Christine Lagarde argues that Europe must be prepared for Trump’s tariff hike

Christine Lagarde argues that Europe must be prepared for Trump’s tariff hike

The president of the European Central Bank affirmed that Europe must “be prepared” and “anticipate what will happen in order to respond” appropriately to the tariffs imposed by the president of the United States, Donald Trump.

Reuters

The president of European Central Bank (ECB)Christine Lagarde, said that we will have to “anticipate what will happen in order to respond” appropriately to the duty that the president of the United States, donald trumpplans to impose on the European Union (EU).

Despite this, he ruled out that on the first day of his presidency he did not give shape to these taxes, which he considered to be a “very smart approach… because across-the-board tariffs don’t necessarily deliver the expected results.”

Europe must prepare for Donald Trump’s tariffs, says Lagarde

According to the official, the idea of ​​​​reducing imports from Europe to “strengthen” the US manufacturing industry is “questionable”, given that “The US economy is almost at the point of overheating right now”.

“If you look at the American labor markethas a very low unemployment rate. If you look at the capacity, it’s running almost at full capacity already. So this idea that you can make what you will no longer import, or that you will import at much higher prices, is… something that will take time“he explained.

donald trump

Trump assumed his second term in the US.

Trump assumed his second term in the US.

Lagarde also said importers will not be able to operate on low margins for a long time. Consequently, he believes that the increase in costs will be “passed on to the consumer” sooner or later.

It should be noted that The Federal Reserve (Fed) halved, to just two, the interest rate cuts it plans to make in 2025. The reason is well reflected in the minutes of the last meeting of the US central bank: fear of the effects that Trump’s policies may have on inflation, the labor market and economic growth.

Thus, Lagarde said: “Be strong at home and make sure you trade, sell and buy at home, save at home and invest at home. Not to say we want to take a protectionist approach, because what lowering barriers has taught us is that trade is actually beneficial.“.

Source: Ambito

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