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The next is the transcript of the interview with Christine Lagarde, president of the European Central Financial institution, that aired on “Face the Nation with Margaret Brennan” on Oct. 19, 2025.
MARGARET BRENNAN: We’re joined now by the President of the European Central Financial institution, Christine Lagarde. The ECB units rates of interest for a lot of nations within the European Union, which is America’s largest buying and selling companion. Good to have you ever right here.
CHRISTINE LAGARDE: Beautiful to be again, Margaret.
MARGARET BRENNAN: From the place you sit, how would you describe the state of the worldwide financial system?
CHRISTINE LAGARDE: In transformation.
MARGARET BRENNAN: Transformation.
CHRISTINE LAGARDE: Transformation, I feel attributable to a few issues. One is the tariffs, which have modified the map of commerce world wide and reconstituted new alliances and reformed the way in which through which we commerce with one another. I feel the second main transformation is the affect of synthetic intelligence on the whole lot we do from knowledge administration to relationship and the whole lot in between.
MARGARET BRENNAN: Completely, and it is altering how we even obtain the info itself —
CHRISTINE LAGARDE: — Yep. —
MARGARET BRENNAN: — to point what’s occurring, however the inventory market has been up and down. I wish to discuss to you on the opposite aspect of this industrial break about among the specifics with these commerce wars and what else you are seeing in Europe, however we’ll take a fast break right here. And we’ve extra questions, however we’ve to come back again in only one second.
MARGARET BRENNAN: Welcome again to Face The Nation. We return to our dialog with European Central Financial institution President Christine Lagarde. You mentioned the financial system is in transformation. S&P International forecasts Trump’s tariffs are going to value international companies upwards of $1.2 trillion this 12 months, with loads of these prices handed alongside to shoppers themselves. You have mentioned that many economists overestimated the affect of Trump’s tariffs. Does that imply you suppose we have moved previous the purpose of danger or are we but to really feel the ache?
CHRISTINE LAGARDE: I feel we’re but to really feel the ache. What we observe, I am going to provide you with some numbers. From Europe to america, our items to the U.S. shoppers had a tariff of 1.5. With the tariff that was determined by the U.S. administration, it is gone as much as 13%. So the query is, the place does this extra 11-ish share level go? In the intervening time, it is one-third on the exporter, so the European firm, one-third of the U.S. importer and one-third of the buyer. What’s going to occur, although, is that these two-thirds borne by two corporates, basically, the exporter and the importer, relies on a squeeze of their margins. How lengthy are they going to place up with a squeeze of the margin, to be seen. And once they do not, as a result of it is turning into too tight, then will probably be on the buyer. So it is a query of time.
MARGARET BRENNAN: How a lot they will abdomen the hit —
CHRISTINE LAGARDE: — Yep. —
MARGARET BRENNAN: — to their very own income earlier than passing that alongside. Properly, there are talks occurring, we perceive, between the world’s two largest economies. The Treasury Secretary Scott Bessent mentioned on social media he will meet with China’s Vice Premier within the coming days. This was after he referred to as the negotiator unhinged just lately, and President Trump mentioned that beginning November 1st there might be new tariffs as retaliation for Chinese language restrictions on uncommon earth exports. These are the biggest economies on the earth. The place does this go? How damaging does this get?
CHRISTINE LAGARDE: To begin with, I’d low cost just a little little bit of the positioning in the meanwhile as a result of that is typical of negotiating techniques on either side. Typical. You present your muscle tissue and also you say that you simply’re able to kill. I am exaggerating, in fact. However folks must come to the desk as a result of it is the curiosity of each economies, regardless of the hostility that there’s between the 2. However China is utilizing a bonus that it has constructed over the course of time by accumulating uncommon earth and the methods to refine uncommon earth after which to promote it to the remainder of the world. They’ve a really, very robust buying and selling place on that entrance and they’ll use it, which is why I feel that on the opposite aspect the shoppers, that’s america, Europe and some different nations world wide, we must always, you already know, be part of forces and be a buying power on the opposite aspect of the desk of a promoting power.
MARGARET BRENNAN: Properly, precisely to that time, there was frustration on the American aspect of it that Europe hasn’t been standing lock step with america in the case of China. That China has leverage over Europe right here.
CHRISTINE LAGARDE: Properly, China at present has leverage in opposition to most nations that devour uncommon earth. And I feel on the entrance of uncommon earth, the Europeans and the People are in the identical boat and they’re rowing in the identical route.
MARGARET BRENNAN: Nevertheless it’s different gadgets that you simply see —
CHRISTINE LAGARDE: — Properly, I feel, you already know, it isn’t for me to say I am only a central banker, however the European authorities and the U.S. administration see it barely in a different way. I feel it is the U.S. would see a blanket power. I feel the Europeans are extra fascinated about concentrating on particular industries or particular sectors the place they suppose that it’s going to make a distinction. So it is a query of techniques that they are going to be discussing, I am certain.
MARGARET BRENNAN: So you may have additionally mentioned just lately that you simply suppose buyers have begun to query whether or not the greenback would nonetheless warrant its standing as the final word secure haven foreign money. I imply, the American greenback is among the strongest weapons, frankly, that the administration has to make use of. Do you suppose that it’s the rise of cryptocurrency that’s most threatening to that or why are you nervous?
CHRISTINE LAGARDE: I see indicators that the attraction of the greenback is barely eroded, and future will inform whether or not there may be extra erosion of that. However while you have a look at the rise of cryptos, primary, while you have a look at the worth of gold. Gold is often, in any scenario, the final word vacation spot for secure haven. Value of gold has elevated by greater than 50% because the starting of the 12 months. —
MARGARET BRENNAN: — So individuals are nervous. —
CHRISTINE LAGARDE: — That is a transparent signal that the belief within the reserve foreign money that the greenback has been, is and can proceed to be, is eroding a bit. Along with that, we have seen capital flows exterior of the U.S. in the direction of different locations, together with Europe. So, you already know, for a foreign money to be actually trusted you want a couple of issues. You want geopolitical credibility. You want the rule of legislation and robust establishments. And also you want, I’d name it, a navy power that’s robust sufficient. I feel on a minimum of one and presumably two accounts, the U.S. remains to be in a really dominant place, but it surely must be very cautious as a result of these positions erode over the course of time. We have seen it with the Sterling Pound, you already know, means again after, after the conflict. Nevertheless it occurs gently, gently, you do not discover it after which it occurs all of a sudden. And we’re seeing intriguing indicators of it, which is why I feel that having a robust establishment with the Fed, as an example, is necessary. Having a reputable atmosphere inside which to commerce is necessary. So volatility, uncertainty, to the extent it’s fueled by the administration, isn’t useful to the greenback.
MARGARET BRENNAN: Shortly on Ukraine, President Zelenskyy mentioned he spoke to you lately about utilizing frozen Russian belongings. What’s truthful use in your view?
CHRISTINE LAGARDE: I feel truthful use would encompass an operational mortgage that may be utilizing money balances as collaterals. And I feel that the energy of the system must be based mostly on everybody holding Russian belongings to do the identical factor. So if all these nations holding belongings, which have money balances obtainable as collaterals, go in the identical route of lending the cash to Ukraine to be repaid by Russian financing of the reconstruction of Ukraine as a result of Russia is the aggressor, then I feel that that may go a good distance in convincing Russia that it has to come back to the desk to barter.
MARGARET BRENNAN: Christine Lagarde, all the time nice to listen to your insights. We’ll be proper again.
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