ECB Vice President Warns of Escalating Trade Tensions

In a stark warning, European Central Bank Vice President Luis de Guindos highlighted the potential for a second round of US tariffs to escalate into a "full-blown trade war," marking it as the worst-case scenario for the global economy.

Impact of US Policies on Global Economy

Speaking at the Spanish Banking Association, De Guindos pointed out that the new US administration's policies have had a more negative impact than anticipated, evidenced by falling government bond yields and a weaker dollar. He emphasized the effectiveness of the ECB's data-driven monetary policy amidst these uncertainties.

Shift Towards Global Economic Fragmentation

De Guindos cautioned that the current US trade stance signifies a fundamental shift in global economic dynamics, leading towards greater fragmentation. "We are heading toward greater fragmentation of the global economy," he stated, underscoring the challenges ahead.