European Central Bank Head, Christine Lagarde has stated that President Donald Trump’s planned tariffs will be negative across the world.
This came as Trump is set to announce a barrage of “reciprocal” tariffs.
The new tariffs, to be announced today, April 2, 2025, which Trump has called “Liberation Day”, is a bid to boost US manufacturing and punish other countries for what he has said are years of unfair trade practices.
Trump also stated that his reciprocal tariff plans are a move to equalise generally lower US tariff rates with those charged by other countries .
However, by most Economists’ assessments, the risky move threatens to plunge the economy into a downturn and mangle decades-old alliances.
According to White House Spokesperson, Karoline Leavitt, the new duties are due to take effect immediately after Trump announces them, while a separate 25% global tariff on auto imports will take effect on April 3, 2025.
Speaking in an interview, Lagarde noted that the density and the durability of the tariffs’ impact will vary depending on “the scope, on the products targeted, on how long it lasts, on whether or not there are negotiations.”
“Because let’s not forget quite often those escalation of tariffs, because they prove harmful, even for those who inflict it, lead to negotiation tables where people actually sit down and discuss and eventually remove some of those barriers.”
“I don’t think I have ever mentioned the word uncertainty as many times as I have in the last few weeks, because we simply don’t really know to this day, which is supposed to be the day when it is announced, what the deal [with the US] will be for the rest of the world. Predictability is in very short supply at the moment.”
Christine Lagarde
Lagarde added that there was still a bit of work to do to get euro zone inflation sustainably to its 2% goal and that the “jury is out” on the economic impact of greater defence spending in Europe, depending on how and where the money is spent. “We are now very close to (the inflation) target, so the disinflationary process is well underway… but we are quite satisfied with the work that we have done,” she said.
New US Tariffs To Hit Italian Producers Hard
Meanwhile, Italian Prime Minister, Giorgia Meloni voiced that the introduction of new US tariffs would hit Italian producers hard.
She added that every effort should be made to avoid a trade war.
Similarly, the head of national industry lobby Confindustria noted that the effect of US tariffs on Italian companies will be massive .
Emanuele Orsini called for Europe to negotiate with Donald Trump to avoid further escalation and warned China would be the beneficiary.
Orsini said that businesses with higher exports – such as the pharmaceutical sector, the fashion and food industries and production machinery – would be those most affected.
He also warned that should “Europe fuel its confrontation with the US, China would benefit from it” and hoped that the European Union would remain united in its approach to the US.
In response to tariffs, the business leader called for a cut in interest rates by the European Central Bank (ECB), new trade deals with countries including Mexico, India, Japan and Thailand and improving the European single market.
Orsini added that he hoped that Italian entrepreneurs would not start to consider relocating production outside of the country as a result of the new tariffs.
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