Interview with Christine Lagarde, President of the ECB

Interview with the Financial Times: interview with Christine Lagarde, President of the ECB, conducted by Roula Khalaf, Patrick Jenkins and Olaf Storbeck on 25 November 2024.

You said recently that the geopolitical landscape was fragmenting into rival blocs where attitudes towards free trade were being called into question. The US election accelerates this trend. Looking forward, what are your expectations, particularly in terms of tariffs?

President-elect Donald Trump has clearly announced last week the magnitude of tariffs that he has in mind: 60% for China, 10-20% for the rest of the world. But he has not been very specific about the scope and the basis on which those tariffs would apply. That’s a really interesting area for clarification and better understanding. Tariffs applied on a broad, undiscriminating basis produce certain effects. But very selective, targeted tariffs will produce a different effect. Going forward, the scope of the tariffs will be really interesting to appreciate. It’s one thing if you are raising your tariffs on certain product categories, as I think the US Administration has done for instance on electric vehicles. It’s another if they’re applied on a broad basis to anything that crosses the border. On these details we have no idea yet.

How should Europe respond?

As far as the tariffs on European imports are concerned – 10-20% – there is a 100% difference between the two. That is also interesting. I think it’s indicative of the approach allegedly often taken by President-elect Donald Trump, which consists of negotiating. The fact that you put out a range means that you are open to discussion. You’re open to a different distribution of that tariff depending on what the base is going to be. The European Commission has flagged that it is preparing, which is good. We seem to err more on what I would call a cheque book strategy. We could offer to buy certain things from the United States and signal that we are prepared to sit at the table and see how we can work together. I think this is a better scenario than a pure retaliation strategy, which can lead to a tit-for-tat process where no one is really a winner.

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