Christine Lagarde, president of the European Central Bank (ECB), warned that Europe must avoid a trade war with the U.S. under Donald Trump. To do this, they should buy more American goods.
In a Financial Times interview, she advised EU leaders to “negotiate, not retaliate,” emphasizing that a trade war would harm global GDP. Trump has threatened to impose heavy tariffs on imports, including a 10% levy on all goods and a 60% tariff on Chinese products, which could eliminate the EU’s trade surplus with the U.S.
Lagarde suggested the EU should counter Trump’s threats with a “cheque-book strategy,” offering to buy more U.S. goods, such as liquefied natural gas (LNG) and weapons, instead of retaliating. She argued that this approach would avoid a damaging tit-for-tat trade war. EU officials are already exploring ways to boost purchases of U.S. LNG, defense equipment, and agricultural products, possibly using taxpayer funds.
Lagarde also raised concerns about the potential for U.S. tariffs on China to redirect goods to Europe, which could strain EU markets. She noted Trump’s willingness to negotiate and suggested that this might present an opportunity for EU leaders and the new U.S. president to collaborate.
While Lagarde previously described Trump as a “threat to Europe,” she acknowledged her views had evolved, now urging Europe to treat his policies as a challenge to address. She stressed that Europe must act decisively to remain competitive, citing the ongoing economic crisis as a wake-up call. Lagarde also saw Trump’s tariffs as a potential catalyst for restructuring Europe’s financial system, including the creation of a unified EU capital market.
