ECB Executive Board Member Highlights Risks of Trade Fragmentation

In a compelling address at the conference on Policy challenges in a fragmenting world: Global trade, exchange rates, and capital flow, Piero Cipollone, a member of the European Central Bank (ECB) Executive Board, voiced significant concerns over the U.S. tariffs imposed under President Donald Trump's administration. He emphasized that these measures are "likely to be material" in affecting the real economy.

The Rising Threat to International Partnerships

Cipollone pointed out the "rising risk" of fragmentation within the Western bloc, warning that these tariffs could endanger long-standing international partnerships. The implications of such fragmentation, according to the ECB official, extend far beyond immediate economic impacts.

Long-Term Consequences for Growth and Prosperity

The ECB banker did not mince words when discussing the potential medium- and long-term effects of these policies. He suggested that the consequences for "growth, stability, and prosperity" could indeed be "potentially profound," signaling a cautious outlook for the global economy's future.