When Americans argue about tariffs, they often frame it as a domestic political fight. Republicans versus Democrats. Trump versus the courts. Main Street versus Wall Street. What gets lost in that conversation is the view from the other side of the Atlantic. For European businesses and policymakers, the chaos unfolding in Washington is not a political spectacle. It is a balance sheet problem, a planning problem and increasingly, a strategic problem.
I have spent the better part of my career at the intersection of American political power and economic policy. I served as senior advisor for House Democratic Leader Hakeem Jeffries. I worked for President Barack Obama and I worked for Senate Democratic Whip Dick Durbin. I have advised on political and legislative strategy through debt ceiling crises, trade battles and political upheaval. And I will tell you plainly: what is happening right now in the United States is not a temporary disruption. Some of it is noise but much of it is a structural rupture. Europe needs to know the difference.
What is actually changing
Start with the thing that is most real: the predictability of the United States as a trading partner has materially declined and that reality will not reverse itself quickly regardless of who wins the next election.
On February 20th the Supreme Court ruled that the 1997 International Emergency Economic Powers Act (IEEPA) does not authorize the president to impose tariffs. Chief Justice Roberts, writing for the majority, held that the power to tax belongs to Congress, not the executive. The IEEPA tariffs, which had collected an estimated $165 billion from American importers, are now illegal. But here is what European business leaders must understand: this ruling did not end the uncertainty. Within hours, President Trump announced replacement tariffs under Section 122 of the Trade Act of 1974 — a statute capped at 15% and limited to 150 days. Once that period ends, Congress must enact legislation to extend it. Additionally the administration has concomitantly launched new Section 301 investigations that could produce a fresh round of durable tariffs within months. The legal framework has changed. The tariff reality has not.
What European business leaders must understand is the Supreme Court’s ruling does not end the uncertainty. It extends it. The administration continues to seize the unused power held by the . Congress, which holds the actual constitutional power to set tariffs. This Congress has not and will likely not act to fill the vacuum. Republican House Speaker Mike Johnson and Republican Senate Majority Leader John Thune – the two most powerful figures in the United States Congress – have surrendered their constitutional authority to Donald Trump. They have made a conscious decision to create a Congress that abdicates a significant portion of its constitutional authority.
Trade Promotion Authority — the mechanism Congress uses to set negotiating objectives and provide expedited consideration for major trade agreements — lapsed in July 2021. It leaves the United States without the normal legislative framework for negotiating comprehensive trade agreements. Until Congress reauthorizes it, that gap remains. For European exporters, this is not a short-term political irritant. It is a structural weakness in the US as a trading counterpart.
The sectors most exposed in Europe are also the sectors where Italy has the most at stake: precision manufacturing, luxury goods, automotive components, agri-food, wine and high-end textiles. These are not industries that can easily absorb a 15 to 25% tariff shock and pass it along to American consumers. American consumers are already stretched thin — persistently high inflation that remains above the Federal Reserve’s 2% target. More than 7 million Americans are unemployed. Credit card debt and consumer debt are at historic highs in $1.3 trillion and $18.8 trillion, respectively. Americans are using buy now pay later services to pay rent, which is unconscionable. The average American is spread thin and consumer confidence is deteriorating. The market that European exporters are selling into is itself weakening.
What is mostly noise
Here is where I want to be direct with European readers, because some of what you are seeing from Washington is theater that does not require a strategic response.
The day-to-day volatility of the Trump administration’s public communications — the press conferences, the social media declarations, the threats aimed at specific countries or companies — is largely a cycle of distraction. I have lived and witnessed this pattern for years – first as an aide in the House of Representatives during Trump’s first term and now as a geopolitical analyst post-government. When the administration is under pressure domestically — from an adverse court ruling, from damaging economic data, from a scandal that is building momentum — it manufactures a new, trite controversy to reset the media cycle. European business leaders who try to make capital allocation decisions based on what the President says in a given week will exhaust themselves and make poor decisions. The signal is in the policy mechanisms, not the rhetoric.
Similarly, the executive orders rolling back environmental protections at the Environmental Protection Agency (EPA) — withdrawing from climate commitments, opening coastal and Arctic areas to drilling, dismantling clean energy incentives — are real in their short term domestic consequences, but their direct business impact on European counterparties is narrower than the headlines suggest. What matters more for European investors is the secondary effect: the devaluation of the US green economy as a collaborative partner. European firms that had built joint venture assumptions around Biden/IRA-era clean technology investment in the United States need to revisit those assumptions. The policy environment for that category of investment has genuinely changed. You also must remember that any executive order by a US president can be reversed by his successor. The only lasting changes that happen in Washington are by legislation.
The Italy dimension
Italy occupies a specific and interesting position at this moment.
On one hand, Italy’s government has cultivated a cozy relationship with the current American administration. That is not irrelevant. Diplomatic proximity can translate into meaningful tariff exemptions, carve-outs in negotiations and advance notice on policy changes that other European governments may not receive. Italian business leaders should not discount this advantage and the Italian government should press it actively and specifically: request explicit protections for the agri-food sector, for wine, for automotive supply chain components and for the luxury goods category where Italy is among the world’s dominant producers.
On the other hand, Italy cannot decouple its trade interests from the European Union framework and that creates a structural tension. The EU is preparing a counter-tariff regime of its own — a reciprocal mechanism that would impose levies on American goods in response to US tariffs on European exports. Italy benefits from European collective bargaining power in that negotiation. But Italy also has more to lose than most EU members if the transatlantic trade relationship deteriorates into a prolonged tit-for-tat, because Italy’s export economy is more premium-concentrated and more US-dependent in certain categories than the European average. Italy is still performing, but that resilience can mask rising exposure.
What Europe should do
The honest answer is that Europe needs to stop waiting for Washington to stabilize. That stabilization is not coming on a timeline that is useful for planning purposes.
In practical terms, this means three things. First, European exporters with significant US exposure need to accelerate market diversification that was already underway. Southeast Asia, the Gulf and Latin America are not perfect substitutes for the American market, but the risk of over-concentration in a single market whose policy framework has become unpredictable has now been demonstrated concretely, not theoretically.
Second, the European Union should use this moment to accelerate its own trade agreement agenda. The EU-Mercosur agreement, long stalled, becomes significantly more strategically valuable in an environment where the United States is retreating from rules-based trade. The same logic applies to deepening trade and investment ties with India, Indonesia and the Gulf Cooperation Council countries. Every agreement the EU closes that the United States does not, closes the gap in global trade leadership that Washington is surrendering.
Third, Italian firms and policymakers must invest in Washington presence and intelligence now. The businesses that are navigating this environment most effectively are those with people and relationships in Washington who can read the signals before they become published policy. There is often a critical gap between internal policy direction and formal publication. For an Italian manufacturer or exporter, those weeks are the difference between adjusting inventory and absorbing a margin collapse.
The forecast
I will be direct here in saying we should feel sober optimism about the future.
The trade war will not end cleanly. The legal challenges will produce wins and losses that keep the policy environment unsettled through at least the midterm elections in November. But the likely victory by the Democratic Party in that election means they will control the House of Representatives and possibly the Senate. That is significant and should not be undercounted. House Democratic Leader Jeffries is a resolute leader who understands the importance of our relationships with friends of the US across the pond and I expect him to work tirelessly to bring more stability to Transatlantic relations . The only question is will it be enough.
For the Italy-US trade corridor specifically, I expect the next eleven months to be turbulent, followed by a slower, more measured decision-making process once Democrats take control of Congress in January 2027. This will not be a full reversal, but a meaningful reduction in volatility. There are many Democratic members of Congress who are pro tariff. That will not change. But Democratic leadership will address this with a scalpel and an eye toward reining in the emotional volatility of the White House on this issue.
The businesses that will emerge from this period in the strongest position are those that do not mistake the turbulence for permanent collapse, as I believe the US-Europe trade relationship has too much structural depth to unravel. But also those that do not assume the old world order will return to its previous form. It will not. But what could replace that could be a stronger relationship between our countries.
The United States is not going away as a market, a partner or a geopolitical anchor. But it is going through a period of genuine institutional disruption that requires European business and political leaders to respond with real strategic adaptation. The window for passive observation has closed. The window for active positioning is open.