Day: August 20, 2025

Geneva – European Central Bank (ECB) President Christine Lagarde has indicated that the trade agreement between Washington and Brussels is nearing the baseline projections established by the ECB, although significant uncertainties persist in critical sectors such as pharmaceuticals and semiconductors, reports 24brussels.

Last month, the European Union implemented a 15% tariff on most products covered by the agreement, averting a major trade conflict and providing clearer guidelines for businesses engaged in transatlantic trade.

How closely does the deal align with ECB forecasts?

In a recent speech, Lagarde remarked,

“The trade deal establishes an effective average tariff estimated to lie between 12% and 16% for U.S. imports of euro area goods.”

“This effective average tariff is somewhat higher than – but still close to – the assumptions used in our baseline projections last June,”

she noted.

“The outcome of the trade deal is well below the severe scenario for U.S. tariffs of over 20%.”

How does the US-EU trade deal affect growth?

The ECB’s baseline projection anticipates a growth rate of 1.1% for the coming year, while the “severe” scenario could lower this expectation to 0.7%, according to forecasts released in June. Lagarde emphasized that the U.S.-EU trade deal is expected to continue influencing economic growth and pointed out that a slowdown, foreseen for some time, is already reflected in the second-quarter economic data.

What steps should Europe take to diversify trade?

Lagarde further articulated that the EU, historically reliant on extensive foreign trade for its economic growth, must diversify its trading relationships to maintain growth and counteract the adverse effects of tariffs.

“While the United States is – and will remain – an important trading partner, Europe should also aim to deepen its trade ties with other jurisdictions, leveraging the strengths of its export-oriented economy,”

she stated.

How might shifting our policy challenge European stability?

In early 2025, Lagarde cautioned that Europeans must prepare for shifts in U.S. trade policy, which may include selective tariffs. She emphasized that Europe should proactively consider how to react through economic reforms to remain competitive.

Lagarde warned that a full-scale trade war could have global repercussions, potentially galvanizing Europe to unite and commit to effective reforms.

She explained that while the ECB monitors these trade agreements closely, it relies on baseline economic projections, adjusting them incrementally based on developments. Lagarde added that a reduction in trade uncertainty is favorable for all economic actors and that prompt resolution of these concerns could significantly mitigate economic risks.

The burger chain has been working to improve its affordability, after consumers have recoiled from escalating restaurant menu prices.

Supporters say eliminating income tax could attract businesses and residents, while critics warn it would force service cuts or higher sales taxes.