MILAN – There are still a lot of ifs, but failure to negotiate U.S. President Donald Trump‘s 30 percent tariffs on European goods by the Aug. 1 deadline could reverse Italian economic growth forecasts for 2025.

According to EY‘s recent Parthenon Bulletin, Italy‘s gross domestic product could fall as much as 1.4 percent as a result of the tariffs, which would have a negative impact of just under 30 billion euros, said EY Parthenon managing partner Marco Daviddi. Parthenon is the accounting firm’s strategy and transaction division.

According to economists at Istat, forecasts in June said the Italian economy was actually expected to grow 0.6 percent in 2025 and 0.8 percent in 2026, lifted by improving domestic demand.

“Taking these factors into account, it seems unrealistic to foresee a final agreement between the EU and the U.S. that would set tariffs around 10 percent, as indicated in the estimates and expectations of European institutions,” the EY report said, adding that tariffs will unlikely settle at under 20 percent.

“The implications for global growth and financial markets are significant, although the most significant effects will be felt during 2026,” the report added.

Trump posted letters to Truth Social detailing the new duty rates for Mexico and the 27-member European trade bloc on July 12.

Prior to Trump’s letter, Confindustria’s president Emanuele Orsini had already raised alarm over the original 10 percent tariffs and said together, with the devaluation of the U.S. dollar, higher tariffs would result in a loss of 20 billion euros in exports and 118,000 jobs by 2026. The dollar hit its lowest point against the euro in four years at the end of June. Confindustria is Italy’s main industrial federation.

In 2024 the textile and apparel sector exported over 2.75 billion euros worth of goods to the U.S., making it the third largest market for the sector, Luca Sburlati, president of Confindustria Moda, told WWD.

FederlegnoArredo, the Italian federation of woodworking and furniture industries which represents the majority of Europe’s luxury furniture-makers, said the U.S. was Italy’s largest extra EU market and exports to the U.S. were worth 2.8 billion euros in 2024.

FederlegnoArredo’s president Claudio Feltrin said a 30 percent tariff on goods would be a tipping point for the industry and would have a severe impact jobs and growth.

“Faced with the news of Trump’s decision to introduce 30 percent tariffs on EU exports to the U.S., we can only be concerned and alarmed. Europe must avoid a tariff-against-tariff battle that would benefit no one,” Feltrin said, adding that the entire European production system would be severely impacted. “Failing to defend our businesses now could result in the industrial desertification of the Old Continent,” he added.

Negotiations at the EU Level

The EU and continues to weigh its options with the goal of reaching some sort of middle ground. Economists have said that the EU has a few negotiating chips to play, like offering to boost its imports of U.S. military equipment, and reduce tariffs and restrictions on U.S. imports like cars.

There is also the option of negotiating down the U.S. goods trade deficit with the EU, which swelled to $235.6 billion in 2024, according to U.S. government data. The EU, on the other hand, has a trade surplus with the U.S., which stood at 17.9 billion euros in December 2024.

Trump’s letter to the EU included a demand that Europe drop its own tariffs. “The European Union will allow complete, open market access to the United States, with no tariff being charged to us, in an attempt to reduce the large trade deficit,” he wrote.

— With contributions from Andrea Onate in Milan