EU must cooperate with Trump to avoid trade war: ECB chief

FRANKFURT: The European Union must cooperate with Donald Trump to avoid a trade war in light of the US president-elect’s plans to raise tariffs on imports, the president of the European Central Bank said Thursday.

“This is a better scenario than a pure retaliation strategy, which can lead to a tit-for-tat process where no one is really a winner,” ECB chief Christine Lagarde said in an interview with the Financial Times newspaper.

Lagarde also said the EU should offer to buy certain goods from the US, such as liquefied natural gas and defence equipment.

During the US election campaign, Trump complained that the European Union was a “mini China” as he criticised the US trade relationship with the bloc.

Trump this week announced tariffs of between 10 and 25 percent on imports from China, Mexico and Canada and is expected to make a similar move against EU goods.

Lagarde said a “trade war at large” was “in nobody’s interest” and would lead to “a global reduction of GDP”.

She said the potential impact of US tariffs on inflation in the eurozone was more uncertain, but if anything it would be “ a little net inflationary in the short term”.

“It depends what the tariffs are, what they are applied on and over what period of time,” she said.