Lagarde: Europe's economy emerged stronger from Trump's tariff pressures

European Central Bank President Christine Lagarde confirmed that the Eurozone economy has managed to overcome the repercussions of the tariffs imposed by US President Donald Trump's administration, without suffering the significant damage that observers had feared.

In a speech in the Finnish capital, Helsinki, Lagarde said that most previous forecasts had indicated that the US tariffs would cause a widespread negative shock to the Eurozone economy, "but these fears have not materialized."

She explained that several factors helped to mitigate the impact of those measures, most notably:

• The limited European retaliatory responses prevented widespread disruption to supply chains.
• The euro rose against the dollar, supported by investor concerns about US economic policies.
• The framework agreement that the European Union concluded with Washington in July, which kept tariffs at only 15%, is far below the "shocking" levels that Trump threatened.

She also noted that European stimulus measures, such as increased defense spending, supported growth and investment in the face of trade uncertainty.

However, Lagarde warned that trade and geopolitical shocks will remain a permanent part of the global economic landscape.

Regarding monetary policy, she affirmed that the European Central Bank is "in a comfortable position" after inflation declined towards the 2% target, noting that the repercussions of the war in Ukraine and supply chain disruptions following the coronavirus pandemic have largely subsided.

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