ECB President Christine Lagarde warned that the global effects of US-led tariffs will be “negative,” though the extent of the damage depends heavily on the scope, duration, and targeted products.

In an interview with Ireland’s Newstalk radio, she emphasized that the broader implications for global trade and growth would vary, but the potential for lasting disruption is real.

Lagarde also noted that history shows such trade escalations often end in talks rather than prolonged battles.

“Quite often those escalation of tariffs, because they prove harmful, even for those who inflict it, lead to negotiation tables,” she said, suggesting that any initial damage might eventually give way to diplomatic resolutions and the removal of trade barriers.

Italian ECB Governing Council member Fabio Panetta warned that the battle against inflation “cannot yet be said to be over.” and urged caution in the timing of interest rate cuts.

In a speech today, Panetta pointed to the heightened uncertainty stemming from “contradictory” announcements on US trade policy, suggesting that such unpredictability complicates the ECB’s path forward. As a result, the central bank must continue to monitor “all the factors that could hinder the return to the 2% target”

Panetta emphasized the balancing act the ECB now faces. On one hand, subdued consumption and investment, driven by geopolitical tensions and weak Eurozone growth, are helping to ease inflationary pressures.

But on the other hand, the resurgence of uncertainty—particularly around US tariffs—means the ECB must remain vigilant and not rush into policy loosening.

ECB President Christine Lagarde emphasized the need for Europe to assert more control over its economic future in light of looming US tariffs, set to begin on April 2.

In a France Inter radio interview, Lagarde reframed the narrative around “Liberation Day,” saying that while the US sees it as a move toward sovereignty, Europe must seize it as an inflection point—“a march toward independence.”

Lagarde reiterated her previous estimates that tariffs from the US could shave around 0.3% off Eurozone growth in the first year. Should Europe retaliate with reciprocal measures, the negative impact could deepen to as much as 0.5%.

On inflation, Lagarde noted that keeping it in check remains a “constant battle.” She stressed that while some progress has been made, inflation needs to fall in a sustainable way. That, she said, requires a carefully calibrated interest rate policy.