France’s central bank chief warns Trump’s policies are destabilizing global economy

French central bank chief Francois Villeroy de Galhau has said that the Trump administration is disrupting the multilateral economic system, which is hurting the American economy and, to a lesser extent, the European economy.

Francois Villeroy de Galhau informed Lawmakers of the lower house of the French parliament’s finance commission that Trump undermines the multilateral system with his decisions and reversals.

He further noted that this shift could increase long-term risks. These could include financial risks such as crypto-assets, non-bank intermediation, and environmental concerns.

Trump’s decisions and reversals are affecting the economies of the U.S. and Europe

Since becoming president of America, Trump has made several decisions, including job cuts involving the mass firing of federal agencies.

One notable example of Trump’s policy reversals is the tariff shift, in which he issued executive orders two days after enacting broad 25% levies on two of America’s closest economic partners to suspend new tariffs on many imports from Mexico and Canada. Because of this abrupt and unanticipated shift, the U.S. stock market decreased by 1.8%.

Villeroy said, “This turnaround increases long-term risks, whether they are financial – think of crypto-assets or non-bank intermediation – or climatic.” 

He added that the recent downgrade of the U.S. Federal Reserve’s forecast proved that the Trump administration’s policies were already hurting the American economy.

Although the cost would be lower in Europe, Villeroy stated that a second-quarter increase in U.S. tariffs would have a “limited” effect on European inflation and could lower the eurozone’s overall economic output by 0.3% over the course of a year.

François Villeroy de Galhau calls Trump’s policy a tragedy for the American economy

Just recently, France’s central bank chief said President Donald Trump’s policies were causing more damage to the U.S. economy than the rest of the world.

Francois Villeroy de Galhau added that disruption was expected following the United States presidential election. But the economic shock had been more severe than anticipated.

During a meeting with his German counterpart at the German embassy in Paris, Villeroy stated, “It is a shock for the world economy, but even more so for the American economy.” He also added that the situation was tragic for the American economy.

Meanwhile, Trump threatened to impose a 200% tariff on wine, cognac, and other European alcohol imports, launching a new dispute in the ongoing trade war.

German central bank chief Joachim Nagel compared the U.S. administration’s current economic policy to something from a horror show.

Despite the instability, both central bankers noted that Europe could use the opportunity to strengthen its economy and attract foreign investment.