ECB/Guindos: A Trade War Would Be Bad News for All Parties

Forex - European Central Bank Vice President Luis de Guindos stated that a trade war involving retaliatory tariffs between the US and Europe would be bad news for all parties involved. Speaking to the Finnish newspaper Helsingin Sanomat, de Guindos said, “When you impose tariffs, you need to be prepared for the other side to retaliate, which can initiate a vicious cycle. Ultimately, this can turn into a trade war, which would be extremely harmful to the global economy. This would be a lose-lose situation for everyone.”

De Guindos also emphasized the need to focus not only on tariffs but also on US fiscal policy. He noted, “By cutting taxes and maintaining public spending, fiscal policy becomes more expansionary, which, combined with a very high fiscal deficit and public debt ratio, can lead to issues of fiscal sustainability.”

According to Helsingin Sanomat, de Guindos mentioned that as inflation decreases, the European Central Bank will continue to lower interest rates, with its focus gradually shifting towards the growth that has proven to be fragile.

De Guindos stated, “Concerns related to high inflation have shifted to economic growth. The trajectory of our monetary policy is clear – if our projections are validated, we will continue to make our monetary policy stance less restrictive.”