(Bloomberg) -- European Central Bank President Christine Lagarde suggested European Union might be in a better position if it talks with the US about potential trade tariffs instead of immediately imposing countermeasures.
“We seem to err more on what I would call a checkbook strategy,” she told the Financial Times in an interview published Thursday, highlighting that last time the EU’s strategy was “not to retaliate, but to negotiate.”
Lagarde repeated earlier warnings on the negative effects of a full-blown trade war and said that “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,” she said, according to a transcript published on the ECB’s website.
US President-elect Donald Trump campaigned on tariffs and has repeated such threats in recent days.
“When you start considering a trade war, you can soon see an escalation, which in my view is a net negative,” she said. “This can be in nobody’s interest, neither for the United States nor for Europe, or anyone for that matter. This would induce a global reduction in GDP.”
Lagarde said it was too early to calculate the impact of what tariffs threatened by Trump, adding that “if anything, maybe it’s a little net inflationary in the short term.”
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