European Central Bank (ECB) President Christine Lagarde has warned that Europe needs to prepare for the possibility of US President Donald Trump introducing new import tariffs on the region.
In an interview with the World Economic Forum in Davos, Switzerland, Lagarde said Trump’s decision not to impose immediate sanctions early in his second term was a “wise” approach because blanket tariffs “do not necessarily have the desired results”.
Lagarde expected Trump’s tariffs to be “selective” and “focused”, but stressed that Europe needed to “anticipate what is going to happen” with Trump’s trade stance “in order to respond appropriately”.
The comments came after Trump took specific aim at the EU on Tuesday, accusing the bloc of being “unfair”. Trump said the EU has a problematic trade surplus with the US and therefore “will be subject to tariffs” to achieve “fairness”.
Separately, Trump threatened to impose 10% duties on imports from China as early as February 1, in line with the deadlines he set for Mexico and Canada earlier this week. Trump, who has previously vowed to impose a 60% tariff on China, said the threat of tariffs could force Beijing to take action against the trade of fentanyl across the US border.
On Monday, Trump suggested he could impose a 25% tariff on goods imported from Mexico and Canada unless the two countries take stronger action against drug trafficking and illegal immigration. Leaders from both countries struck a conciliatory tone with Washington after the remarks.
Despite issuing several executive orders to begin his second term in the White House, Trump has stopped short of imposing sweeping tariffs on America’s allies and rivals. The approach provided some relief that supported a rally in US stocks on Tuesday.
