ECB official criticizes Trump’s trade war as ‘lose-lose game

A top European Central Bank (ECB) official has sharply criticized former U.S. President Donald Trump’s trade war policies, labeling them a “lose-lose game” that damaged global economic stability and undercut trust between allies.

At a conference in New York, ECB official Francois Villeroy de Galhau said aggressive trade measures threaten to throttle an already fragile economy. He added that increasing tariffs between major economies creates uncertainty for business, discourages investment, and risks financial market stability.

His remarks follow a series of deteriorating global economic forecasts. Only hours before Villeroy spoke, the International Monetary Fund (IMF) revised its global growth forecasts downwards for this year and the next. The IMF warned things could worsen if the trade war escalated further.

Villeroy stands up for Europe’s values

Villeroy also directly addressed comments by President Trump criticizing the European Union . Trump has criticized the EU as a group created to exploit the United States and has called it unfair in trade matters. Villeroy pushed back hard on that narrative.

The European Union, he added, was forged after World War II with deep American support.

Villeroy added that peace, democracy, and market-based economies are core American values and that the European Union was multilateralism “at its best,” with firm backing from the United States.

The ECB official’s defense reflects increasing European unease about how the current U.S. administration treats longtime allies. Past American presidents have done so as partners in global leadership when dealing with Europe. Trump’s defiant posture is a notable departure.

Villeroy’s comments also came after ECB President Christine Lagarde called on EU governments to boost internal trade and cooperation earlier in the day. Lagarde called on European countries to eliminate barriers to one another to withstand external shocks like trade wars more effectively.

Villeroy calls for positive dialogue

Villeroy ended his speech by urging deliberate, rational discussions between the U.S. and Europe aimed at settling disagreement.

He rejected the notion that international trade is a zero-sum game, where one nation’s success comes at the expense of another. Instead, he framed global commerce as a powerful driver of mutual prosperity—built on exchanging goods, services, talent, and innovation.

Villeroy also pointed to often-overlooked facts in heated trade debates. He noted that the U.S. holds a significant services trade surplus with Europe, particularly in finance, technology, and consulting—areas where it stands to benefit most. He further noted that mechanisms like Value-Added Tax (VAT) differ from customs duties and are not intended as protectionist measures.

Villeroy added that the ECB’s baseline scenario continues to project inflation returning to near 2% in 2025 without a big recession. But he conceded that rising trade tensions pose risks to this forecast.

Villeroy called on Europe to react by growing stronger — investing better, innovating quicker, and building new partnerships worldwide. He also emphasized that there’s still an opportunity to work with the U.S., particularly in global financial stability, cybersecurity, digital assets, and fighting climate change.

To close, he sounded a sharp warning about political interferences into central banks, saying attacks on their independence and credibility, as seen recently, could have fundamentally damaging financial consequences.

Trump has often attacked the U.S. Federal Reserve and its chair, Jerome Powell , suggesting the U.S. central bank has failed to do enough to foster economic momentum. Yet Trump said on Tuesday that he does not intend to fire Powell.

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