In a trade war, everyone loses. ECB President Christine Lagarde has called on EU politicians to collaborate with the new US president, suggesting increased purchases of US. goods as a way to ease tensions.
Lagarde urged European politicians to work with Donald Trump on tariff issues, warning that an intense trade war could derail global economic growth. «A full-scale trade war will have global consequences. It’s in no one’s interest—neither the United States’ nor Europe’s,» Lagarde said in an interview with the «Financial Times».
A Checkbook Strategy Over Tit-for-Tat Tariffs
Rather than engaging in a tit-for-tat cycle of retaliatory tariffs, Lagarde advised Europe to respond to Trump’s second term with a «checkbook strategy.» She recommended that EU member states purchase more US-made products as a gesture of goodwill and a step toward negotiations. «We could offer to buy certain products from the United States and signal our willingness to sit at the negotiating table,» she suggested.
Trump has previously threatened the EU with sweeping tariffs of up to 20% on all non-Chinese US imports. Lagarde’s advice to the EU: refrain from retaliation and focus on negotiations instead.
Global Implications of a Trade War
Lagarde emphasized the broader economic risks of escalating tensions. «How can you make America great again if global demand shrinks?» she asked.
In her remarks, she emphasized the importance of diplomatic engagement, highlighting the EU's role as a stabilizing force in an increasingly fragmented trade landscape.
