As fear grows over Donald Trump's tariff proposals, a leading European banker has instructed the EU to purchase more US goods, according to the Express.
In response to Trump's increased tariff threats, European Central Bank President Christine Lagarde has called for EU nations to purchase more American goods to prevent a trade war with the US.
She also cautioned that without a practical and cooperative approach, tensions might rise, harming global economic development.
In her first interview since Trump defeated Democratic opponent Kamala Harris, Lagarde emphasized that a trade war would have disastrous effects, especially for Europe.
"We must negotiate, not retaliate," she insisted.
Lagarde advocated for dialogue rather than confrontation, per the Financial Times.
Her statements coincide with Trump's proposal to impose up to 20% tariffs on all non-Chinese goods in the US, which might jeopardize the EU's substantial trade surplus with the US.
Lagarde also advocated for a "cheque-book strategy" to offset the aggressive approach taken by the US president.
This would entail the EU importing more US commodities, including defense hardware, agricultural products, and liquefied natural gas (LNG).
"It's in nobody's interest to engage in a trade war," adding that retaliation would likely lead to a damaging tit-for-tat escalation. This approach creates space for negotiation and avoids plunging us all into an economic abyss," she said.
Fears in Brussels have increased due to Trump's claims that the EU may have to move more production to the US to escape harsh tariffs.
The European Commission is now looking into ways to lessen the impact, such as allowing US businesses to participate in joint defense procurements sponsored by the EU and coordinating trade policy with Washington regarding China.
Lagarde has cautioned that the European economy would face new difficulties during Trump's second term. Trump's strategy, she said, is "a wake-up call for Europe," forcing EU leaders to reconsider their economic priorities.
She underscored that this is not merely a threat but a task we must confront. Europe is currently at a disadvantage, yet this does not preclude the possibility of progress. The present circumstances necessitate the expeditious implementation of reforms that have been pending for an extended period.
She stated that Trump's proposal of various tariffs indicates his willingness to engage in dialogue, emphasizing that Europe must participate in discussions to explore collaborative solutions.
Trump's tariff measures and Lagarde's response have elicited heated comments online.
“Trump’s tariffs are reckless, but Europe bowing down isn’t the answer. Where’s the EU’s backbone?” one netizen claimed. “Lagarde is right—collaboration is the only way to prevent economic chaos. Retaliation will hurt everyone," another X user said.
“Trump’s strategy is a power play, and Lagarde is smart to advocate dialogue over confrontation," a third source noted. “20% tariffs might actually push Europe to finally reform its outdated trade policies," another netizen shared.
“Why should we buy U.S. goods under pressure? This is economic bullying at its worst," a critic suggested. “Lagarde’s approach is pragmatic. Avoiding a trade war benefits everyone, not just the EU or U.S," another X user commented.
Business Times has reached out to Donald Trump for comments.
