Any European Union retaliation to Donald Trump’s tariffs will be “negative” for European economies, but worsening relations between Europe and the US present an opportunity for the bloc to become more independent, the European Central Bank (ECB) president told Irish radio on Wednesday morning.
Christine Lagarde, who is in Dublin to receive an award, was speaking on the Pat Kenny Show on Newstalk, hours before the US president is expected to unveil a sweeping package of tariffs that could upend global trade.
The French politician said that “predictability is in very short supply at the moment” concerning US trade and foreign policy. “I don’t think I have ever mentioned the word ‘uncertainty’ as many times as I have in this last few weeks.”
Europe and the rest of the world do not know what is going to be announced by the White House on Wednesday evening, Ms Lagarde said. “We simply don’t really know to this day, which is supposed to be the day when it is announced, what the deal will be for the rest of the world.”
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However, she said it “will not be good for the global economy and it will not be good for those who inflict the tariffs and those who retaliate”.
The European Union (EU) is likely to respond to whatever is announced Wednesday with its own punishing tariffs on imports from the US, a move that has been signalled by, among others, EU Commission president Ursula von der Leyen.
Ms Lagarde said the question of retaliation is “something for political leaders to decide”. However, she warned that the impact of reciprocal trade measures will be negative for the European economy.
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“Our job at the central bank is to anticipate, to explain to them [ ...] what the consequences will be in terms of the economic impact. I was going to say negative impact, because it will be negative anyway for the world over,” she said.
Reiterating a point she made on French radio earlier this week, Ms Lagarde said the divergence between the US and the EU presents the latter with an opportunity to wean itself off its dependence on the world’s largest economy in several areas including trade and defence.
“I call it the beginning of a march towards independence,” she said. “What I mean by that is we should not be exclusively focused on what is happening on the other side of the pond, and we should focus on the strength that we have at home and how we can regain a degree of independence that we don’t have. And that applies to defence. It applies to trade, of course, it applies to finance.”
Ms Lagarde is in Dublin to receive the Sutherland Leadership Award at the Business and Finance Awards at the O’Reilly Hall in University College Dublin on Wednesday evening.
