Protectionist policies by the next United States administration will hurt global economic growth and Europe should be better prepared than in 2018, European Central Bank board members have warned.

THE Donald Trump has promised a big increase in trade barriers, including enforcement single duty 10% on all imports from foreign countries and 60% tariff on imports from China aimed at reducing the US trade deficit.

“What we do know is that the high import tariffs being talked about could have harmful effects on the global economy,” said Finnish central banker Olli Rehn. “A new trade war is the last thing we need at a time of geopolitical rivalry – mostly between allies».

Austria’s central banker Robert Holzmann warned that if Donald Trump implements the policies he has announced, US interest rates and inflation will remain high, putting upward pressure on prices elsewhere.

“He means what he has said and is likely to implement it sooner than we expect. If this is the case, what are the markets waiting for? That interest rates will remain higher and that inflation will also be higher,” said Robert Holtzman, adding that this will put upward pressure on the dollar and eurozone inflation.

Robert Holtzman added that if the dollar stabilizes and approaches 1-to-1 parity against the euro, it will have a measurable impact on import costs, particularly of energy, making it harder for ECB to achieve its 2% inflation target and will probably delay the process.

Trade tensions between the US and Europe had been rising during Trump’s first presidency and Europe was struggling to come up with a common response, a mistake it should not make this time, Olli Rehn said. “If a trade war is to start, Europe should not be unprepared, like in 2018».

“The ECB must, as part of its mandate, act as an anchor of economic and monetary stability in this turbulent landscape. No one should doubt that we will fully shoulder this responsibility“, warned the Finnish central banker.