European Central Bank (ECB) President Christine Lagarde yesterday said that Europe should move toward economic independence as US President Donald Trump prepares to unleash a new wave of tariffs.
Trump has vowed to impose reciprocal tariffs on a wide range of trade partners tomorrow, which he has coined “liberation day,” saying the world’s top economy has been “ripped off by every country in the world.”
Lagarde told France Inter radio that Europe faces an “existential moment.”
Photo: AFP
“He calls it ‘liberation day’ in the United States. I see it as a moment when we must collectively decide to take greater control of our destiny and I think it is a step towards independence,” she said.
“To put ourselves in a position to negotiate effectively, we have to show that we won’t just roll over,” Lagarde said, as the EU readies its response to the tariffs.
The ECB estimates that Trump’s trade war could slash the eurozone’s economy by 0.3 percent in its first year — and by 0.5 percent if the EU retaliates.
“A trade war creates only losers,” Lagarde said.
Trump on Sunday said that the reciprocal tariffs he plans to impose would include “all countries,” not just those with the largest trade imbalances with the US.
The US president has already slapped tariffs on steel and aluminum imports and additional levies on imports from China.
Tariffs on imported autos are also due to take effect on Thursday.
The aggressive tariff scenario prompted Goldman Sachs Group Inc to lower its US and euro area GDP forecasts, as well as forecast that the US Federal Reserve and ECB would cut interest rates three times this year.
The investment bank now sees the Fed cutting rates in July, September and November, versus earlier bets on two cuts this year and one in 2026.
In a separate note, Goldman said lower EU growth forecasts reinforce expectations the ECB would cut rates this month and June, with a further quarter-percentage-point reduction now seen for July.
Additional reporting by Bloomberg
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