European Central Bank President Christine Lagarde has warned that uncertainty is creeping back into the global economy, driven by fresh tariff threats from U.S. President Donald Trump, now increasingly aimed at Europe. Speaking to CNN on the sidelines of the World Economic Forum in Davos, Lagarde said rising trade tensions are undermining trust between the United States and the European Union.

According to Lagarde, companies on both sides of the Atlantic are not only concerned about the potential size of new tariffs, but above all about the lack of clarity over what may come next. That unpredictability, she stressed, is more damaging to the economy than the tariffs themselves.

ECB: Uncertainty Weighs on Investment and Growth

Lagarde emphasized that the core issue is not just the risk of new trade barriers, but the fact that businesses, investors, and markets are operating without a clear outlook. In such an environment, companies tend to delay investment plans, hiring decisions, and long-term strategies—developments that could ultimately slow economic growth.

Trade, she noted, acts as a bridge between Europe and the United States. European firms have a strong presence in the U.S., while American companies are deeply embedded in European markets. Sudden or unpredictable tariff changes disrupt firms that rely on stable trade rules and increase economic risk.

For the ECB, this is particularly concerning as reduced corporate spending and investment could dampen the momentum of the European economy at a sensitive time.

Inflation and Monetary Policy Risks

Trade uncertainty may also affect inflation dynamics. If tariffs push up the cost of imported goods, price pressures could re-emerge, complicating the ECB’s efforts to maintain price stability—especially given Europe’s reliance on imports from the U.S.

Interest rates in the euro area have been on hold since June, and neither investors nor economists currently expect imminent changes. However, François Villeroy de Galhau, Governor of the Bank of France, said any new tariffs would need to be closely assessed, even if their immediate impact on prices is expected to be relatively muted.

Still, a tougher U.S. stance toward Europe could challenge the ECB’s relatively benign outlook for inflation and economic activity in the coming years. While the eurozone has shown resilience to rising protectionism so far, officials continue to stress that risks remain elevated.

Call to Protect Transatlantic Trade Ties

Lagarde underscored that the U.S. and Europe share deep and longstanding economic ties, built on trade, mutual investment, and job creation. Putting these relationships at risk, she said, does not make sense from either an economic or policy perspective.

She urged leaders on both sides of the Atlantic to carefully weigh the consequences of any trade actions before moving forward, warning that escalation could prove costly.

Lagarde also remarked that Europe has been through similar trade disputes before. When she said this was a “movie we’ve already seen,” she was referring to past trade conflicts with the U.S. that generated significant uncertainty but few lasting benefits. In her view, those experiences should serve as a reminder of the importance of avoiding a repeat of the same mistakes.

#ECB , #TRUMP , #Eu , #Inflation , #globaleconomy

Stay one step ahead – follow our profile and stay informed about everything important in the world of cryptocurrencies!

Notice:

,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“