Italy Issues Caution on Retaliatory Tariffs Against the US, Advocates for Budget Flexibility
Italian Economy Minister Giancarlo Giorgetti has cautioned against the introduction of retaliatory tariffs on the US in response to President Donald Trump’s declaration of extensive import duties targeting trade partners.
During a business forum near Milan, Mr. Giorgetti emphasized that Italy seeks a “de-escalation” in relations with the US.
According to Mr. Trump’s plans announced on Wednesday, Italy, which enjoys a significant trade surplus with the US, will face a broad tariff of 20% along with other EU nations.
“We should refrain from initiating a policy of counter-tariffs that could have detrimental effects on everyone, especially ourselves,” Mr. Giorgetti remarked, adding, “we must strive to maintain a calm approach.”
High-debt Italy consistently urges the EU to provide more flexibility in budgetary matters.
Under EU regulations, commitments made with the European Commission to reduce public spending can be suspended in the face of a “severe economic downturn” within the euro zone.
According to US President Donald Trump’s proposals, Italy will be subjected to a general tariff of 20%.
The Bank of Italy announced yesterday that the euro zone’s third-largest economy is projected to grow by just 0.5% this year, which is less than half of the government’s 1.2% forecast released in September.
“Recently, there has been discussion of assistance for companies, but such support is a form of state intervention that must comply with EU regulations,” Mr. Giorgetti stated.
Italy is committed to reducing its deficit below the EU’s 3% of gross domestic product threshold by 2026, down from 3.4% in 2024, a challenge made more difficult by its sluggish economic growth.
The government is expected to lower its growth estimates for this year and 2026 next week when it unveils multi-year economic projections.
“The Italian public debt limits our budgetary flexibility, a constraint that must be taken into account in any decisions we undertake,” Mr. Giorgetti commented.
Italy’s debt, which is the second highest in proportion in the euro zone, is currently projected to rise to nearly 138% of GDP by 2026, up from 135.3% last year.
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