Catenaa, Wednesday, October 08, 2025- Europe’s economy is holding up better than expected despite US President Donald Trump’s new tariffs, European Central Bank President Christine Lagarde said Tuesday, citing the EU’s measured response and favorable trade conditions.
Lagarde noted that the eurozone’s growth and inflation have been moderated by a stronger euro, the conclusion of a trade deal with the US, and the EU’s decision not to impose retaliatory tariffs.
The agreement capped tariffs at 15% and reduced uncertainty that could have delayed or disrupted business investment.
“A year ago, most would have assumed that US tariffs would trigger a major adverse shock to the euro area economy. Yet some of these assumptions have not been borne out,” Lagarde said in a speech at a central banking conference in Helsinki.
She reported little impact on inflation and only moderate effects on growth, attributing the resilience to European governments’ pro-growth measures and effective supply chain management.
Lagarde also emphasized that ECB interest rate policy remains “in a good place,” with no commitment to future rate adjustments.
The central bank left its key rate unchanged at 2% during its Sept. 11 meeting and is set to review policy again on Oct. 30.
The ECB’s assessment comes as Europe benefits from continued access to imported goods without significant tariff-induced bottlenecks.
The stronger euro has further lowered import costs, helping maintain a moderate inflation rate of 2% in August. In contrast, the US economy faces cooling hiring trends and persistent inflation pressures.
Europe’s economy remains resilient under Trump tariffs, aided by a stronger euro, non-retaliation by the EU, and a trade deal that eased business uncertainty.
