration, which anticipate a significant increase in 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 such policies on inflation and economic growth in the United States, as well as their effects on global trade balances. In this context of uncertainty, it's natural that 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 fundamental role in the Italian economy. Italy ranks fourth place in the world by export volume, alongside Japan and South Korea, and twelfth in 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 growth projected at 4.51% in 2025 and 4.21% on average over the following two years. Italian exports are estimated to can overcome ii 650 billion by 2024, reaching 679 billion this year. In the last three years, Italian exports have recorded growth superior to 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 Donald Trump's election 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 numerous Italian products, to which Europe responded with duties on agricultural products and other goods. The Biden administration has maintained these trade barriers and promoted reshoring, implementing policies to support “Made in 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, economic growth-oriented policies through tax cuts and increased tariffs could favor U.S. equities in the near future at the expense of the bond market. However, inflation could rise, leading to a possible “steepening” of the yield curve.

In this context, Europe could suffer significant economic repercussions: it is estimated that a 10% tariff on U.S. imports could reduce European GDP by 0.21% by 2026.

The European stock market is already underweight in international investors, thus limiting Europe's attractiveness compared to the US market. The United States represents one of the most important trading partners for Italy, and this situation could indeed affect the share of Italian exports to the US market.

Impact of US tariff increases on the international market: the case of commodities

An often overlooked aspect is the impact that the increase in U.S. tariffs has on commodity prices internationally. The United States, as a net importer of many raw materials, may find itself facing a increase in internal costs, with direct consequences on inflation. If the compensation measures adopted by the government prove ineffective, commodity prices could significantly increase in the American market.

Globally, however, imposing tariffs would reduce the’export to the U.S., increasing supply in international markets and leading to a decline in prices. The experience of Trump’s first term, marked by tariffs on steel and aluminum, offers valuable insights into the effects of such policies. In 2018, the Trump administration imposed tariffs of 25% on steel and 10% on aluminum, in response to an investigation that identified national security risks linked to imports. 

The data show that, between 2018 and 2019, steel prices in the United States rose by 16.21%, while in international markets have remained stable. indicating that the international offer managed to compensate for the reduction in exports to the USA. 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 was mitigated by protective measures adopted by the European Union.

This analysis highlights how tariffs, despite aiming to strengthen domestic industry, can also impact 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 face a 16% reduction, with significant impacts on the mechanical, pharmaceutical, and chemical sectors. Prometeia estimates that a 10% increase in tariffs could cost Italy over $4 billion, particularly affecting the fashion sector. If the tariffs were applied across the board, the costs for Italian companies could exceed $9 billion.

The new US tariffs fall within the scope of “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 protectionist measures from the European Union and significant consequences on global supply chains. This exchange of protectionist measures would inevitably spill over into the international market as well, as demonstrated by recent developments in the commodity sector, such as steel and aluminum.

If the protectionist approach were to continue, Italian companies could face tariffs on their flagship products. 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 suffer consequences, with problems in the supply of essential components and an increase in production costs.

However, the Italian government's recent rapprochement with the United States could lead to economic benefits, such as an increase in American investments in Italy, especially in sectors like technology and renewable energy. On the other hand, Italy could risk losing influence in Europe, where commercial interests do not always align with those of the United States.

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 emphasize that the imposition of indiscriminate tariffs would also harm the U.S. economy. It is unlikely that industrial goods, fundamental 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 constantly changing economic scenario, involving a country fundamental 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 a clear understanding of the market, by developing a strategic action plan to maximize your chances of 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.