When a country is trying to impose extra-territorial laws, then it goes beyond enforcing their sovereignty, and it is completely reasonable for the affected to request diplomatic intervention.

Surely I don't need to point out the irony of complaining to the US government about another country wanting to impose extraterritorial laws?

It would be nice if we had an international agreement on how to apply sovereignity on the internet without infinging on sovereignity of other countries. US would be in a great position to initiate this if the current administration had any understanding of what "international agreement", "sovereignity" or "other countries" means.

Well the law is surely addressing European/Italian citizens and business. If you serve them from the US and target Italians for financial gain, you are no longer extraterritorial because you operate there as a business.

You mean like the US with it's sanctions that prevent European countries getting payments per credit card or Paypal when they sell Cuban products?

Has Trump considered bombing Italy and kidnapping Meloni yet?