A mix of policies and strategies for SMEs against the tariffs effect

The US tariffs shock has produced effects that are still spreading through the international system, with the effective American tariff rising on average from 2.5% in January to over 20% after the so-called Liberation Day (source: Yale BudgetLab), and with the possibility of further increases due to sanctioning tariffs and reprisals by other countries. For Italian companies, especially the SMEs that have distinguished themselves most in terms of turnover, profitability and resilience, the shock is significant: many of these companies, in fact, have benefited directly or indirectly from the increase in Italian exports in recent years. For our country, exports have been the most dynamic component of GDP over the past decade with a plus of 30 per cent.

Since 2022, Italian companies have intercepted the wind of geopolitical changes worsening business prospects in Russia and some areas of the Middle East, and have focused more strongly on the US market than in the past. The Trump administration's tariffs now require a new course of action. Exports, driven by the solidity of the manufacturing system and the quality of products, together with the private savings of Italians and the wealth of scientific, cultural and labour skills, represent one of the pillars of the Italy-system. This calls for reflection on business strategies and economic policy priorities, in a fragmented international context marked by strong tensions. With the prospective reduction of outlets and margins in the USA, a significant potential for Made in Italy exports to other markets, including emerging ones, can be activated with a mix of business strategies and suitable policies. Business planning and industrial policies will in fact make the difference even in the new context. Two thirds of the companies that invest in digital technologies export, while less than half of those that do not invest in them sell abroad. In particular, Italian SMEs can benefit from artificial intelligence, but they are faced with different, more or less challenging strategies. On the one hand, we find plug-and-play initiatives, which support routine functions within the organisation without direct external interaction. On the opposite side we find market initiatives, which are integrated into the key-flows of the company and involve direct interactions with customers or external stakeholders. The latter carry significantly higher risks, considering the direct impact on crucial operational management hubs. Without a credible industrial policy initiative in the face of global uncertainty, many Italian and European SMEs may not take these risks. Training is also crucial and sometimes neglected. For example, analyses show that over the last decade, Italy has worsened its relative position in the EU in terms of digital skills, with southern regions and the female component of the population at a significant disadvantage. Even in the case of skills for environmental sustainability, domestic supply still does not seem adequate to meet increased demand.

European manufacturing needs reasonable financial conditions, realistic and stable technological trajectories for a good number of years to come, taxation that encourages tangible and intangible investments and, particularly in Italy, energy and logistics costs that are compatible with competitors. The regulatory simplification promised by the Commission must finally be realised. Above all, industry must be recognised as an indispensable linchpin of economic and social progress, something that is lacking beyond declarations of principle. In this respect, since the direct effect of the NRP will be exhausted in the next two years, a medium-term design for industrial policy is urgently needed in Italy to counteract the negative pressures coming from the rest of the world.