Christine Lagarde: Europe cannot afford to be 'disjointed' in face of international trade challenges

ECB president was speaking in Dublin as US president Donald Trump unveiled a series of tariffs against the EU

European Central Bank president Christine Lagarde and Ian Hyland, president of ‘Business & Finance’, prior to Ms Lagarde being presented with the Sutherland Leadership Award at O’Reilly Hall, UCD. Picture: Andres Poveda

Europe cannot afford to be “disjointed” in the face of growing international uncertainty and trade disputes, European Central Bank (ECB) president Christine Lagarde has warned, as US president Donald Trump unveiled a series of tariffs against the EU.

Ms Lagarde was in UCD on Wednesday to accept the Sutherland Leadership Award which is awarded as part of the Business & Finance Awards. 

She was speaking in Dublin around the same time that Mr Trump in Washington was unveiling his plans for tariffing imports.

Speaking at his ‘Liberation Day’ event, Mr Trump said he would be imposing 20% tariffs on all exports from the EU, effective from midnight.

He claimed the EU “rips us off”, charging the US 39% in tariffs. “We’re going to charge them 20%, so we essentially charge them half,” he said. 

President Donald Trump holds a signed executive order during an event to announce new tariffs in the Rose Garden of the White House in Washington. Picture: Evan Vucci/AP Photo

Additionally, he said that he will levy a 10% tariff on imports from Britain, as well as a 25% tariff on all foreign-made cars.

The EU is expected to unveil its retaliatory tariffs on US goods entering the bloc by the middle of this month.

Ireland is one of the most exposed countries in Europe to international trade disputes, given the presence of many US multinationals with operations here. 

Retaliatory tariffs from the EU on US goods could have a significant impact.

Ms Lagarde said that geopolitical rivalries are “spurring protectionism and upending global supply chains”, and international institutions are “facing increasing challenges”, and that this new landscape “poses a serious challenge for Europe on two fronts”.

“Economically, it risks compounding existing issues like sluggish productivity growth and weak competitiveness,” she said. 

“Europe’s reliance on external trade makes it vulnerable to trade headwinds.”

Ms Lagarde said that at a time when major economies are “adopting cohesive strategic agendas” and using tariffs to extract concessions from other countries, “Europe cannot afford to be disjointed, to lack unity”.

“If we cannot take decisions in a European way, then others will use that against us,” she said.

To stand our ground, we need to be able to act as a single entity across several key areas. And that means we need to structurally change how we make decisions.

She said a single nation’s veto power within the EU can stand in the bloc’s way and she is now convinced that “more qualified majority voting would therefore be inherently more democratic”.

Ms Lagarde, and the rest of the ECB governing council, are due to meet on April 16 and April 17 to discuss whether additional interest rate reductions are needed.

The tariffs imposed by the US and the counter-tariffs imposed by the EU are expected to complicate matters for the ECB as prices are expected to begin increasing once again.

Additional reporting from The Guardian