MNI: U.S. Tariffs Seen Hitting Italy Exports, GDP, From 2026

Italian exports to the U.S. are likely to fall only slightly this year under the impact of new tariffs, with the real damage coming in late 2026 and 2027 and with GDP forecasts for those years likely to have to be downgraded, sources in the Italian government and business lobby Confindustria told MNI.

The difficulty of quickly substituting Italian products could limit the contraction in Italy’s shipments to the U.S. to around EUR6 billion in 2025 from last year’s EUR 64.8 billion, the government official said, while the Confindustria source saw stagnation for the rest of this year before the pain hit later.

In the long-run, tariffs could cause considerable damage to Italian producers in high value-added sectors such as mechanical engineering, the Confindustria source said, adding that the depreciation of the yuan against the euro this year will make Chinese competition still more intense in third-country markets. (See MNI SOURCES: Markets Overplaying ECB's Hawkish Shift)

MANUFACTURERS HIT HARDEST

Italian food and wine exports tend to target premium consumers who are less sensitive to price changes, but even high-end manufacturers of cars and other mechanical goods are facing ever-tougher Chinese competition, both sources said.

“Models are already estimating an effect, even if it’s early to quantify,” the government source said. The government forecasts expansion in GDP of 0.6% this year, and 0.8% in both 2026 and 2027 but officials are starting to prepare a downward revision once the impact of tariffs is clearer, the government source said.

“We can’t calculate it yet, because while the industrial sector is expected to struggle, services and consumption are doing well,” he added.

Future exchange rate movements, against both the dollar and the yuan, could also have an impact on exports, potentially mitigating the negative impact should the euro depreciate, the Confindustria official said.