ECB Executive Board Member Highlights Risks of Economic 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 concerns over the tangible effects of the tariffs levied by the United States under President Donald Trump's administration. Cipollone emphasized that these measures are "likely to be material" on the real economy.

The Threat to International Partnerships

Cipollone pointed out the "rising risk" of fragmentation within the Western bloc, a consequence of tariffs that endanger decades-old international alliances. This fragmentation, according to the ECB official, could disrupt the global economic order.

Long-term Consequences for Global Prosperity

The speech also shed light on the potential deep-seated impacts of such economic divisions. Cipollone warned that the medium- to long-term effects on growth, stability, and prosperity could be "potentially profound," urging for a reevaluation of current trade policies.