In a recent interview on “Face the Nation,” Christine Lagarde, President of the European Central Bank (ECB), outlined her perspective on the shifting landscape of the global economy. During the October 19, 2025, discussion, she emphasized the transformative changes driven by trade tariffs and the rise of artificial intelligence.
Economic Transformation and Trade Challenges
Lagarde characterized the current state of the economy as one of significant transformation. She attributed this shift primarily to the imposition of tariffs, which have altered global trade dynamics and reshaped alliances among countries. She stated, “Tariffs have changed the map of trade around the world and reconstituted new alliances.”
Additionally, Lagarde highlighted the profound impact of artificial intelligence on various sectors, noting that it has influenced everything from data management to personal relationships. As economies adapt to these changes, the volatility in stock markets has raised concerns among investors and consumers alike.
According to S&P Global, the tariffs enacted during the previous U.S. administration could cost global businesses upwards of $1.2 trillion in 2025, with a significant portion of these costs likely passed on to consumers. Lagarde pointed out that while many economists initially underestimated the impact of these tariffs, the true effects are yet to be felt.
Future of U.S.-China Relations and Currency Stability
Amid ongoing tensions between the United States and China, Lagarde commented on the meeting between U.S. Treasury Secretary Scott Bessent and China’s Vice Premier. She noted that such high-stakes negotiations often involve tactical posturing from both sides. “This is typical of negotiating tactics on both sides,” she explained, indicating that both economies have a vested interest in reaching a resolution despite current hostilities.
Lagarde also discussed the implications of China’s strong position in the rare earth market, stating that the European and U.S. economies should collaborate to enhance their purchasing power. “China currently has leverage against most countries that consume rare earth,” she noted, highlighting the need for a united front.
On the topic of currency stability, Lagarde expressed concerns about the erosion of trust in the U.S. dollar as a safe haven currency. She observed that the price of gold has surged over 50% since the beginning of the year, suggesting that investors are increasingly wary. She stated, “I see signs that the attraction of the dollar is slightly eroded.”
Lagarde underscored the importance of maintaining strong institutions and the rule of law to preserve the dollar’s status. She cautioned that fluctuations in trust can happen gradually but lead to sudden changes, referencing historical precedents.
Support for Ukraine and Russian Assets
Addressing the ongoing conflict in Ukraine, Lagarde mentioned a recent conversation with Ukrainian President Volodymyr Zelenskyy about utilizing frozen Russian assets for operational loans. She proposed that countries holding these assets should collaborate to lend money to Ukraine, which could be repaid through Russian financing for the country’s reconstruction.
Lagarde’s insights reflect a complex interplay of economic factors that are shaping the global landscape. As countries navigate trade tensions, emerging technologies, and geopolitical conflicts, the path forward remains uncertain yet crucial for international stability.
