Lagarde: buy American to avoid trade war

"When you start considering a trade war, you can soon see an escalation, which in my view is a net negative result," he said. "This cannot be in anyone's interest, neither the US nor Europe, or anyone else's. This would induce a global reduction in GDP."

In order to assess the implications and spillovers on inflation of the possible tariffs that Donald Trump will impose once he officially enters the White House on 20 January next, "it is too early, but "it is possible that there will be a slight increase in pressures", due to a likely reduction in economic activity and exchange rate fluctuations, Lagarde said, explaining that, however, "it is not certain and one could argue both ways, it depends on what the tariffs will be, how they will be applied and for how long". This is precisely why it is good for Europe to move beyond Trump's campaign rhetoric and focus on the details of his proposals. For example, 'it is interesting' that he has suggested introducing tariffs between 10% and 20% on non-Chinese imports: 'The fact that he has put forward a range of proposals means that he is open to discussion. This creates an opportunity to sit at the table and see how we can work together,' Lagarde said.