ECB Official Says Trump’s Tariffs Hurt Global Market Stability

• ECB’s Villeroy says Trump’s trade stance risks shaking global financial stability.
• The IMF has lowered its global growth outlook from 3.3% to 2.8% due to trade uncertainty.
• The ECB wants new crypto rules to protect Europe from rising US stablecoin dominance.

Francois Villeroy de Galhau, a key European Central Bank (ECB) official, has warned that Trump’s trade policies could threaten global economic stability. He described the U.S. tariffs as a “lose-lose game” that may slow growth and affect financial systems, even within the United States.

The ECB official emphasized that international trade is not a zero-sum game. He said one country’s gain should not come at another’s loss. According to sources, Villeroy called for immediate de-escalation of tariffs to prevent a worsening trade conflict.

He added, “It’s more crucial than ever, across the Atlantic, to tell the truth, to fully assess the damage of a trade war, and to open the way for a possible positive dialogue.” His statement followed the IMF’s decision to cut its global growth forecast from 3.3% to 2.8%.

IMF Downgrades Growth as Market Worries Deepen

The International Monetary Fund cited policy uncertainty in its downgrade. It warned that market risks and overvalued assets now pose a threat to financial stability. The IMF also noted the influence of nonbank financial firms, which may worsen any future financial shocks. These concerns emerged amid growing doubts about the global impact of U.S. tariffs. Meanwhile, the ECB’s base forecast expects inflation to reach 2% in 2025 without a recession. 

Moreover, Villeroy urged a more focused approach to preserving global institutions such as the IMF and World Bank. These agencies are seen as central to global economic resilience. Can global markets endure the pressure of protectionist U.S. policies as international trade frameworks face growing strain?

ECB Urges Review of Crypto Laws Amid U.S. Reforms

The ECB expressed concerns over U.S. crypto legislation. It called for a European Commission review of the Markets in Crypto Assets Regulation (MiCA). According to the ECB, the existing framework might be too weak to offset the impact of upcoming U.S. stablecoin reforms. These reforms, which include the STABLE and GENIUS Acts, could expand the U.S. stablecoin market from $240 billion to $2 trillion by 2028.

Related: Christine Lagarde Dismisses Bitcoin as ECB Reserve Asset

Additionally, ECB Chief Christine Lagarde commented on growing U.S. political tension. She said she hoped Trump would not dismiss Federal Reserve Chairman Jerome Powell, whom he has repeatedly criticized.

She did not address hypothetical market reactions but expressed “immense respect” for Powell’s commitment to policy. Lagarde remained optimistic that trade talks could proceed between the U.S., China, and the EU.

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