Trump's tariffs will be negative the world over, says ECB's Lagarde

By Padraic Halpin

US president Donald Trump's planned tariffs will be negative across the world, with the damage depending on how far they go, how long they last and whether they lead to successful negotiations, European Central Bank head Christine Lagarde said on Wednesday.

The Trump administration on Wednesday is set to announce "reciprocal tariffs" targeting nations that have duties on US goods. That move would come after it slapped new import levies on products from Mexico, China and Canada - the top US trading partners - as well as on goods including steel and autos.

"It will be negative the world over and the density and the durability of the impact will vary depending on the scope, on the products targeted, on how long it lasts, on whether or not there are negotiations," Ms Lagarde said in an interview on Newstalk.

"Because let's not forget quite often those escalations of tariffs, because they prove harmful, even for those who inflict it, lead to negotiation tables where people actually sit down and discuss and eventually remove some of those barriers."

Ms Lagarde was in Dublin to receive an award named in honour of Irishman Peter Sutherland, the former World Trade Organisation director general whom Ms Lagarde said "would turn in his grave if he knew what is going on at the moment".

"I don't think I have ever mentioned the word uncertainty as many times as I have in the last few weeks, because we simply don't really know to this day, which is supposed to be the day when it is announced, what the deal (with the US) will be for the rest of the world," she said.

"Predictability is in very short supply at the moment."

Ms Lagarde added that there was still a bit of work to do to get euro zone inflation sustainably to its 2 per cent goal and that the "jury is out" on the economic impact of greater defence spending in Europe, depending on how and where the money is spent.

"We are now very close to (the inflation) target, so the disinflationary process is well underway... but we are quite satisfied with the work that we have done," she said.

Mr Trump is due to unveil his tariff plans at 9pm tonight Irish time.