Italian Economy Minister Giancarlo Giorgetti has cautioned against retaliatory measures in response to the United States’ newly announced trade tariffs, instead advocating for a diplomatic approach and greater fiscal leeway from the European Union to manage potential economic fallout.
During a business forum near Milan, Giorgetti emphasized Italy’s intent to avoid escalating tensions with Washington following former U.S. President Donald Trump’s declaration of a 20% import duty on European goods, including those from Italy. “We should steer clear of counter-tariffs that could end up hurting everyone—especially ourselves,” he said. “We need to keep our composure.”
With Italy maintaining a considerable trade surplus with the U.S., the tariffs present a significant challenge. Giorgetti argued that instead of tit-for-tat measures, the EU should grant member nations more budgetary flexibility to navigate the economic disruption caused by the tariffs.
Italy, a frequent advocate for more lenient EU fiscal regulations, is once again pressing for the suspension of strict budgetary rules—particularly those tied to reducing public spending—when faced with severe economic turbulence. “There’s been talk of support for businesses,” Giorgetti noted, “but such aid must align with EU regulations.”
The Italian economy has shown signs of fragility, with the Bank of Italy recently slashing its 2024 growth projection to 0.5%, well below the government’s earlier estimate of 1.2%. This slowdown is expected to impact Italy’s ability to reduce its budget deficit, which the government plans to bring below the EU’s 3% of GDP threshold by 2026. The deficit currently stands at 3.4%.
New economic forecasts are due next week, with officials expected to revise growth projections downward for both the current year and 2026. “Italy’s significant public debt narrows our fiscal options,” Giorgetti said, pointing to projections that debt will climb from 135.3% of GDP in 2023 to nearly 138% by 2026—the second-highest ratio in the eurozone.
Giorgetti’s message was clear: while the temptation to retaliate may be strong, Italy’s best path forward lies in strategic restraint, economic realism, and pushing for EU-level support to weather the growing financial pressures.