European Central Bank policymaker François Villeroy de Galhau warned that protectionist trade measures championed by former U.S. President Donald Trump could pose a renewed threat to global financial stability and economic growth. The comments come as markets increasingly price in the possibility of Trump returning to office following the upcoming U.S. presidential election.
Speaking at a financial conference in Paris, Villeroy stressed that open trade remains crucial for sustainable global expansion, and cautioned that a revival of aggressive tariff policies could strain global supply chains and dampen investment confidence.
“A return to unilateralism and trade barriers would be a step backward for financial stability,” Villeroy said. While he did not mention Trump by name in prepared remarks, he alluded to the impact of previous U.S. trade policies on market volatility and cross-border cooperation.
The remarks come amid broader concerns among central bankers that geopolitical tensions and populist policies could further complicate inflation management and financial market conditions. With the ECB still battling above-target inflation and sluggish eurozone growth, officials are wary of additional external shocks.
Villeroy, a centrist voice within the ECB Governing Council, has consistently advocated for rules-based international cooperation, particularly in trade and climate finance. His comments reflect a growing unease within European policy circles about the potential economic ramifications of a more isolationist U.S. policy agenda.
While markets remain focused on interest rate paths, the return of trade-related uncertainty could become a renewed headwind, particularly for export-driven economies like Germany and France. For now, Villeroy’s remarks serve as an early reminder of the broader macro risks policymakers may need to navigate beyond inflation and growth data.
