Christine Lagarde Discusses Global Economy and Trade Challenges

The global economy is undergoing significant transformation, according to Christine Lagarde, President of the European Central Bank (ECB). In an interview on “Face the Nation” with Margaret Brennan on October 19, 2025, Lagarde highlighted the impacts of tariffs and advancements in artificial intelligence as key drivers of change.

Lagarde described the current economic landscape as one marked by the effects of tariffs, which have altered trade dynamics globally. She noted that the United States trade policies, particularly under former President Trump, are projected to cost businesses worldwide upwards of $1.2 trillion in 2025, with consumers likely facing the burden of these costs.

She stated, “S&P Global forecasts Trump’s tariffs are going to cost global businesses upwards of $1.2 trillion this year, with a lot of those costs passed along to consumers.” Lagarde expressed concern that the full impact of these tariffs has yet to be felt, as the rising costs are currently being absorbed by exporters and importers, rather than consumers.

Trade Relations and Economic Strategies

The conversation also delved into ongoing trade tensions between the United States and China. Lagarde acknowledged the complexity of negotiations, suggesting that both economies have a vested interest in reaching an agreement despite current hostilities. She stated, “This is typical of negotiating tactics on both sides. You show your muscles and you say that you’re ready to kill.”

With recent comments from U.S. Treasury Secretary Scott Bessent indicating that he would meet with China’s Vice Premier, Lagarde emphasized the necessity for collaboration among nations that rely on rare earth materials. “The Europeans and the Americans are in the same boat… they should join forces,” she said. This sentiment reflects the growing recognition of China’s dominant position in the rare earth market and the need for a unified purchasing approach.

Lagarde also touched upon the potential implications of rising cryptocurrency usage on the status of the U.S. dollar as the world’s primary reserve currency. She noted signs of eroding trust in the dollar, citing increased gold prices and capital flows shifting towards Europe as indicators. “Gold has increased by more than 50% since the beginning of the year,” she remarked, suggesting that this trend could signal a gradual decline in the dollar’s dominance.

Support for Ukraine and Future Financial Stability

Addressing the ongoing conflict in Ukraine, Lagarde discussed a recent conversation with Ukrainian President Volodymyr Zelenskyy about the potential use of frozen Russian assets to support Ukraine’s reconstruction. She proposed that countries holding these assets should collaborate to provide operational loans, using cash balances as collateral. “If all those countries holding assets go in the same direction of lending money to Ukraine… that would go a long way in convincing Russia to negotiate,” she said.

Lagarde’s insights reflect a broader concern for the stability of the global financial system in the face of evolving economic challenges. As nations navigate trade disputes, currency dynamics, and geopolitical conflicts, the importance of strategic cooperation and adaptive policies remains critical.

The interview concluded with Lagarde reiterating the need for strong institutions and credible economic environments to maintain trust in currencies and ensure future stability in global markets.