Europe must prepare for new trade war with US, ECB officials warn
- By Reuters -
- Nov 12, 2024
VIENNA/FRANKFURT: Protectionist policies from the incoming U.S. administration will hamper global growth and Europe must be better prepared than in 2018, European Central Bank policymakers warned on Tuesday.
U.S. President-elect Donald Trump has promised a big increase in trade barriers, including a 10% universal tariff on imports from all foreign countries and a 60% tariff on imports from China, with the aim of reducing the US trade deficit.
“What we do know is that the significant import duties spoken of could have detrimental ramifications for the world economy,” Finnish central bank chief Olli Rehn said in London. “A new trade war is the last thing we need amid today’s geopolitical rivalries – especially among allies.”
Austrian central bank chief Robert Holzmann warned that these policies, if implemented, will keep U.S. interest rates and inflation higher, also putting upward pressure on prices elsewhere.
Trade tensions started to increase between the U.S. and Europe during Trump’s first presidency and Europe struggled to find a joint response, a mistake it should not make this time, Rehn said.
“If a trade war were to start, Europe must not be unprepared, as it was in 2018,” Rehn added.
“The (ECB) must, within its mandate, act as an anchor for economic and financial stability in this landscape of great challenges,” Rehn said. “No one should doubt that we will shoulder this responsibility in full.”