Italian PM downplays impact of Trump’s tariffs

The new US tariffs on the EU will “certainly have a significant impact” on Italy but it should be able to handle them, Prime Minister Giorgia Meloni reportedly told her cabinet on Friday.

Meloni, a far-right leader and ally of President Donald Trump, told her ministers that the effects of the new tariffs are on a scale “we can meet,” according to a government source.

She cited the head of the European Central Bank, Christine Lagarde, telling the European Parliament early this week, before the US tariffs were unveiled, that Trump’s trade war with the EU would likely shave a little off the eurozone’s economy.

Lagarde estimated that a hypothetical 25-percent tariff rate would cut eurozone GDP by 0.3 percent in the first year.

In the end, Trump on Wednesday announced a 20-percent rate on imports into the United States from European Union countries.

“Given that, the 20 percent tariffs should lead to a cut to European GDP of less than the estimated 0.3 percent. That would certainly have a significant impact, but of an order of magnitude we can meet,” Meloni was quoted as saying.

She reportedly urged ministers not to panic and stressed it was “important not to unduly amplify the actual impact of the US decision.”

The European Commission, responsible for trade issues for all 27 EU member countries, says it hopes for substantive negotiations with Washington to bring down the “unjustified” US tariffs, but it is readying retaliatory measures, if needed.

Lagarde, in her hearing before the European Parliament on Monday, also said that, if the trade war deepened with EU retaliation, the eurozone economy could be slashed by 0.5 percent.

Meloni was reported saying in the government meeting that, as the US market represented 10 percent of Italy’s exports, the new tariffs could dampen the overall export figures, “but it was too early to quantify the effect.”

She ordered a working group of the relevant ministers be created to study the consequences of the US move.

The group would meet on Monday, with another meeting, of representatives of impacted Italian industries, to take place on Tuesday.

Italy’s central bank on Friday lowered its growth estimate for the country this year to 0.5 percent, from 0.7 percent previously, because of the US tariffs.