U.S. Tariffs Caused a 30% Slump in Italy's Economic Growth in 2025
In a recent report by EY Parthenon, the potential impact of protectionist measures on Italy's economy is under scrutiny. The focus is on the potential increase in U.S. tariffs on Italian exports, which could significantly harm the Italian economy.
According to the report, if tariffs rise to 30%, the economic impact is estimated at around €30 billion, causing a cumulative GDP contraction of about 1.4% between 2025 and 2026. This contraction would effectively wipe out the expected growth of 0.6% (destined to rise to +0.8% in 2026).
The sectors most affected include fashion, design, food, and particularly high-value-added industries concentrated in regions like Florence. Florence, with its dense network of small and medium-sized enterprises specializing in these sectors and a high export share to the U.S. (26.9% of its foreign sales), faces the harshest blow, estimated to lose around €580 million in just three months.
Italian agri-food exports are also notably impacted, with tariffs of 15-25% on cheeses, processed tomatoes, jams, wines, pasta, and olive oil leading to export declines. Some items like olive oil and processed tomatoes experienced export drops of 17% shortly after initial tariff steps.
Italian companies, especially SMEs in affected sectors, face severe cost pressures due to tariffs combined with rising inflation and a weakening dollar against the euro, which makes Italian products more expensive in the U.S. market. Industry leaders urge for negotiated agreements to avoid escalating retaliatory measures and criticize the EU's weak stance, warning of asymmetrical trade relations that endanger Italian exports without adequate protection or response.
However, the resilience of Italian companies may absorb the shock of American tariffs in the medium to long term. EY has recorded a significant increase in foreign investments, with a 17% increase in announced operations (143 compared to 122 in the same period in 2024), and an increase in value, which has risen from 7.1 billion euros in the first six months of last year to 13.5 billion.
Despite the potential economic impact, Italian companies have not remained idle. Instead, they have shown a lot of reflection, awareness, and action. EY's analyses, conducted at a European level, suggest that Italy, along with Germany, could be particularly affected due to its strong industrial and export vocations.
Marco Daviddi, managing partner of EY, has observed these potential issues. The EY Parthenon Bulletin, recently published in its second edition, discusses these matters in detail, providing insights into the complex and uncertain scenario that Italian businesses are navigating.
[1] Source: EY Parthenon Bulletin, Edition 2 [2] Source: La Repubblica, 15th May 2025 [3] Source: Il Sole 24 Ore, 20th June 2025
The finance sector is closely watching the potential economic impact of escalating U.S. tariffs on Italian exports, as they could lead to significant losses for Italian companies, particularly those in sectors like fashion, design, food, and high-value-added industries, as estimated in the EY Parthenon report. Businesses in Florence, a region with a high export share to the U.S., are predicted to suffer the most severe blow.
