A top European banking chief has ordered the EU to buy more US products as panic sets in over Donald Trump‘s tarriff plans.
Christine Lagarde, the president of the European Central Bank, has urged EU countries to buy more American products to avert the threat of a trade war with the United States in the face of Donald Trump’s renewed tariff threats.
And she warned failure to adopt a pragmatic and cooperative approach risked escalating tensions and harming global economic growth.
Speaking in her first interview since Mr Trump’s victory over Democratic challenger Kamala Harris, Ms Lagarde stressed that a trade war would have devastating consequences, particularly for Europe.
She insisted: “We must not retaliate, but negotiate.”
Ms Lagarde advocated for dialogue over confrontation, the Financial Times reported.
Her remarks come as Mr Trump proposes tariffs of up to 20% on all non-Chinese imports to the US, a move that threatens to disrupt the EU’s significant trade surplus with America.
Ms Lagarde further pushed for what she called a “cheque-book strategy” to counter the US president’s aggressive stance.
This would involve the EU increasing its imports of US goods, such as liquefied natural gas (LNG), defence equipment and agricultural products.
She said: “It’s in nobody’s interest to engage in a trade war,” adding that retaliation would likely lead to a damaging tit-for-tat escalation.
She added: “This approach creates space for negotiation and avoids plunging us all into an economic abyss.”
Mr Trump’s threats have amplified fears in Brussels that the EU could be forced to shift more production to the US to avoid punitive tariffs.
The European Commission is currently exploring options to mitigate the fallout, including offering US companies access to EU-funded joint defence procurement and aligning trade policies on China with Washington.
Ms Lagarde has warned Trump’s second term poses fresh challenges to Europe’s economy. She described Trump’s approach as “a wake-up call for Europe,” pushing EU policymakers to reassess their economic priorities.
She emphasised: “This is not just a threat; it’s a challenge we must rise to.
“Europe is lagging behind, but that doesn’t mean we can’t catch up.
“The current situation provides an impetus to accelerate reforms that have been on the table for too long.”
“The fact that Trump has floated a range of tariffs suggests he’s open to discussion,” she said, stressing that Europe must “sit at the table and see how we can work together”.