Christine Lagarde, president of the European Central Bank (ECB), has warned that Trump’s trade policies are dragging the world economy toward a major recession. She pointed to escalating trade tensions and unpredictable tariff battles as major risks, saying that his economic decisions are fueling “a level of uncertainty that we haven’t seen in a long time.” Speaking to the BBC on Thursday, Christine said that if a full-scale trade war erupts, global markets will take a severe hit. “If we were to go to a real trade war where trade would be dampened significantly, that would have severe consequences,” said Christine. “For growth around the world and for prices around the world, but particularly in the United States.” Trump’s tariff threats set off global panic Since returning to the White House, Trump has reignited his aggressive tariff agenda, rolling out new economic policies at random and crashing global markets every other day. Just this Thursday, he announced plans to impose a 200% tariff on French wine, champagne, and other European alcoholic beverages, which came after the European Union (EU) proposed a tax on American whiskey exports, a direct response to Trump’s earlier steel and aluminum tariffs that went into effect on Wednesday. During her interview , Christine made it clear that: “Any trade war is going to hurt the global economy. The initiator, the retaliator, the re-retaliator, and so on and so forth—all of that is going to hurt growth at large.” She stressed that trade conflicts always lead to economic damage, affecting some countries more than others, but ultimately ensuring that everyone loses. Christine also dismissed Trump’s claim that the EU was “formed to screw” the United States. She called the statement historically inaccurate and pointed out that the EU was actually built with American support after World War II to stabilize Europe. “To argue that it was set up to screw the United States is not just bad language, but it is an abuse of history,” Christine said to BBC. Business leaders panic as Trump’s policies create economic uncertainty As Trump’s erratic economic decisions play out, top business executives are scrambling to figure out what comes next. CEOs from IBM, Qualcomm, and HP have been making frantic calls to the White House, demanding clarity on the administration’s tariff agenda. They no longer believe they can convince Trump to reverse his trade decisions, but they are desperate for some kind of predictability. Last Monday, Trump met with top executives in the Roosevelt Room of the White House. During the closed-door discussion, tech CEOs shared concerns that the tariffs could severely damage their industries. But instead of addressing their worries, Trump told reporters afterward that the meeting focused on business investments in the US. National Economic Council Director Kevin Hassett has reportedly spent the past two days on the phone with the CEOs, trying to reassure them. Even some Republican lawmakers have admitted that they are not confident in Trump’s economic strategy. Treasury Secretary Scott Bessent acknowledged last week that the economy needed a “detox” but avoided giving specifics. On Sunday, Trump himself admitted in a Fox News interview that his tariffs could push the economy into a recession but refused to change course. That same day, his comments caused a stock market panic, triggering a massive selloff that wiped out every gain on Wall Street since his first election in 2016. By Tuesday, Trump was downplaying concerns, saying the economy was strong, and that he doesn’t care about the stock market, because it’s a “fake economy.” But White House spokesperson Kush Desai dismissed claims of internal division, insisting that Trump’s team is united. “Every member of the Trump administration is playing from the same playbook—President Trump’s playbook—to enact an America First agenda of tariffs, tax cuts, deregulation, and the unleashing of American energy,” Desai said on Thursday. Cryptopolitan Academy: Coming Soon - A New Way to Earn Passive Income with DeFi in 2025. Learn More
