ECB Vice President Warns of Trade War Dangers

In a significant address at the Spanish Banking Association, European Central Bank Vice President Luis de Guindos raised alarms over the potential for escalating US tariffs to ignite a full-scale trade war. Describing this as the worst-case scenario, de Guindos highlighted the precarious state of global economic relations.

Impact of US Policies on Global Economy

De Guindos pointed out that the new US administration's policies have had a more negative impact than anticipated, with markets reacting through falling government bond yields and a weakening dollar. He emphasized that the US's current trade stance marks a fundamental shift towards greater global economic fragmentation.

ECB's Response to Uncertainty

Despite these challenges, de Guindos reaffirmed the effectiveness of the ECB's data-dependent monetary policy approach in navigating through these uncertain times. However, the warning was clear: the path ahead is fraught with risks that could destabilize the global economy.