US tariffs are an ‘unnecessary test’ to Europe’s economic recovery, top finance chief says

US tariffs are an ‘unnecessary test’ to Europe’s economic recovery, top finance chief says

Higher trade tariffs coming from the U.S. are not what the euro zone needs right now following several years of a promising recovery, a high-ranked European official told CNBC.

The European Union is currently studying ways to prevent an escalation in trade tensions with the White House. Media reports earlier this week suggested the EU could propose a deal to the world’s biggest car exporters and thus prevent wider ramifications in case President Donald Trump moves ahead with a 25 percent tax on European carmarkers.

The International Monetary Fund (IMF) also warned in June that higher trade tariffs are the biggest single risk to the euro zone economy. IMF Managing Director Christine Lagarde told CNBC that the problem now is not the direct economic impact of higher duties, but “the breach in confidence that undermines the relationship” between both the U.S. and Europe.

Lagarde also warned that if the trade tensions escalate further, then the direct impact on the economy will become more substantial.

Until now, Trump has only raised tariffs against the EU on steel and aluminum exports. However, more recently, Trump threatened to put a 25 percent added tax on European cars.

The EU is the largest exporter of motor vehicles in the world, whereas the United States is the largest importer of motor vehicles in the world.

Correction: This article, including the headline, has been updated to correct a quote from Mario Centeno where he stated that tariffs would be an unnecessary test to the euro zone.