Giorgia Meloni is under pressure from Italy’s EU partners to “choose a side” in the transatlantic trade war as she wields an effective veto over a push by some big member states for Brussels to hit back hard against US tariffs.
The Italian premier — who has friendly ties with US President Donald Trump — is opposing a Franco-German push to escalate the EU’s response to the 20 per cent so-called “reciprocal tariff” to be imposed on its exports.
Paris and Berlin are among member states urging the European Commission to hit US services exports such as technology in response to Trump’s measures affecting more than €360bn of its trade.
At a meeting of ambassadors on Thursday, France, Germany, Spain and Belgium said the EU should be prepared to use its “trade bazooka”, the anti-coercion instrument, for the first time ever to achieve this, said two EU diplomats.
But a move using the instrument could be blocked by a weighted minority of member states. Given Italy’s size, it would be the decisive member of the No camp, which also includes Romania, Greece and Hungary, the diplomats said.
“At some point she will have to choose a side,” one of them said. “There is a lot of talk about services as the next step.”
The conservative nationalist told the FT last week it was “childish” and “superficial”to suggest she had to choose between the US and Europe, insisting she would protect Italy’s interests.
Meloni has criticised Trump’s tariffs on the EU this week as “a wrong decision”. But she has called for calm and for frank negotiations, warning that escalation risked further damage to European economies.
“I am not convinced that the best choice is to respond to tariffs with other tariffs,” the Italian leader told state broadcaster Rai on Thursday, emphasising that Italy wanted tariffs “removed not multiplied”.
A vocal Eurosceptic in opposition, Meloni has “played ball” in Brussels since coming to power two years ago, said the second diplomat, who cited “her vulnerability to the markets given Italy’s debt and deficit levels” as a likely reason she “stayed within the fold”.
However, they said, if negotiations make no progress over the next few weeks, Meloni would be asked to back retaliation against the US.
“It is all about protecting Italy. We all do that from time to time. But we all have to take some pain to maximise pressure on the US. Trade is the first big test,” they said.
Meloni’s concern about a trade war reflects opinion among business groups in Italy, which still sees the US as an ally and friend as well as the country’s second-largest export market.
“In this case, there is one single country that is self-harming to a massive scale,” said Marco Simoni, who was economic adviser to two former centre-left Italian prime ministers.
“What do you do if a friend is self-harming, even if it is provoking you to some harm? You tell him, ‘don’t do that’ . . . But let’s keep it cool. Don’t start wars.”
Simoni argued that devastating effects of the tariffs on the US economy, including business bankruptcies and job losses, would lead to strong domestic pressure for a rollback.
“Wait six months. The US will be in open recession and US companies will beg the government to lift the tariffs,” said Simoni, who teaches at Rome’s Luiss University.
If countries retaliate, he said, “we are giving an enormous advantage to Trump — when the recession hits America, he will tell the electorate that we are in recession because of retaliation”.
The anti-coercion instrument allows retaliatory measures, such as revoking the protection of intellectual property rights or their commercial exploitation through, for example, software downloads and streaming services.
Brussels could also block foreign direct investment or restrict market access for banking, insurance and other financial services groups.
Ireland has publicly opposed using the ACI — which was agreed in 2023 — ahead of an EU trade ministers’ meeting in Luxembourg on Monday.
Meloni’s office and other ministries declined to comment on Rome’s view about using the instrument.
But Meloni told her cabinet on Friday evening the EU should use the Trump tariff shock as a chance to tackle “the tariffs we have imposed on ourselves”, particularly by abandoning “ideological” green rules, cutting back “suffocating” regulations and pushing “the acceleration of the single market”.
Even before this week’s global tariffs announcement, Trump had imposed 25 per cent sectoral levies on steel, aluminium and cars.
The European Commission has said it would retaliate for the steel tariffs on up to €26mn of US exports. Ireland, France and Italy have asked for bourbon whiskey to be removed from the list of products to be targeted.
The Commission will send its final retaliation list, which is separate from any use of the anti-coercion instrument, to member states on Monday, with a vote expected on April 9. If approved they would become law on April 15 and apply from May 15.
European Commission President Ursula von der Leyen said after Trump’s announcement that the EU was preparing further retaliation, but she was “ready to negotiate to remove any remaining barriers to transatlantic trade”. Commission officials said that the EU would not do so unilaterally, however.
Karl Falkenberg, a former senior EU trade official and now adviser to consultancy Shearwater, said the bloc would need to hit US services exports to create leverage.
“You are going to have to go after services, where you can do maximum damage . . . You can only negotiate against American measures when you have measures of your own to negotiate with,” he said.
