Europe must “be prepared” and anticipate the potential trade tariffs of newly inaugurated U.S. President Donald Trump, European Central Bank President Christine Lagarde told CNBC on Wednesday.
She said the fact that Trump had not imposed blanket tariffs on the first day of his presidency was a “very smart approach … because blanket tariffs are not necessarily giving you the results that you expect.”
As such, she said she expects Trump’s tariffs to be “more selective, focused.”
“What we need to do here in Europe is to be prepared, and anticipate what will happen in order to respond,” she told CNBC’s Karen Tso at the World Economic Forum in Davos.
Trump has threatened to impose duties on goods imported to the U.S. from the EU and has repeated these claims since his inauguration on Monday, telling reporters that the EU has been “very, very bad to us. So they’re going to be in for tariffs.”
Valdis Dombrovskis, the European Union’s commissioner for the economy, on Wednesday told CNBC that if the bloc’s economic interests needed to be defended, the EU would respond “in a proportionate way.”
‘One way to respond’ to U.S. trade policy
Lagarde also called for the removal of obstacles to trade within Europe, noting that despite aspirations to create a single market there were still barriers that at times prevented goods and services from travelling without impairment.
“I think it’s one of the points that Ursula von der Leyen, the president of the European Commission, made yesterday — let’s make sure that we remove the barriers over which we have control,” Lagarde said, without disclosing details.
Lagarde said she hoped this will happen in the coming weeks, describing it as “one way to respond to the change in the trade policy in the United States.”
“Be strong at home and make sure you transact, that you sell and purchase at home, that you save at home and that you invest at home. Not to say that we want to move into a protectionist approach, because what lower barriers has taught us is that trade is actually very helpful,” Lagarde added.
— CNBC’s Katrina Bishop contributed to this report.
