Lagarde warns new US tariffs risk renewed disruption to global trade

ECB’s Lagarde urges clarity as US tariff turmoil returns.

Summary:

• Lagarde warns renewed US tariff uncertainty risks fresh disruption

• Says businesses need clarity on trade and investment rules

• Hopes new tariff plans are “sufficiently thought through” and constitutional

• Notes consumers ultimately bore the cost of prior tariffs

• Defends central bank independence amid US political backdrop

• Reaffirms focus on euro area price stability and completing her term

European Central Bank President Christine Lagarde warned that renewed uncertainty around US trade policy risks triggering fresh disruption for businesses and consumers, following a Supreme Court decision that struck down much of the Trump administration’s prior tariff regime.

Speaking on Face the Nation, Lagarde said it remains unclear what will happen next as President Donald Trump prepares new tariff measures in response to the court ruling. She stressed that companies need predictability.

“You want to know what the rules are for trade and investment,” Lagarde said, adding that an equilibrium had been emerging in global trade relationships before being shaken again. Reopening trade tensions would bring “more disruptions,” she cautioned.

Lagarde expressed hope that any new tariff framework would be “sufficiently thought through” and compliant with the US Constitution, warning that businesses prefer certainty over litigation and policy volatility. The comments followed the Supreme Court’s decision to overturn the bulk of last year’s tariffs, prompting the White House to signal fresh levies.

She also emphasised that consumers did not avoid the pain of earlier tariffs, underlining the inflationary transmission channel from trade barriers to household budgets, a key concern for central banks.

Turning to monetary policy, Lagarde reiterated her respect for both Jerome Powell and Fed nominee Kevin Warsh, while stressing that central bankers must remain immune from political influence.

Lagarde reaffirmed her focus on price stability in the euro area and indicated that her baseline expectation is to serve until the end of her term to consolidate policy gains.