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 most concerning outcome for global economies.

Impact of US Policies on Global Economy

Speaking at the Spanish Banking Association, de Guindos highlighted the effectiveness of the ECB's data-driven monetary policy amidst prevailing uncertainties. 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.

Shift Towards Global Economic Fragmentation

De Guindos pointed out that the current US trade policies signify a fundamental shift in international trade dynamics, warning that the world is moving towards greater fragmentation of the global economy.