ECB’s Christine Lagarde says US tariffs will actually ease inflation in Europe, praises Fed’s Powell

Christine Lagarde, president of the European Central Bank (ECB), said on Wednesday in Washington that the new wave of US tariffs could end in declining inflation in Europe if the EU did not retaliate.

The whole effect was uncertain, but he made it clear that things could move in favor of Europe under the right conditions. Speaking at an event in the Washington Post, Christine said:

“It is unclear what the impact on the net will be. Especially if no countermeasures are concluded by Europe, I don't think net inflation is not sure right now, but it will probably be disinflationary than inflationary.”

He said the world was in a “move time,” with trade talks and tariff threats still floating. There is no final. Christine said the analysis of the exact effect was difficult because everything was still in the air.

“We are in a world of hypotheticals … We don't know exactly what will come out of the discussions that are happening right now, and we need to be careful,” he said.

Lagarde expects China exports will flood in Europe and drop prices

Christine raised the US-China's continued trade war and said it could force China to find new markets to dispose of its excess supply. She is Warning is directly: “China will be overwhelmed, want to restore its exports somewhere, perhaps in Europe, it will have an impact on prices.”

In the US's efforts to avoid Chinese goods, those products have to go somewhere, and the European market may be the easiest alternative.

Meanwhile.

That delay came immediately after Trump dropped his so -called “reward” tariff rate on most European goods from 20% to 10%, also in 90 days.

Trump told reporters that he was “very confident” a trade agreement with Brussels would happen. On the same day, French finance minister Eric Lombard said Europe would not return to tariffs and instead moved toward a “truly free trade agreement” in the US.

ECB can adjust the growth outlook as tariffs hit business activity

Christine said the ECB could change its growth assessment at its June meeting as the effects of tariff threats are now felt on economic data.

“Not much of the export numbers – because there is a buildup of inventory as we see at the moment as relying on possible tariffs – but we see that in PMI numbers, in the intention of buying, intention to hire, it slows down,” Christine said.

He also gave him a US-China tariff war and said the two governments would eventually arrive at the table. Christine said, “You look at the tariffs in China, 146%, China's tariff in the United States, 125% – it's huge, and as Secretary Scott Beslent said yesterday, it wasn't preserved.” In these types of numbers, he said, both sides knew that the standoff could not continue longer.

Christine also recognized our financial policy with us, saying she had a “huge respect” for the Federal Reserve Chair Jerome Powell and believed she was doing what her work was.

“The talent and the capacity of the Fed's seat assure me,” he said. “And I know in a fact that he puts all his efforts and all his discipline in delivery on his mission.”

Despite Trump's regular attack on Powell for not falling interest rates, Christine said she believes the Fed stays on the track. “He does what he hopes to serve the Americans and financial stability, which is with price stability,” he added.

Christine also called the risk of political interference in the middle banking. “If you look at the academic literature on the subject, and there are many of them around the world, every time there is political intervention and every time the Central Bank Chair or President has lost its freedom, as a result, it is followed by a refusal to grow, increase inflation,” Christine said. “It's not something anyone wants and certainly not a thing that serves the mission.”

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