The trade war escalated dramatically as China announced retaliatory 34% tariffs on US goods and filed a WTO complaint. Global markets suffered catastrophic losses, with Milan's exchange plummeting 6.5-7%, its worst performance since September 11, 2001. Wall Street lost $5.2 trillion in two days - worse than during the COVID pandemic.
Despite market panic, Trump maintained his hardline stance while paradoxically encouraging investors to "get rich" during the crisis. Prime Minister Meloni warned against "panic and alarmism," suggesting a suspension of the EU Green Deal for automobiles to mitigate economic damage.
Bank of Italy slashed Italy's 2025 GDP growth forecast to just 0.6% due to tariff impacts. Fed Chair Powell warned that tariffs would likely increase inflation, undermining his monetary policy efforts.
Meanwhile, the government approved a controversial security decree amid protests and clashes in Rome.