Europe News

Draghi to Trump: If you put tariffs on your allies, who are your enemies?

Key Points
  • Asked about trade, Mario Draghi explains that Donald Trump's tariff plans are a concern.
  • Draghi says there is a worry about the state of international relations.
  • President Donald Trump looks likely to implement steel and aluminium tariffs later Thursday.
Immediate spillover of US trade measures isn't going to be big, Draghi says

European Central Bank (ECB) President Mario Draghi fired a warning shot Thursday over the dangers of President Donald Trump's threat of trade tariffs.

During a press conference in Frankfurt, Germany, following an ECB monetary policy decision, Draghi was asked about his concerns over trade wars and its effect on Europe.

He said the immediate spill over of the measures won't be big but noted a wider concern.

"What strikes me is whatever convictions you have about trade, we are convinced that disputes should be discussed and resolved in multilateral framework," Draghi said. "Unilateral decisions are dangerous."

The ECB president added that Trump's recent trade threats did not bode well for previously healthy relations between the U.S. and the European Union.

"There is a certain worry or concern about the state of international relations, because if you put tariffs on your allies, one wonders who your enemies are," he said.

Following an earlier tweet from Trump, it looks likely an order to implement steel and aluminium tariffs will be signed later today.

Draghi also noted that putting trade restrictions on another country had benefited the U.S. dollar in the past, but there was no guarantee of a similar reaction in the future.

He said the most important thing to watch for would be the effect on confidence.

ECB: See strong, broad-based growth momentum in euro zone

"I wouldn't call them yet trade wars, but of all the trade exchanges we have seen, is there is an effect of confidence?" he said. "It can be difficult to assess, but if there is a negative on confidence that will be negative on both inflation and output."

Earlier, the ECB dropped its easing bias, fueling expectations that it will normalize monetary policy in the euro area.