Donald Trump’s tariff wars “are not working,” says the head of the Bank of France.
Francois Villeroy de Galhau, who is also a European Central Bank (ECB) policymaker, slammed the uncertainty the US president’s wave of import levies has sparked in economies and markets around the world.
But Mr Villeroy de Galhau stressed: “We are in a moment of great uncertainty ... Mr Trump’s policies are not working.
“The policies of this Trump administration are playing against the US economy and unfortunately also against the world economy.”
Noting that some economists were even expecting a recession in the United States, he added on RTL Radio: “Protectionism does not work, it means less growth and more inflation.”
The downgrade is the biggest for a major economy.
The IMF also cut its growth forecast for Britain by 0.5 percentage points to 1.1% for 2025, compared to its January prediction, and hiked expected inflation by 0.7 percentage points to 3.1%.
Chancellor Rachel Reeves has been in Washington for talks on a US-UK trade deal to try to limit the tariffs on Britain, of 10%, and 25% for cars, steel and aluminium.
Amid the economic mayhem, Americans are losing faith in Trump’s handling of the economy after his tariff moves wiped trillions off the value of shares around the world.
Millions of Americans face being hit with price rises due to the US import levies, US Commerce Secretary Howard Lutnick has admitted.
Trump has already started exempting some goods, including smartphones, computers and some other electronic devices from “reciprocal” tariffs, to limit the impact of his controversial policies on US citizens.
The US president massively hiked tariffs on goods from China, to 145% or more, but now appears ready to try to avoid a full scale trade war with Beijing.
He is believed to be listening to his Treasury Secretary Scott Bessent, who is not a tariffs hawk.
Germany will see no growth in 2025, according to the IMF, France 0.6 per cent, Italy 0.4 per cent, Japan 0.6 per cent and Canada 1.4%.
Mr Villeroy de Galhau reaffirmed that he saw no recession risk in France or in Europe, as inflation continued to decline.
“We still have a gradual margin for rate cuts,” he said.
ECB policymakers are becoming increasingly confident about cutting interest rates in June as inflation continues its march lower, but there is little to no appetite for a big move, six sources told Reuters last week.
The ECB trimmed its benchmark rate to 2.25% earlier this month.
