U.S. Tariffs Could Slow Eurozone Growth and Inflation, Says ECB’s Cipollone
Import tariffs proposed by U.S. President-elect Donald Trump’s administration could dampen economic growth and inflation across the 20 eurozone countries, European Central Bank board member Piero Cipollone stated on Tuesday.
While most economists agree that tariffs would likely hurt growth, their impact on consumer prices remains debated. Some argue that U.S. trade barriers would strengthen the dollar, making imports of essential commodities costlier, with potential European retaliation further raising expenses.
However, Cipollone offered a different perspective during a pre-recorded interview at a financial conference. “Considering all these factors, I believe we will see a reduction in both growth and inflation,” he said.
His remarks resonate with concerns from some dovish members of the ECB’s Governing Council, who warn that undershooting the 2% inflation target could justify faster rate cuts.
Cipollone explained that U.S. tariffs would weaken economic activity, leading to lower consumption and easing price pressures. Additionally, Chinese producers excluded from the U.S. market might seek European buyers, offering goods at reduced prices.
Although oil imports could become pricier due to a stronger dollar, Trump’s support for increased U.S. energy production may boost supply, potentially offsetting inflationary effects. Together, these dynamics are expected to mitigate upward pressure on prices.
