Trump brings back tariffs, markets shake, Europe responds. And Italy?
It was to be expected: when Donald Trump returns to the White House, he does it his own way. The President of the United States broke the deadlock on Wednesday and announced a new wave of “reciprocal” tariffs – as he calls them – targeting goods imported into the U.S. In plain terms: if a country taxes American products, America will return the favor, with interest.
The European Union is also in the crosshairs, now facing an additional 20% tariff on a wide range of exports. Italy, of course, is involved. Trump presented the tariffs as a tool to “rebalance” trade relations he considers to have been unfair for decades. The method used to calculate these tariffs? A very simple formula that has raised more than a few eyebrows among economists: take the trade deficit with a country, divide it by imports from that country, then cut it in half “out of kindness,” as the President himself explained. All of this wrapped in a speech about defending America’s economic identity.
The problem is that the markets didn’t take it well. Wall Street reacted with a steep drop: the Nasdaq lost 6%, the S&P 500 nearly 5%, and Apple shed more than 9% of its value, wiping out over $300 billion in a single day. Nike and many other American multinationals with overseas production also suffered. The dollar lost ground, oil prices dropped, and even Bitcoin turned negative. In short, the domino effect kicked in immediately.
In Europe, the picture wasn’t much better: after an initial wave of declines, things worsened further on Thursday morning. The Milan Stock Exchange (Piazza Affari) lost 7%, falling back to January 2025 levels, dragged down mainly by the collapse of the banking sector. Unipol plunged by 13%, while Mps, Bper, Unicredit, and Banco BPM all dropped more than 11%. Intesa Sanpaolo and Popolare di Sondrio were down by 10%. Generali also suffered, falling 7%. The selloff spread across major European markets: Madrid closed down 4.9%, Frankfurt -3.6%, Paris -3%, London -2.7%. The hardest-hit sectors? Automobiles, industry, and energy—a list that reads like a small financial war bulletin. Some are already talking about a potential “tariff effect” on the real economy.
Italian Prime Minister Giorgia Meloni called the tariffs “wrong” and pledged to work toward an agreement to avoid an all-out trade war. “It would weaken the West,” she said, hinting that this battle also has geopolitical implications. The message is clear: better a compromise than an outright clash. Meanwhile, Ursula von der Leyen described the move as a “severe blow to the global economy” and confirmed that the European Union is preparing countermeasures, although she left the door open for dialogue. Initial contacts between Brussels and Washington are already underway to explore the possibility of a compromise, perhaps by lowering mutual tariffs and restarting transatlantic trade talks.
However, it’s not certain that a soft approach will be the most effective. “Trump only seems to understand the language of strength”, someone remarked within the EU corridors. But reacting too harshly could also harm Europe, which exports more to the U.S. than it imports. It’s a delicate game, and the stakes are high.
Meanwhile, Asia responded swiftly: China has threatened retaliation, South Korea is assessing the impact of the new tariffs, and Australia has been caught off guard (“What do we even export to the U.S.?” they’re asking in Norfolk Island). Even the United Kingdom, while still declaring itself Washington’s “closest ally,” hasn’t hidden its discomfort.
In summary, the new tariff era has officially begun. And Italy, as usual, finds itself in the middle: too big to go unnoticed, too exposed to remain indifferent. With shaky markets, active diplomacy, and worried industries, the situation is in full motion.
