A trade war involving retaliatory tariffs between the United States and Europe would be bad news for all parties, said Tuesday (26) the vice president of the European Central Bank (ECB), Luis de Guindos.
“When tariffs are imposed, you need to be prepared for retaliation from the other side, which can start a vicious circle. Eventually, this could turn into a trade war, which would be extremely damaging to the world economy,” Guindos said in an interview with the Finnish newspaper Helsingin Sanomat.
He added: “It would be a lose-lose situation for everyone.”
United States President-elect Donald Trump said in a post on his Truth Social platform that on the first day of his presidency on all products entering the US and an additional 10% tariff on products coming from China.
De Guindos also emphasized that in addition to tariffs, US fiscal policy will need to be in focus.
“By reducing taxes, but maintaining public expenditure, fiscal policy becomes more expansionary, which, combined with a very high fiscal deficit and proportion of public debt, can cause fiscal sustainability problems”, noted the director.
