ECB Vice President Warns of Trade War Risks

European Central Bank Vice President Luis de Guindos issued a stark warning on Tuesday, suggesting that a second wave of US tariffs could escalate into a full-blown trade war, a scenario he described as the worst possible outcome for the global economy.

Impact of US Trade Policies

Speaking at the Spanish Banking Association, de Guindos highlighted the effectiveness of the ECB's data-driven monetary policy in navigating through uncertain times. However, he expressed concerns over the "worse than expected" impact of the new US administration's policies, evidenced by declining government bond yields and a depreciating dollar.

Global Economic Fragmentation

De Guindos pointed out that the current US trade stance marks a significant shift, warning that it could lead to greater fragmentation of the global economy. His remarks underscore the growing tensions and uncertainties in international trade relations.