Trump tariffs to fuel US inflation, weaken euro – ECB’s Knot

Klaas Knot, a member of the European Central Bank’s governing council, warned on Sunday that new US tariffs imposed by President Donald Trump will drive inflation and interest rates higher in the United States, likely weakening the euro.

In an interview with Dutch television programme Buitenhof, Knot, who also leads the Netherlands’ Central Bank, said trade wars harm all sides, but political considerations will likely push countries to retaliate. “Europe will not want to be pushed around. We are also a powerful trade bloc with 400 million consumers,” he stated.

Trump announced tariffs on Canada, Mexico, and China on Saturday. Knot expects US consumer prices to rise, forcing the Federal Reserve to tighten policy. “We’re already seeing that reflected in long-term interest rates,” he noted, adding that some impact will spill over into Europe.

Despite global trade tensions, Knot reaffirmed his support for the ECB’s recent rate cut, predicting inflation in the eurozone will return to the 2 per cent target.

Attribution: Amwal Al Ghad English

Subediting: M. S. Salama