The two trams crashed head-on along via Commerciale on the panoramic Trieste-Opicina tramline, a network which includes a funicular, Corriere reported.
Serious injuries were avoided because the trams were on steep stretch of line and so were travelling slowly.
Police are investigating the cause while authorities have launched an internal inquiry, with Trieste mayor Roberto Dipiazza saying the crash was “unacceptable”.
The tramway, which links Piazza Oberdan, in the city centre, with Villa Opicina, a small town in the hills, is one of the Friuli Venezia Giulia city's main tourist attractions.
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