European Central Bank President Christine Lagarde has urged the European Union to engage in direct negotiations with the United States over potential trade tariffs rather than resorting to immediate countermeasures. In an interview with Financial Times published on Thursday, Lagarde emphasized that a more strategic approach—focused on dialogue rather than financial retaliation—would better serve the EU’s interests.
“We seem to lean towards a ‘checkbook’ approach, where the instinct is to act financially,” Lagarde observed, reflecting on the EU’s past handling of trade tensions. “However, the last time, our strategy was to avoid immediate retaliation and instead to seek negotiation.” She underscored that an open channel for discussion would offer more productive long-term results than simply engaging in a tit-for-tat conflict.
Lagarde reiterated her concerns about the consequences of a trade war, warning that such an escalation would be harmful to all parties involved. “We could consider offering to purchase certain goods from the US as a sign of goodwill,” she said, suggesting that this could pave the way for more constructive talks. “This approach is far more beneficial than retaliating, which can spiral into a cycle where no one wins.”
The ECB president also commented on the rhetoric surrounding trade war threats, particularly from US President-elect Donald Trump, who has made tariff impositions a centerpiece of his economic agenda. Lagarde stressed that once trade disputes escalate, they often result in a broader economic slowdown, ultimately reducing global GDP.
“I think a trade war is a net negative for everyone involved,” Lagarde stated, adding that it could create harmful ripple effects across the global economy. “It’s in nobody’s interest—neither the US, Europe, nor anyone else. We all stand to lose.”
While the full implications of Trump’s tariff threats remain uncertain, Lagarde noted that any potential tariff increases could have an inflationary effect in the short term, although it was too early to fully assess the overall economic impact.
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