U.S. Imports experienced a noticeable decline in 2025, largely driven by a drop in goods from China amid escalating trade tensions. While Chinese exports to the U.S. Fell by 20%, overall Chinese exports demonstrated resilience, increasing by 5.5% due to strong growth in other key regions.
Exports to the Eurozone rose by 8%, to the ASEAN bloc by 13%, to Latin America by 7%, and to Africa by a significant 26%, according to recent trade data. The extent to which this represents a genuine reorientation of trade flows in response to U.S. Tariffs, or is attributable to other factors, remains a central question. Delays in the implementation of new tariffs and ongoing political uncertainty complicate assessments of trade reorganization directly caused by the tariffs.
Early indications suggest some diversion of trade is occurring, particularly in the Chinese consumer goods sector, where increased U.S. Tariffs coincide with stronger export growth to alternative markets. Estimates, based on varying assumptions about trade elasticity, suggest the decline in Chinese exports to the U.S. Could range from $90 billion to $310 billion annually.
An analysis by the Bank of Italy assessed the potential for trade diversion across a group of countries, estimating the share of Chinese exports that could be redirected to absorb excess supply resulting from shifting trade patterns. For Italy, this share is estimated at just 1% of total exports in a scenario of maximum elasticity – approximately EUR 6.4 billion. While lower than most emerging economies, this represents one of the highest percentages among advanced economies, particularly when compared to Germany and France.
The impact of trade diversion varies significantly by sector. Italy’s “other manufacturing industries” (including toys), electronics, rubber and plastics, and machinery are among the most exposed. Conversely, pharmaceuticals and transport equipment, while affected by U.S. Tariffs, are less vulnerable to trade diversion than the average sector.
The shift in trade flows could similarly lower input costs for Italian businesses. Approximately 60% of Italy’s imports from China consist of intermediate goods and equipment. This reorganization could act as a positive supply shock, reducing production costs in certain sectors.
A Bank of Italy survey conducted between May and June 2025, gauging business expectations regarding the potential effects of increased Chinese supply, revealed that 34% of manufacturing firms and 24% of service companies anticipated increased Chinese competitive pressure. Exporters were particularly concerned, citing intensified competition and downward pressure on sales prices as the primary transmission channels. A significant minority also highlighted potential reductions in the price of intermediate inputs. Companies most exposed to trade diversion also reported increased medium-term uncertainty and greater caution in their investment plans.
Despite the challenging international context, the overall impact of the new U.S. Tariffs has, to date, been more moderate than initially anticipated. Italian exports have proven resilient, increasing by 3.3% annually. Performance has been particularly strong with the United States (+7.2%), which remains Italy’s second-largest export market after Germany. Italy’s trade surplus reached EUR 50.746 billion, largely supported by a substantial surplus in non-energy products, amounting to EUR 97.685 billion.
