US-EU trade war “Lose-Lose” situation – ECB’s De Guindos

A trade war sparked by retaliatory tariffs between the US and Europe would harm the global economy, European Central Bank Vice President Luis de Guindos cautioned Tuesday.

“It would be a lose-lose situation for everyone,” De Guindos told Helsingin Sanomat, a Finnish newspaper.

The warning follows President-elect Donald Trump’s pledge to impose tariffs of up to 25 per cent on imports from Canada, Mexico, and potentially China. While his stance on European goods remains unclear, De Guindos stressed the risks of retaliatory measures that are escalating into broader economic damage.

He also highlighted concerns over US fiscal policies, warning that tax cuts paired with high public debt could threaten fiscal sustainability.

With eurozone growth forecasted at a fragile 0.8 per cent for 2024, De Guindos underscored that geopolitical uncertainty and shifting US trade policies could weigh further on the European economy. The ECB is set to issue updated projections in December amid growing concerns over the region’s economic outlook.

Attribution: Reuters