European Central Bank President Christine Lagarde called for a diplomatic approach to address potential US tariffs on European goods.
In an interview with the Financial Times, published on the European Central Bank’s website on Thursday, Lagarde stressed that avoiding a trade war would be in the best interests of all parties involved.
“We seem to be moving more towards what I call a checkbook strategy,” Lagarde said, referring to the EU’s previous approach during trade tensions with the United States, highlighting the value of negotiation rather than escalation.
“In the previous trade conflict with the United States, the European Union also used the strategy of ‘not reacting immediately, but negotiating,’” she explained.
Lagarde’s comments come amid escalating global trade tensions following US President Donald Trump’s announcement of 10 percent tariffs on Chinese goods, which will take effect immediately after his inauguration in January. These new tariffs are in addition to the current tariffs imposed on Chinese products.
Canada and Mexico will also have to pay import duties of 25 percent. In addition, Trump has threatened to impose tariffs of up to 20 percent on goods from other regions, including Europe.
Lagarde repeated her warnings about the harmful effects of a global trade war, and urged the European Union to signal its willingness to negotiate with the United States.
“I think this is a better scenario than a pure revenge strategy, where no one really wins,” she said, warning that starting a trade war or responding forcefully risks escalating tensions with far-reaching consequences.
She warned: “This cannot be in anyone’s interest, neither the United States nor Europe, nor anyone else as this would cause a global contraction in GDP.”
While it is still too early to assess the full economic impact of Trump’s proposed tariffs, Lagarde acknowledged that they could lead to a slight rise in inflation in the near term. However, she noted that a broader trade war would likely lead to lower economic growth. Global.
