European Central Bank President Christine Lagarde said US tariffs may be more disinflationary than inflationary for Europe even as more time is needed to fully assess the situation.
“It is very unclear what the net impact will be,” she said at a Washington Post event. “Particularly if there is no countermeasures decided by Europe, I think the net inflation is uncertain at the moment, but probably it’s going to be disinflationary more than inflationary.”
Speaking in Washington on Wednesday, Lagarde said that the net impact is “difficult to assess because we are in a world of hypotheticals, we are in this transition period where we don’t know exactly what is going to come out of those discussions that are going on at the moment, and we also have to be careful.”
She also highlighted that with the trade war raging between the US and China, the latter “will have overcapacity, will want to reroute its exports somewhere, possibly to Europe, that would have a dampening impact on prices.”
The European Union agreed this month to delay for 90 days the implementation of a set of counter-tariffs against the US over 25% duties US President Donald Trump imposed on the bloc’s steel and aluminum exports. That move came after the US president lowered his so-called “reciprocal” rate on most EU exports from 20% to 10% for the same amount of time.
Trump has said he is “very confident” of a trade deal with Brussels, and French Finance Minister Eric Lombard said earlier on Wednesday that he very much hopes to avoid the EU retaliating to tariffs and instead strike a “genuine free trade agreement” with the US.
Still, with tariff uncertainty still high, Lagarde said the ECB may revisit its growth forecast for its June meeting, saying the impact of tariffs on economic output numbers is beginning to show.
“Not so much in the exports numbers — because there is a buildup of inventories as we see at the moment in anticipation of possible tariffs — but we are seeing that in PMI numbers, in intention to purchase, intention to hire, this is slowing down” she said.
Lagarde also said that she expects the “prime negotiation” between the US and China “will come about.”
“You look at the tariffs on China, 146%, China’s tariff on the United States, 125% — this is monumental, and as, as Secretary Scott Bessent said yesterday, it’s not sustainable,” she said.
RECOMMENDED FOR YOU
Trump Plans To Start Notifying Countries Of US Tariffs Up To 70%
Jul 04, 2025
Trump Says Again He’ll Set Unilateral Tariffs In Two Weeks
Jun 12, 2025
Trump’s China Gambit Belies Rocky Road Ahead On Tariff Deals
Jun 07, 2025
China Assures Pakistan Of $3.7 Billion Loan In Commercial Loans Before June-End
May 29, 2025
POPULAR