ROME: If the US returned to protectionist policies, how much would that hurt ‘Made in Italy’ industries? And above all, should the scenario for Italian exports both towards, and in competition with, the United States change, to whose advantage would that be?
In the hopes of understanding how economic and international policies could change under the new American president (given the announcements Donald Trump made during the electoral campaign), the Prometeia consultancy firm/research center made a few calculations.
Currently with €35 billion in Italian exports in 2015—the United States is Made in Italy’s third-largest foreign market worldwide after Germany and France (and the largest non-European market) with the percentage of national exports rising from 6.2% in 2010 to 9.2% in 2015.
A 1980s-era, pre-WTO trade policy certainly does not seem compatible with the current flow of goods between the two countries.
According to Prometeia’s reasoning, if the United States were to bring customs tariffs back to 1989 levels, the additional burden would cost Italian businesses almost €800 million—2% of the current overall value of goods exported to the US.
But not all ‘Made in Italy’ products would experience the same treatment. According to Prometeia’s estimates, the return to commercial duties would weigh the heaviest (over €345 million) on more “traditional” ‘Made in Italy’ products: fashion, footwear, design, and food.
Machinery and vehicles (including cars) would take a €216 million hit; €62 million for construction products and materials; €43 million for metal products; and €32 million for chemical/pharmaceutical products. And this isn’t even accounting for potential health/biological restrictions, which would hit certain sectors’ exports even harder.
But seeing as how Italy’s commercial policies are a subsection of the EU’s commercial policies, the tariffs could have a “dead weight” effect on the entire European market—creating a domino effect in international supply chains—and the first victims of that effect would be American multinational corporations, themselves.
As Carlo Altomonte, Professor of International Trade at Bocconi University in Milan, explains, there are two perspectives that explain how ‘punishing’ exports nowadays means, above all, damaging the very US economy that Trump is trying to protect.
“An iPhone is the product of a supply chain of raw materials and assembly that involves around ten countries—not just China—but also South Korea, France, Germany, and Japan,” he explained. “Then it gets imported to the United States for the finishing touches. Currently, around 50% of US imports are purchased from foreign affiliates of American multinational corporations—who, in turn, cannot afford to produce everything in the United States, since that would make their products’ prices prohibitive for the same American middle class.”
