International trade relations are poised to endure significant strain as President Donald Trump announced new tariffs of up to 25% on steel and aluminum on March 17, 2025. This move marks a strong continuation of his protectionist agenda and poses challenges for numerous countries, particularly the United States' neighbors, Canada and Mexico.
The repercussions of these measures are expected to be particularly harsh for the North American economies. According to new forecasts from the Organisation for Economic Co-operation and Development (OECD), the growth of the United States is projected to decline significantly—from previously estimated rates—to just 2.2% this year. This is nearly halved from the earlier projection of 2.4% and is anticipated to drop even more to 1.6% by 2026.
Trump, speaking onboard Air Force One, stated, “None intention to backtrack on tariffs on steel and aluminum.” His commitment to these tariffs signals potential destabilization of trade relationships not just with allies, but with significant global players like China, which the U.S. believes may respond by flooding the European market with low-cost products. This has caused alarm within the European Union (EU), prompting preparations for new protections and measures.
The OECD's data painted a grim picture, claiming global growth would slow from 3.2% next year down to 3% by 2026, reflecting the protective measures coming from the U.S. The estimates for China's economy show similar trends, with growth dropping from 4.8% this year to 4.4% by 2026.
Regarding the effects on Trump's immediate neighbors, Mexico is expected to see its economy contract by -1.3% this coming year, contrasted with initial predictions of 1.2% growth, and -0.6% by 2026. Meanwhile, Canada forecasted growth would slow to only 0.7% over the next two years.
Europe is not standing still. Countries like Italy are monitoring the situation closely, as their economic interests stand to be heavily impacted. Each year, Italy exports around 65 billion euros worth of goods to the United States; this market stands as the country's primary extra-European economic partnership. The potential for tariffs raises fears of retaliation, jeopardizing this significant trade surplus of 39 billion euros.
Confapi Brescia, representing several manufacturing businesses, warned against the detrimental impact tariffs may have on the competitiveness of Italian industry. They emphasized, “Tariffs can harm the entire country’s system,” urging immediate action to preserve the health of the Italian manufacturing sector and mitigate the repercussions on exports, which have already been tightened under the existing economic climate.
According to the OECD’s recent assessments, the growth of the Euro area is projected to increase minimally, with expectations of 1% this year from 0.7% predicted for the previous year. Italy’s growth remains stagnant at 0.7% for 2025, hinting at other structural issues exacerbated by external pressures.
Confapi Brescia called for swift and coordinated responses to avoid igniting what could turn out to be a disastrous trade warfare climate. Adolfo Urso, the Italian Minister of Enterprises and Made in Italy, echoed this sentiment, stating, “We must act swiftly to avoid the risks of trade wars.”
The potential repercussions reach beyond mere financial metrics; they resonate with the livelihoods of workers and the overall health of industries, particularly within the vulnerable sectors reliant on export-driven strategies. With April 1 marking the deadline for Trump’s next steps, the European Union's response could set the tone for future negotiations.
Looking forward, Europe could face new challenges, including tariffs on European goods like cars and food products. The EU has signaled it might reinstate previous tariff measures from 2018 to 2019 and is considering new taxes on US goods starting April 2025. This situation emphasizes the need for European solidarity among member states as they navigate this complex global trade environment.
Overall, as Trump continues to cement his stance on tariffs and protectionism, the global economic forecast remains clouded with uncertainty and apprehensions. Industries worldwide can only brace themselves for the impacts these economic confrontations may yield. The American Chamber of Commerce to the European Union noted the significance of the situation, stating trade and financial relations worth $9.5 trillion are at stake, demonstrating the scale and significance of these concerned negotiations.
Without decisive action, the ramifications of Trump's tariffs could escalate the existing tension, marking consequential transformations within industries across the globe. Only collective and informed strategies will sustain the economic backbone during this tumultuous trade climate.
