In addition to the specific difficulties that plague every business in its ordinary activities, for some time now and with increasing frequency, generalized crises or obstacles of considerable magnitude have been arising, often unexpectedly, which jeopardize the very survival of businesses without any direct responsibility on the part of local operators, but due to external causes that may occur far away.
These are mostly wars, financial crises, natural disasters, mass immigration due to economic and social tensions, and so on: all phenomena that negatively affect our daily activities. The latest misfortune is that of tariffs, which in recent decades were considered by all to be an anachronistic measure, damaging in both the short and long term the very global development to which everyone should aspire.
Unfortunately, if the most powerful country in the world now wants to impose them, we cannot oppose them, but we must try to limit the damage and identify opportunities in this area with a resilient attitude, bearing in mind that an escalation of tariffs on our part, with the United States or any other country, would ultimately backfire on us. Therefore, in order to find some compensation for the damage caused by US tariffs, we must do exactly the opposite: liberalize even more, removing our tariffs on other countries (there are still many) and demanding reciprocal treatment, in order to achieve free trade, where our products can freely enter foreign markets at lower prices and other countries’ products can be imported by us at more affordable costs (provided they meet minimum safety requirements). In this way, our exports can grow more easily and imports become more affordable for domestic consumers, but also for the competitiveness of domestic producers (who obtain raw materials at lower costs).
The effects of tariffs
The tariffs currently in force in the United States for goods imported from the European Union are generally 15%, except for certain specific products, such as steel, aluminum, and others, which are subject to higher rates. The direct effect of this tax is that American consumers pay 15% more for our products, meaning that some of these products will no longer be purchased. The corresponding effect for Italy is lower exports, which lead to lower corporate revenues and lower GDP.
Obviously, we cannot know how big the contraction will be until the final statistics for next year are available (assuming the tariffs do not change again), as current figures are distorted by a sharp increase in advance sales in the first half of this year (precisely to avoid the announced tariffs) and even in September, with the tariffs already in force, there was still an increase in our exports (an increase which, despite everything, gives us hope for the future). To get an idea of the figures at risk in the two provinces of Treviso and Belluno, it can be noted that in 2024 to the US:
– Treviso mainly exported beverages, machinery, furniture, sporting goods, and household appliances, for a total of approximately €900 million.
– Belluno mainly exported eyewear, machinery, electronics and precision instruments, tanned and processed leather, rubber and plastic products, also for a total of approximately €900 million.
However, the decrease in these considerable amounts will depend on a number of factors. First of all, the reaction of US demand: products of a certain quality should not suffer significant declines due to the high purchasing power of buyers, while more standardized goods are subject to competition from other substitute products. However, it remains to be seen whether there is potential within the American production structure to expand with competitive prices that could reduce the appeal of our products. This is by no means a foregone conclusion,
as agriculture and industry in that country may not be sufficiently specialized in the products in question, or may be oriented towards different sectors. Furthermore, our companies can also seek effective responses to this situation with greater resilience and determination. A recent survey by Assocamerestero of a number of Italian chambers of commerce abroad has highlighted new ideas and opportunities.
Resilience to tariffs
It is therefore appropriate to indicate some possibilities that our production system can adopt to react in some way to the current significant difficulty, while bearing in mind that in the short term some negative effects will be inevitable, but the long-term impact could also become positive.
Firstly, some good practices have already been implemented among operators: Italian producers and American importers and traders have agreed to absorb the infamous 15%, sharing the relative burden and thus giving up part of their profits. On the other hand, for many exported products, their high quality has so far allowed for adequate margins, which can now also be easily contained. In this way, it is possible in many cases to offer the same product at the previous price, and therefore sales should remain unchanged.
A further step consists in seeking new markets within the US itself. As is well known, this country is very large and administered by different states, which very often give rise to diversified markets that do not communicate with each other, so it may happen that many of our products, well established in some areas, are unknown in others. However, our current presence in the former may now allow easy access to the latter, given our already established commercial relations. In this way, with modest effort and in a relatively short time, we could regain
market share among new wealthy customers, offsetting those lost among less affluent customers due to the price increases caused by the tariff.
A final option for exporters penalized by tariffs is to establish a direct presence in the US (initially more expensive, but ultimately very promising) with a production facility capable of competing with any domestic competitors. In this way, finished products would no longer be subject to tariffs, but only raw materials from other countries would be. This route is also beginning to be explored, although it is not possible for quality food products that must be produced in their areas of origin.
However, a more in-depth analysis of US markets could reveal opportunities for other competitive products (which we had not previously considered), which could compete with local American products, despite the inevitable price increase of the former. In fact, a more accurate study (possibly with the help of artificial intelligence) can identify new market opportunities that were previously unknown. In this regard, it should also be noted that the current expansionary policy, protectionism, and consumerism in that country, together with its currency depreciation on international currency markets (with the
gradual rise of the euro-dollar exchange rate), are leading to a resurgence of inflation, which means that even domestic American products will cost more and may give rise to some price increases, even if they are not subject to tariffs.
Finally, for goods that were first exported and then unsold due to tariffs, the only option is to seek new markets in other countries. As already suggested, it would be beneficial for Europe to enter into new reciprocal agreements to remove any existing tariff barriers. In reality, there are large markets around the world that are still unexplored or, in any case, not sufficiently covered by our companies in terms of their potential to absorb high-quality goods, especially in the BRICS countries, which have now been joined by other developing countries, including India. The large populations of some of these countries mean that there are also large numbers of people belonging to the wealthy classes who are able to purchase our products, which until now have only been sold in the US. Furthermore, European consumers themselves could appreciate our products more, if they were adequately offered, even outside our usual customer base in Germany, France, and Spain, especially in the Nordic countries.
On the other hand, we not only excel in quality products, but also in various sectors of standardized production, such as metalworking, where Italian innovation has created a good performance/price ratio. Therefore, the competitiveness of these products can also be effectively highlighted in the markets of developing countries that are seeking more suitable goods and services for growth. All in all, foreign market research pays off and can more than compensate for the difficulties created by tariffs with a single country, even if it is an important one.
Search for new competitive advantages
Regardless of tariff barriers, there may be products on the market with such competitive advantages that they are purchased even if the price is not favorable. In other words, quality justifies a higher price, so the product is judged in terms of its quality/price ratio. Our main exports are based precisely on this ratio, which is particularly evident in the agri-food, fashion, furniture, and luxury goods sectors. A further increase in quality can therefore justify a higher price, which is perceived as fair and willingly accepted by consumers, except for those who are not economically self-sufficient.
To limit the analysis to the agri-food sector, we can say that everything depends on the organoleptic quality of the products, which is determined by various characteristics typical of the places of production, making their consumption pleasant and rich in culture and emotions. But quality today can also extend to other factors, such as ESG (Environmental, Social, Governance), which ensure that the product has been made responsibly without harming society and the environment and therefore that its consumption promotes future sustainable development. Although not yet widespread, this awareness now affects a large proportion of consumers and encourages virtuous practices, especially among the economically better-off.
Considering that the PV investments are also economically advantageous today, due to the fact that the necessary panels last an average of 25 years, while the savings on energy bills cover their cost over a period of 5 to 7 years, it is possible to offer the same product, now characterized by an increase in sustainability, at the same price as before, thus highlighting a superior quality/price ratio. In the American market, if the duty increases the price, there will still be an increase in demand, because the difference due to the duty is offset by the meritorious requirement of sustainability.
Obviously, all this takes commitment and effort, but it is part of the resilience needed to overcome the serious hardships that a disordered and irrational world throws at us.
However, the tariffs themselves are unlikely to survive for long, because this policy will cost American consumers too much, as inflation will affect not only high-priced products such as ours, but also cheap products imported from poor countries and intended for the poor sections of the population, which are also numerous in the United States, certainly creating new social tensions. On the other hand, the domestic production system will find it difficult to meet the huge demand for low-priced goods, precisely because of the growing inflationary situation.
