Investing.com – Europe must be prepared for US President Donald Trump to introduce new import tariffs on the region, European Central Bank President Christine Lagarde has warned.
Speaking with CNBC at the World Economic Forum in Davos, Switzerland, Lagarde added that Trump’s decision not to impose immediate sanctions from the outset of his second term was a “smart approach” because blanket levies “are not necessarily giving you the results that you expect”.
Lagarde told the business news channel she expects Trump’s tariffs will be “selective” and “focused”, but flagged Europe must still “anticipate what will happen” with his trade stance “in order to respond”.
The comments come after Trump hit out at the EU in particular on Tuesday, accusing the bloc of being “very, very bad to us”. The EU had a troubling trade surplus with the US and as such is “going to be in for tariffs” in order to achieve “fairness”, Trump said.
Separately, Trump threatened to slap a 10% duty on Chinese imports as early as February 1, aligning with a deadline he set for Mexico and Canada earlier this week. Trump, who had previously vowed to impose as much as a 60% tariff on China, said that the prospect of the duties may force Beijing to clamp down on the trade of fentanyl across US borders.
On Monday, Trump suggested he could impose 25% tariffs on imported goods from Mexico and Canada unless they crack down on the drug and the trafficking of illegal migrants. Leaders in both countries moved to strike conciliatory tones with Washington in the wake of the statements.
Yet, despite issuing a wave of executive orders to begin his second term in the White House, Trump stopped short of placing universal levies on America’s friends and adversaries alike. Relief around this approach helped underpin a rise in US stock markets on Tuesday.
