by MK
Professor Francesco Magris is a distinguished economist and full professor at the University of Trieste’s Faculty of Economics. Born in Trieste in 1966, he earned his PhD in Quantitative Economics from the Catholic University of Leuven and completed postdoctoral research at the University of Cambridge. An expert in economic policy and global markets, he has authored several books and regularly contributes to international publications on economic theory and financial systems.
Recent tariffs imposed by President Trump are shaping the global economy. How do you think they will influence Europe, and in particular, Italy?
Francesco Magris: We are talking about tariffs, and these are serious matters. First, let’s establish what tariffs do. When Italian businesses sell products to American consumers, they now face additional costs. This means that Italian and European goods become more expensive and consequently less attractive. By definition, tariffs are a protectionist measure designed to shield domestic industries. However, the first consequence is reduced demand for Italian exports.
But tariffs don’t only affect trade; they also impact monetary policy. If Italy and other European countries sell fewer goods to the United States, demand for euros will decline. This could lead to a depreciation of the euro against the dollar. Initially, this might make European products cheaper, somewhat offsetting the negative impact of the tariffs. However, we must also consider the response of financial markets and central banks.
For example, if the Federal Reserve lowers interest rates to stimulate domestic demand, this could drive up the value of the euro relative to the dollar, mitigating the effects of tariffs on currency exchange. The interaction between trade policies and monetary policies is complex, and these fluctuations could create unintended consequences.
Do you think Europe is equipped to respond effectively to these trade policies?
Francesco Magris: That is the key question. To counteract such measures, Europe must act as a unified bloc. But is Europe truly united? That’s the real challenge. If the U.S. applies tariffs selectively—one policy for Italy, another for France, a different one for Germany—each country may prioritize its own interests. This weakens the European response and exacerbates divisions within the EU.
Another fundamental issue is Germany’s economic model, which has been largely export-driven. German growth has depended on selling goods internationally, including to the U.S. If tariffs disrupt this flow, it could have severe implications not only for Germany but for the entire European economy, given Germany’s central role in the EU.
How long do you think it will take for the global economy to adjust to these new trade realities?
Francesco Magris: That’s a difficult question. Tariffs introduce a market distortion—an external shock that disrupts existing equilibrium. The transition period is uncertain and depends on numerous variables. Economics is not an exact science in the way that physics or mathematics is. Every economic decision influences and is influenced by countless other factors, from inflation to interest rates to political stability.
While we can compare different economic equilibriums—before and after the introduction of tariffs—the real challenge is understanding the transition process. How long will it take for markets to adapt? What are the costs involved? How will businesses and consumers react in the short and long term? These are the crucial unknowns.
So, in essence, the world is entering a new phase of economic relations?
Francesco Magris: Absolutely. The bigger picture here is not just tariffs or economic models—it’s the shift in the global trade framework. For decades, we operated under the assumption of globalization, with relatively open markets and international cooperation. That assumption is now being challenged.
President Trump’s trade policies send a clear signal: the rules of global commerce are changing. Even if the actual tariffs are not fully implemented, the message is clear—countries must rethink their economic strategies. We are moving away from a system of multilateral trade agreements and heading toward a fragmented landscape where nations prioritize individual interests over collective global policies.
In a way, it’s like switching from playing soccer to basketball. The game has changed, and now everyone has to learn new rules. The question remains: who will adapt best, and who will struggle to keep up?
