The escalation of a long-running dispute between the United States and the European Union (EU) over state-aid regulations for European aircraft suppliers could further slow Italy's already anemic economic growth rate, analysts said.
The standoff between the United States and the EU dates back to 15 years ago when European member states were accused of excessive aid to support Airbus and its supply chain. The United States has argued that European aircraft subsidies have given Airbus an advantage over U.S.-based rival Boeing.
The issue has come under the spotlight in recent weeks, as U.S. President Donald Trump vowed to retaliate with taxes of up to 100 percent on European alcoholic drinks, olive oil and cheese if state aid to Airbus and other firms is not reduced.
World Trade Organization arbitrators are expected to rule on whether Trump's threat is granted under rules that allow a country to impose punitive tariffs on European goods "equivalent to the value of the subsidy." According to the White House, subsidies to Airbus and other related companies are worth 11 billion U.S. dollars.
Analysts said that a set of heavy tariffs on agricultural goods would have an oversized impact on the Italian economy, which depends heavily on exports.
"There's a history that shows that the Italian economy follows the export sector," Denis Pantini, head of the agro-industry section at the economic think-tank Nomisma, told Xinhua. "The economy will feel anything that hurts exports."
The Italian economy has already been struggling prior to the U.S. tariff threat. It ended 2018 in a technical recession before bouncing back in the first quarter of 2019 to grow a modest 0.1 percent. It then "returned" those gains in the second quarter. The Bank of Italy predicted the economy will grow by just 0.1 percent for this year.
If agricultural exports take a hit, analysts said, it could slow economic growth even more.
"About 10 percent of our agricultural exports go" to the United States, Lorenzo Bazzana, an economist with Coldiretti, Italy's main agricultural trade union, told Xinhua in an interview.
"That is more than any other country besides Germany and France. It's more than trade with Britain, an amount worth 4.2 billion euros (4.7 billion U.S. dollars) a year. There's no doubt that shrinking that figure would have a measurable impact on economic growth," Bazzana said.
It will not be easy for Italy to find new markets for the wine, cheese, and olive oil that would normally be exported to the United States, as "things have become so complicated with international trade in recent years," he added.