Barriers European Central Bank President Christine Lagarde said on Friday that the European Union could offset the impact of US trade tariffs if it removed some of its internal barriers. According to Reuters, Lagarde said the EU’s export-oriented economic model has been transformed by a protectionist turn globally, from US President Donald Trump’s trade tariffs to China’s dominance of rare earths.
Also Read: Federal Reserve Study Reduces Inflation Rate Contrary to Popular Opinion
He argued that the bloc could increase its wealth if it made it easier to trade among its 27 members, citing the Netherlands as a virtuous example. “Our analysis shows that if all EU countries only lowered their barriers to the same level as the Netherlands, internal barriers could be reduced by around 8 percent for goods and 9 percent for services,” Lagarde told a conference in Frankfurt.
“If we do just a quarter of that, it will be enough to boost domestic trade to fully offset the impact of US tariffs on growth,” he added. Lagarde listed wide-ranging economic reforms, from harmonizing VAT to creating company rules across the EU, and even proposing structural changes to the bloc’s own functioning, such as a framework known as the ’28 regime’.
Lagarde also credited fiscal spending, particularly in Germany, for buffering the economy and said the European Central Bank, which has cut rates sharply in 2024-2025, would do its part. “We will continue to adjust our policy as necessary to ensure that inflation remains within our target,” Lagarde said.
Source: IndexBox Market Intelligence Platform
About the Author
