Lagarde: Trump’s Trade War a ‘Wake-Up Call’ for ...

Lagarde: Trump’s Trade War a ‘Wake-Up Call’ for Europe

European Union Central Bank President, Christine Lagarde

Zim Now Writer

European Central Bank President Christine Lagarde has warned that a full-scale global trade war could have severe consequences, particularly for the United States, while simultaneously pushing Europe toward greater unity.

Speaking on the BBC’s HARDTalk program, Lagarde highlighted the impact of recent U.S. tariff policies, which have affected both allies and rivals. The retaliatory measures from other nations have raised concerns about global economic stability.

"If we were to enter a real trade war, where trade is significantly dampened, the consequences would be severe," Lagarde stated. "It would hurt global growth and drive up prices, particularly in the United States."

Despite these risks, Lagarde suggested that the tensions could have a silver lining for Europe by prompting stronger cooperation among EU nations.

"This is stirring European energy," she said. "It’s a wake-up call for Europe. Perhaps this is another defining moment for European unity."

The European Commission and Germany, the bloc’s largest economy, have already responded by ramping up investments in defense and infrastructure—marking a shift from years of fiscal conservatism.

Lagarde also pointed to the UK’s involvement in Europe’s security efforts, despite Brexit, as further evidence of renewed collaboration on the continent.

The call for deeper European integration comes after a critical report from former ECB chief Mario Draghi last year, which underscored the EU’s sluggish progress on reforms. While EU leaders have been slow to act on Draghi’s recommendations, economic challenges—including Germany’s two consecutive years of contraction—may now push the bloc toward greater economic and political cohesion.