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European Central Bank President Christine Lagarde said uncertainty has returned due to the latest tariff threats by Donald Trump.<\/p>\n
Trust between the US and Europe is being undermined, Lagarde told CNN at the World Economic Forum in Davos, adding that firms in both regions are now struggling to work out the knock-on effect of new levies.<\/p>\n
\u201cWhat is more important than the tariffs themselves is the rising uncertainty that we are seeing again \u2014 so uncertainty is back,\u201d she said in an interview broadcast Tuesday. She described the threats as a \u201cmovie we\u2019ve seen before.\u201d<\/p>\n
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Trump\u2019s potential action against European countries could challenge the ECB\u2019s benign outlook for inflation and economic activity over the coming years. While the euro zone has so far proved resilient to rising protectionism, officials have continuously highlighted that risks remain elevated.<\/p>\n
Lagarde said policy in Europe has recently become \u201creally predictable,\u201d with inflation and benchmark borrowing costs both at 2%.<\/p>\n
Indeed, interest rates have been on hold since June and neither investors nor economists expect further steps for now. Bank of France Governor Francois Villeroy de Galhau told Bloomberg TV earlier Tuesday that any new tariffs must be assessed, but added that he expects their influence on prices to be \u201cmuted.\u201d<\/p>\n
Lagarde highlighted that trade links between the US and Europe are \u201cvery deep.\u201d<\/p>\n
\u201cTo jeopardise that, to put that into question, is not conducive to good business policies,\u201d she said. \u201cCorporate America should be thinking about it, as Europe corporate is thinking about it.\u201d<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n
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