ECB President: Tariffs could increase inflation in eurozone by 0.5 pp

European Central Bank (ECB) President Christine Lagarde said in her March 20 speech that a 25% U.S. tariff on European imports might cut euro area growth by 0.3 percentage points (pp) in the initial year, as per the central bank's website. Should Europe counter by boosting tariffs on U.S. goods, the downturn could deepen to 0.5 pp. She added that potential EU retaliatory actions and a declining euro could potentially push inflation up by roughly 0.5 pp.