In a recent address at the Assiom Forex conference in Venice, Fabio Panetta, the governor of the Bank of Italy, presented an analysis suggesting that the US is incurring significant costs due to its protectionist measures. While tariffs were expected to slow down globalization and benefit the US by rebalancing trade relations, the real impact appears to be different. Instead of a contraction in trade activity, international trade grew by 4% last year, outpacing global GDP growth and double initial expectations.

Panetta noted that this growth can be attributed to several factors, including lower tariffs than initially anticipated and a lack of widespread retaliatory measures from trading partners. This has led to a dynamic shift in global trade patterns rather than a halt, suggesting that the protectionist approach may not yield the desired results for the US economy. The data challenges the narrative often presented by proponents of tariffs and paints a more complex picture of the current global trade environment.

The implications of Panetta's remarks indicate that while the US may have anticipated an advantage through tariffs, the reality of increased global trade growth diminishes these assumptions. This shift can pose long-term challenges for the US, as it must navigate a more interconnected global economy where traditional protectionist strategies may be ineffective. The insights shared at the conference reflect significant trends that could influence future economic policies and international relationships, especially in the context of ongoing tariff debates and globalization efforts.