The president of the European Central Bank said on Sunday that the global economy "has not yet felt the pain" of President Donald Trump's tariffs, Politico quoted her as saying.
On CBS's "Face the Nation," Christine Lagarde said that at some point, exporters and importers will no longer accept the lower profit margins caused by tariffs and will decide to raise prices.
"These two-thirds, taken by two corporations, essentially the exporter and the importer, are based on a squeeze on their margins," she said. "How long they will tolerate margin squeeze - we will see. And when they don't, because it gets too tight, then it will be at the expense of the consumer. So it's a matter of time."
Lagarde told host Margaret Brennan that tariffs were one of two factors that led to a "transformation" of the global economy, the other being advances in technology.
"The transformation", she said, "I think was caused by a couple of things. One is tariffs, which have changed the map of trade around the world, re-established new alliances and reformed the way we trade with each other. I think the second big transformation is the impact of artificial intelligence on everything we do, from data management to meetings and everything in between.”
Lagarde has been head of the European Central Bank since 2019. She previously served in the French government, including as foreign trade minister and managing director of the International Monetary Fund.
She said part of the current trade war between the United States and China is posturing.
"I would ignore the posturing a little bit at the moment because that is typical of the negotiating tactics on both sides. Typical," Lagarde told Brennan. "You flex your muscles and say you are ready to kill. I am exaggerating, of course. But people will have to sit at the negotiating table because it is in the interest of both economies, despite the hostility that exists between the two."