ECB chief Christine Lagarde recommends cheque-book strategy for Trump
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The news: European Central Bank president, Christine Lagarde, called on European leaders to adopt a "cheque-book strategy" and negotiate with US President-elect Donald Trump rather than retaliate against his proposed tariffs on imports.
The context: In an interview with The Financial Times, Lagarde warned that a trade war would harm global GDP and recommended Europe adopt a “cheque-book strategy,” where the bloc increases purchases of US goods such as LNG and defence equipment instead of retaliating. She argued this would avoid a harmful tit-for-tat.
The interview was published Thursday but conducted Monday, before Trump announced a 10% tariff on Chinese products and a 25% levy on imports from Canada and Mexico.
The paper cited sources saying the European Commission is considering increasing US imports, including agricultural products, LNG and weapons, and may allow US companies to participate in joint military procurement with EU funds.
The Commission is also weighing options to align more closely with US trade and geopolitical policies, it said.
What they said: In the interview Lagarde challenged Trump's claims that tariffs would help “make America great again”, as he claims, saying they would reduce global demand.
“How do you make America great again if global demand is falling?” she said.
Describing Europe’s current economic challenges as a “big awakening,” she called for swift action on long-discussed reforms like a Capital Markets Union and unified supervision of EU capital markets.
“We should have one single supervisor” that “operates like the Securities and Exchange Commission”, Lagarde said.
She also flagged potential risks from the potential dumping of cheap Chinese goods into Europe due to US tariffs, saying policymakers need to monitor such a “rerouting scenario.”
The source: The Financial Times
