Cristina Pensa

US duties: an ever-changing scenario

The second Trump mandate reopens a potentially much broader and deeper trade war scenario than the first, when the duties applied and maintained had almost exclusively concerned China, while those aimed at the EU and other countries were limited in terms of rates and/or mitigated by subsequent understandings.
Between 2018 and 2020, in fact, the US introduced duties on two-thirds of imports from China, with an average imposition of 19.3% on total purchases from China (up from just 3.1% at the beginning of 2018), triggering counter-duties of a similar magnitude on the Chinese side (on about 58% of imports from the US, with the average tariff rising from 8.0% to 21.1%).

US tariffs on purchases from the rest of the world, on the other hand, increased marginally, remaining at very low levels (from 2.2% to 3.0% on total non-China imports).These include, in particular, the 25% and 10% tariffs on US imports of steel and aluminium respectively (suspended for EU exporters by the Biden administration at the end of 2021). The second term's approach appears decidedly less inclined to strategic alliances, waivers, or exemptions and strategically leverages the almost daily announcements of new measures aimed also at 'friendly' countries, starting with Canada and Mexico: privileged trade and economic partners to which the US is linked by the United States-Mexico-Canada Agreement (USMCA, formerly NAFTA). On 1 February 2025, the new US president announced the introduction of additional duties of 25% on all products from Canada and Mexico (reduced to 10% for energy from Canada) and 10% on purchases from China. The justification refers to national security emergencies: the entry from these countries of drugs, such as fentanyl, and illegal immigration, particularly from the Mexican border. These measures were suspended the next day for a month, before being implemented, following commitments by these countries for greater control over irregular border flows and the trafficking of drugs and illicit substances. The additional ones on imports from China, on the other hand, took effect on 4 February, provoking a reaction from the Chinese authorities in the form of counter-duties on selected US products and export controls on rare earths.

In addition, Trump reiterated his intention to extend tariff barriers to other countries, including the EU, in the near future. On 10 February, he announced the re-introduction of erga omnes tariffs on steel and aluminium as of 12 March next, cancelling all suspensions and exemptions introduced (in addition to the EU, Argentina, Australia, Brazil, Canada, Mexico, South Korea, Japan UK and Ukraine) and equating the tariffs to 25% on both materials. On some occasions, it has also threatened universal tariffs of 10-20% on all US imports. If all these measures are actually implemented, it is highly likely that a full-scale escalation will be triggered.

Canada and Mexico had already announced counter-demands, and the European Commission declared its readiness to move in the same direction. The very high uncertainty generated by the mere threat of plunging trade and economic relations into retaliatory spirals is capable, by itself, of producing profound effects on world trade and economic connections. Particularly exposed to these tensions are the European economies, especially the Italian one, which are very open to foreign trade, integrated in global value chains and closely connected to the US economy.

The following analysis is divided into two parts. In the first, we review the motivations and instruments of US trade policy and its possible economic consequences, in the United States and in the configuration of world trade. In the second part, we analyse the potential direct and indirect channels of transmission to the Italian economy, the most exposed sectors and the products potentially most at risk, also based on the policy priorities identified above.