Confindustria: tariffs bring down Italian exports to the US. Sales down by EUR 16.5 billion in the medium term
The Via dell'Astronomia Research Centre: the greatest impact on motor vehicles, food, beverages and footwear
Key points
The recent truce between Israel and Palestine alleviates uncertainty and the return of oil prices lowers costs. In Italy there are some positive signs for investments, but in the third quarter industry is still in difficulty and services continue to grow little. US tariffs and the devalued dollar continue to erode exports, while precautionary savings curb consumption. This is the picture of the economic situation that emerges from the Conjunctura Flash analysis by the Confindustria Studies Centre.
Tariffs slash Italian exports to the US
A focus is dedicated to the tariffs: Italian exports to the US plummeted in August, -21.1% on August 2024, after a strong increase in the first part of the year due to advance purchases. This contributed more than two-thirds to the fall in non-EU exports (-7.0% trend, -1.1% on the world total).
In the medium to long term, according to the SCS, the new tariffs could reduce Italian sales to the United States by approximately 16.5 billion (compared to a scenario without tariffs), equal to 2.7% of total exports. The greatest effect is for sectors such as motor vehicles, food, beverages, footwear, leather and other manufacturing activities. The losses are amplified if we consider the indirect effects, along the European production chains, of the drop in exports to the US by other European countries on the demand for Italian inputs. The overall impact is -3.8% of manufacturing exports, -1.8% of production.
In the long term, there is a strong incentive to relocate some production to the US market: the risk for European industry is to lose vital parts of the production fabric. The quality of EU products acts as a shield against tariffs in the short term. But a substitution process will start over time, if tariffs continue and if US production, plus Mexico and Canada, is able to meet demand. Moreover, the Fed rate cut to support growth tends to weaken the dollar, raising imported inflation, and this slows down US imports.
Energy: oil decline
As for energy, the price of gas has been stable in Europe for three months, 32 euro mwh in October, but remains more than double 2019's rate of 14 euro. Oil fell to $66 a barrel, at the pre-pandemic level (64). Inflation remains low in the EU, +2.2% in September, but the ECB remains firm (rates at 2% since June). The Fed resumed cuts, 4.25 in September, and a continuation is expected. The dollar remains devalued against the euro, which is +12.7, reflecting the worst expectations on the US economy linked to tariffs.
