Trade Turbulence: ECB Braces for Trump's Protectionist Policies

European Central Bank policymakers express concerns about the incoming U.S. administration's protectionist trade policies, warning they could hinder global economic growth. With significant tariffs proposed by President-elect Donald Trump, a new trade war could lead to higher interest rates and inflation worldwide. Europe must prepare better than in 2018.

European Central Bank policymakers are raising alarms about potential protectionist trade policies from the incoming U.S. administration. They warn that these measures, promised by President-elect Donald Trump, could reportedly stunt global economic growth. On Tuesday, central bank leaders emphasized the need for Europe to be more prepared this time compared to 2018.

Trump's proposals include a significant increase in trade barriers, such as a universal 10% tariff on imports from all foreign countries and a substantial 60% tariff on those from China. These steps aim to decrease the U.S. trade deficit but may lead to detrimental outcomes for the world economy, as highlighted by Finnish central bank chief Olli Rehn in London.

Austrian central bank chief Robert Holzmann noted that these policies could keep U.S. interest rates and inflation elevated, impacting other regions. He stressed the importance of the ECB acting as a stabilizing force amidst these challenges, urging Europe not to repeat past mistakes and to ensure readiness in response to potential trade conflicts.

(With inputs from agencies.)