The new challenges of the U.S. market for Italian companies that want to internationalize
The troubled U.S. election has led to a fractured country that must now face complex challenges: the bumpy transition to a new presidency, the composition of the new Congress and management of the COVID-19 crisis. Due to lockdown measures introduced in the U.S. as well, the American economy has also taken a blow, with an estimated 6% decline in GDP.
However, from the start of the pandemic the U.S. government swiftly launched a series of major financial stimulus measures, allocating 2.2 trillion dollars to support families and businesses, and implemented a very expansive monetary policy. Together with the news of the Pfizer vaccine, all these elements suggest that the U.S. economy will recover in 2021.
So what are the prospects and forecasts for Italian companies that export to the U.S.?
Italy has maintained a good position on the American market: We are in 11th place among U.S. trading partners, ahead of France and Spain. Meanwhile, the U.S. accounts for 10% of our export market.
These exports are predominantly capital goods such as mechanical equipment, vehicles and electrical appliances. A large share is also represented by intermediate goods, particularly chemical and pharmaceutical products, and consumer goods, primarily Made in Italy fashion.
In 2019, the United States received around 46 billion euros of Italian goods, up 7.5% on the previous year, thanks to the impetus of pharmaceuticals, mechanical equipment and agribusiness.
The decline forecast for 2020 is lower in the United States than the global average and the latest SACE-Simest Export Report predicts a significant recovery in 2021.
However, the timeframe for this recovery is likely to vary depending on the sector.
Intermediate goods, for example, which are more sensitive to economic cycles, were the first to be affected by the crisis, but will also be the first to reverse the trend. The chemical sector appears to be the least affected by the negative economic situation thanks to the driving force of the pharmaceutical industry. Agribusiness exports have suffered a sharp setback due to the pandemic, but are estimated to recover by 7.1% in 2021, unless higher duties are introduced between the U.S. and the EU.
The constant increase in sustainable products and the decision to invest in green technologies, from research to tracking, is also contributing to the positive trend.
How to seize the opportunities of the U.S. market by safely exporting
Like all markets, the U.S. market is going through a period of uncertainty with many unknown factors that must be carefully assessed. Besides the internal challenges, we must also monitor the evolution of the clash with China, the different approach to the negotiations of the new presidency, and a potential intervention to support the Brexit negotiations. The fiscal and monetary policies implemented during the pandemic prevented the implosion of the financial market, but significant changes in the euro/dollar exchange rate cannot be ruled out in the future.
Never before has it been so necessary for Italian companies that export or intend to internationalize in the United States to prudently adopt strategies that enable them to protect themselves from market risks and shocks.
The U.S. may be the ultimate destination for Italian companies that intend to internationalize, due to the vast, dynamic and open nature of its market, and to the U.S.’s long-standing appreciation of Made in Italy products. There is no doubt, however, that especially at this historic time, a cautious and stringent approach to the political and economic climate is needed, preferably relying on an experienced, reliable partner to help define the most appropriate business strategies.
Way2Global is a specialized translation agency in Milan with 30 years of experience in improving the multi-lingual cross-border communication of Italian brands and outstanding companies. Way2Global helps them export, expand in their target markets and seize every opportunity.
With our global network of professional native-speaker translators specialized in the vertical markets that represent our core business
- financial and legal
- medical and scientific
- technical and industrial
- fashion, luxury and Made in Italy
together with our dedicated project managers, our customized consulting service and experience gained in the US market through our two correspondent offices in Los Angeles and New York City, we accompany your business – whatever it may be – overseas, ensuring total peace of mind.
The decision to use specialized language mediation can be critical to the success of business negotiations and expansion strategies in the U.S. market.
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