U.S. Tariffs and Economic Impact

MADRID (Reuters) – Trade tariffs announced by U.S. President Donald Trump could trigger economic uncertainty, but the impact on inflation is less clear, according to European Central Bank Vice President Luis de Guindos on Monday.

Trump’s plan for 25% tariffs on all steel and aluminium imports into the U.S., in addition to existing tariffs, marks a significant escalation in trade tensions.

“Today we woke up to the issue of steel and aluminium,” de Guindos told Spanish broadcaster TVE. “Apart from the geopolitical risks, I think that the policy of the new American administration obviously creates a situation of huge uncertainty.”

The ECB’s number two official noted that the implementation of tariffs would create a supply shock, fundamentally affecting global economic growth.

“The impact on inflation is much less clear (…) because if you have a fall in economic activity, then immediately that tempers the evolution of the inflationary tensions,” said de Guindos.

He emphasized the importance of avoiding a trade war, urging Europeans to respond cautiously to potential U.S. tariffs. “Sometimes the initial announcements don’t end up materialising (…) therefore, you have to take a prudent and intelligent approach,” he added.

De Guindos remarked that inflation in the euro zone is converging towards the ECB’s medium goal of 2% and that future monetary policy decisions would be made on a meeting-by-meeting basis.