Lagarde: "Trump's Tariff Pain Will Soon Be Passed on to Consumers"

"Europe and the United States Are in the Same Boat on Rare Earths"

Christine Lagarde, President of the European Central Bank (ECB), stated on October 19 (local time) that the global economy has yet to fully feel the pain caused by U.S. President Donald Trump's tariff policies, but ultimately, consumers will bear the burden through higher prices.

Christine Lagarde, President of the European Central Bank (ECB). Photo by Reuters Yonhap News

In an interview with CBS's "Face the Nation" that day, President Lagarde said, "At some point, exporters and importers will no longer be able to accept shrinking profits due to tariffs and will raise prices." She added, "Currently, about two-thirds of the tariff burden is being shouldered by exporters and importers. Ultimately, it's just a matter of time. When they can no longer endure, that burden will be passed on to consumers."

President Lagarde also noted that the global economy is undergoing a period of transition, citing both tariffs and technological advances such as artificial intelligence (AI) as reasons. She explained, "Tariffs have reshaped the global trade map, reconfigured new alliances, and reinvented the way trade is conducted. AI is affecting every area, from data management to dating."

She assessed that a significant portion of the current trade war between the United States and China is part of a negotiation strategy. "This is a classic negotiation tactic," she said, predicting, "Even if there is hostility, both sides will eventually come to the negotiating table because negotiations benefit both the U.S. and Chinese economies."

In particular, tensions between the two countries have been escalating, with China recently tightening controls on rare earth exports and the United States announcing an additional 100% tariff on Chinese goods in response. Regarding this, President Lagarde stated, "China has long stockpiled rare earths and developed refining technologies, securing a very strong trading advantage. Now, they are leveraging that advantage." She continued, "On the other side, the United States, Europe, and others need to join forces as a collective buying bloc to counter China. When it comes to rare earths, Europe and the United States are in the same boat, rowing in the same direction."