Mubasher: The new tariffs announced by US President Donald Trump would lead to looming global trade war that is likely to weigh heavily on Europe’s economic growth, Greece’s central bank governor Yannis Stournaras told the Financial Times in a recent interview.

Stournaras stated: “A notable adverse impact on growth could lead to activity being much weaker than expected, dragging inflation below our targets.”

A week ago, Trump announced a 20% tariff to be imposed on most EU imports.

Stournaras, who is one of the longest-sitting members on the European Central Bank’s (ECB) governing council, warned that the Eurozone was facing the shock just when the outlook for growth was already “modest” and inflation was on track to meet the ECB’s medium-term target of 2%. The ECB is set to make its next interest rate decision on April 17.

The Greek official said that “tariffs are definitely a deflationary measure” for the Eurozone. He stressed that the US’s protectionist steps were “worse than expected” and had created an “unprecedented” degree of “global policy uncertainty” that weighed on economic activity, according to the interview with the Financial Times.

ECB President, Christine Lagarde, said in March that inflation in the Eurozone would increase by 0.5% in a trade war owing to “EU retaliatory measures and a weaker euro exchange rate”.

JPMorgan, which previously expected the ECB to hold rates steady at 2.5% in April, on Friday, April 4, changed its view and predicted another quarter-point cut, to be followed by two more in June and September 2025.

Goldman Sachs economists on Friday also said a cut in April was “now very likely.”

Stournaras warned that while it was difficult to “precisely assess the impact of tariffs,” the negative impact on the Eurozone growth “could be anything between 0.5% and 1%.”

Noteworthy to mention that the ECB in March lowered its 2025 growth forecast for the euro area to just 0.9%.