Italian Economy Minister Giancarlo Giorgetti has urged caution and called for de-escalation in response to sweeping import tariffs announced by U.S. President Donald Trump. Speaking at a business forum near Milan on Saturday, Giorgetti warned that retaliatory tariffs could backfire, harming the Italian economy and wider European interests.
Trump’s newly announced trade policy, unveiled Wednesday, imposes a blanket 20% tariff on imports from several trade partners, including Italy and other European Union nations. Italy, which enjoys a significant trade surplus with the U.S., is expected to be among the hardest hit in Europe.
“We should avoid launching a policy of counter-tariffs that could be damaging for everyone, and especially for us,” Giorgetti said, advocating instead for a “cool-headed” response focused on economic stability rather than retaliation.
Giorgetti suggested that the European Union should allow greater fiscal flexibility for member states in light of the potential economic shock. He proposed suspending strict EU budget rules to enable countries like Italy to increase spending to support affected businesses and stimulate growth. “In recent days there has been talk of aid for companies, but aid for companies is a state intervention that must be allowed under EU rules,” he emphasized.
Italy, one of the EU’s most indebted countries, has long pushed for more leeway under the bloc’s fiscal governance rules. EU regulations currently allow for temporary relaxation of budget commitments in the event of a “severe economic downturn,” a condition many economists believe is increasingly likely following Trump’s tariff move.
The warning comes as Italy’s economic outlook continues to deteriorate. The Bank of Italy revised its 2025 growth forecast downward to just 0.5%, less than half the government’s previous projection of 1.2%. The government is expected to officially cut its growth forecasts for 2025 and 2026 when it releases updated multi-year economic projections next week.
Giorgetti also acknowledged the mounting challenge posed by Italy’s public debt, which is expected to rise to nearly 138% of GDP by 2026, up from 135.3% in 2024. The government has pledged to reduce its deficit to below the EU’s 3% of GDP threshold by 2026, down from a projected 3.4% this year—a goal that could prove increasingly difficult under current economic pressures.
With Italy’s fiscal room shrinking and trade tensions rising, Giorgetti’s remarks underscore growing unease across Europe about the broader implications of Washington’s protectionist shift. As EU leaders prepare to respond to the U.S. tariffs, Rome is signaling its preference for diplomacy over escalation in a bid to protect its fragile recovery.
