ECB Official Highlights Risks of US Tariffs on Eurozone Economy

In a recent interview with Le Monde, Francois Villeroy de Galhau, a key figure on the European Central Bank's Governing Council and Governor of the Bank of France, issued a stark warning. The escalating trade war, fueled by the US administration's global tariffs, poses a significant threat to the Eurozone's economic growth, potentially reducing it by 0.25%.

Global Economy at Risk: A Looming Scenario Where Everyone Loses

Villeroy emphasized that the global economy stands to suffer from these trade tensions, with the United States likely to bear the brunt of the initial impact. He pointed out that the imposition of tariffs could lead to higher prices for imported goods in the US, thereby driving up inflation.

Trade War Shock: Significant but Not Recession-Inducing for Eurozone

In his annual letter to President Emmanuel Macron, Villeroy described the potential shock from the trade war as not "negligible." However, he reassured that the euro area is not expected to slide into a recession as a result of these developments.