Financial markets were not in short supply of anxiety before US President Trump decided to impose tariffs on steel and aluminium. Now volatility could surge on the back of a higher risk premium, inflationary pressures and rising interest rates in the US. Add to that pockets of risks in selected emerging markets, and a political deadlock in Europe. As noted in our Games of Trade report all this adds fuel to the fire, even more so when the US starts it. Indeed, the world's biggest economy has been a trend-setter with 90 new protectionism measures out of 467 in 2017. The metals sector was the second most-affected with 54 new protectionist measures. So, why the fuss? Even on the campaign trail, then-candidate Trump was clear about his intentions to renegotiate every disadvantageous free trade agreement. NAFTA was a prime target right from the start . The March 8 announcement has dramatic ring to it. The hike to a 25% tariff on steel and 10% on aluminum (up from the current 0.3% and 3.5% on average, respectively) rattled many. In reality the potential losses may be limited and an exemption for Canada and Mexico could further ease the pain. Brazil, Russia, China and South Korea are the main losers with an estimated cost of more than half a billion dollar a year.  Surely, there is a risk that more protectionist moves hurt growth and raise inflation expectations in the US. In particular, the chemicals sector, second in the number of protectionism investigations only to metals, and the car industry, already hypersensitive and visible ahead of the mid-term elections, are on the radar.  Yet, American households and companies will pay the highest price. Congress, on its part, decided to hold back the protectionism bulldozer. The risk of a a full-fledged trade war, characterized by a generalized hike in tariffs and severe retaliation from the EU and China, is very low at this point. Yet when unpredictability is high, the ghosts of the past may come for an unwelcome visit. President Trump’s decision is often compared with President Bush’s, back in 2002. The same goods are at stake, and the political and economic situations are similar. Yet, the styles are different. When combining the profligate fiscal stimulus, the pressure on the dollar, and the protectionism bravura, the Trump landscape resembles more the Reagan era. Back in the 1980's trade was a global bone of contention. By 2019, fiscal hawks may come back and the economic expansion be less vibrant. Both Presidents Reagan and Bush had to face an economic reality check of their own.  But the gusto for old-fashion deal-making behind closed doors could be back for good. The very style of President Trump, embodied in tariffs, raises the specter of 30 year old trade policies. This was an era before multilateralism leveled the playfield, before the World Trade Organization, before the advent of Europe and China as we know them today. Since then, the world agreed to work together to reduce tariffs. Countries had to find other ways to boost competitiveness from exchange rates and wage moderation, to non-tariff measures, to institutionalized subsidies and bilateral free trade agreements. And all the players accepted that the globalization game was rigged just enough for the greater good, through such means as free trade, to be safe and sound. Will the US manage to change the rules and forgoes 25 years of progress? Will other countries overreact and escalate? It does not look like it but “a good scare is worth more to a man than advice”. Strengthening the benefits of globalization for all should certainly be on the G20 agenda in Argentina this month.

Italy’s planned spending on the National Industry 4.0 Plan in 2018-2019

5bn euro