New tariffs could be inflationary in the near term

Finance

New tariffs could be inflationary in the near term

European Central Bank (ECB) President Christine Lagarde said during European trading hours on Wednesday that trade disputes between the United States (US) and the European Union (EU) underscore the need for a deep review of how we organize the European economy.

Additional remarks

New world economic order must lead us to a deep review of how we organize European economy.

German economy would be more impacted than French economy by tariff hikes.

Inflation would be slightly affected by new tariffs, likely upwards.

Since inflation is under control at 1.9%, the impact would be minimal.

I am on alert, we have a good monetary position, but economy, productivity, public finances could do better.

European countries would be much stronger if they scrapped non-tariff trade barriers within the EU.

Market reaction

There seems to be no significant impact of ECB Lagardes comments on the Euro (EUR). As of writing, EUR/USD trades 0.1% lower to near 1.1710.