A senior official from the European Central Bank stated that the US economy has borne the heaviest burden from recent tariffs. Speaking at a financial conference in Venice, he explained that while foreign exporters absorbed an estimated 10% of the cost, the initial impact was largely taken by the profit margins of US firms. Over time, however, about half of that cost has now been passed on to American consumers.
He further highlighted that these tariffs have contributed significantly to inflation, adding just over half a percentage point to the rate, which remains above the Federal Reserve’s target. This analysis comes shortly after a significant legal development, where the nation’s highest court struck down the bulk of the tariffs imposed last year, ruling that the president had exceeded his authority by declaring a national emergency to enact them. In response, the president imposed a new 10% global tariff and promised a series of investigations that could lead to more import taxes.
The official also pointed to a major shift in global trade patterns resulting from the trade policies. US imports from China have contracted, while imports from other countries like Mexico, Vietnam, and Taiwan have increased. At the same time, China has strengthened its presence in alternative markets around the world. “Today the world is tightly interdependent—no country can prosper for long by isolating itself,” he remarked.
In defense of the tariff program, the president argued that it is a crucial tool for bringing manufacturing back to the United States and for advancing foreign policy goals. While acknowledging the US’s dominant position in technology, military capacity, and international finance, the ECB official noted that many countries find disengaging from the US economic ecosystem to be unviable.
He also emphasized the deep economic ties between the US and Europe, pointing out that Europe absorbs one-fifth of US goods exports and 40% of its service exports. Furthermore, Europe generates a third of the foreign profits for US multinational companies and holds a substantial amount of US government debt.
Shifting focus to Europe, the official, who also leads a major national bank, discussed the state of the euro area. He described it as having strong institutions but suffering from incomplete economic and financial integration. He reiterated the need for a common safe asset, like a European sovereign bond, which would help finance public projects and provide a stable benchmark for investors, thereby boosting the bloc’s financial unity.
On the topic of inflation, he warned that risks remain significant in both directions, meaning monetary policy must stay flexible and be guided by a medium-term outlook. Regarding his home country, he noted that its economy expanded by 0.7% last year, driven primarily by domestic demand and investment, especially in the latter half of the year.
