The White Home’s protectionist insurance policies may hit the U.S. more durable than Europe within the quick time period, Banco Santander‘s govt chair informed CNBC on Thursday, as tariffs take a toll on home shoppers.
“Tariffs [are] a tax. It is a tax on the patron.” Ana BotÃn stated in an interview with CNBC’s Karen Tso in Brussels on the sidelines of the 2025 IIF European Summit. “Finally, the financial system can pay a value. There will likely be much less development and there will likely be extra inflation, different issues equal.”
President Donald Trump has imposed — and at instances suspended or revoked — a slew of tariffs on imports into the U.S. since his second administration started in January. He’s in search of to advertise home manufacturing and cut back commerce deficits between the world’s largest financial system and its industrial companions.
BotÃn just isn’t alone in her warning relating to tariffs’ damaging influence on the U.S., with many analysts additionally saying the duties may in the end trigger increased inflation and pressure the wallets of U.S. shoppers.
“On a relative foundation, within the quick time period, Europe will likely be much less affected than the U.S.,” BotÃn stated Thursday.
The imposition of blanket and country-specific duties — which embrace Wednesday’s information of a 25% tariff on all automobile imports into the U.S., efficient from April 2 — have led to quite a lot of retaliatory measures, together with from the U.S.’ historic transatlantic ally, the European Union.
The bloc has additionally taken steps to bolster its autonomy by means of a package deal of proposals that might critically loosen up beforehand ironclad fiscal guidelines and mobilize almost 800 billion euros ($863.8 billion) towards the area’s increased protection expenditures.
“European banks in the present day are able to lend extra and assist the financial system extra. We’re robust. Now we have the capital,” BotÃn stated. She additionally known as for extra “flexibility” in EU laws that presently decide the “buffers” European lenders should maintain on high of minimal capital necessities to bolster their resilience within the occasion of monetary shocks.
The most recent EU plans — and Germany’s steps to overtake its long-standing debt coverage to accommodate bolstered safety spending — have boosted German and European protection shares in latest weeks.
Nevertheless, Germany is closely reliant on its beleaguered auto sector — leaving the world’s third-largest exporter weak to stark shifts in commerce patterns and probably uncovered to recessionary dangers because of U.S. tariffs, German central financial institution Governor Joachim Nagel warned earlier this month.
BotÃn — whose financial institution is the fifth-largest auto lender within the U.S. and has been pushing to broaden its operations transatlantic whereas shuttering some bodily branches within the U.Ok. — painted an optimistic image of the state of the European financial system, nevertheless.
“As of in the present day, we consider the U.S. will decelerate greater than Europe, different issues equal, as a result of Germany is one third of the financial system of the euro zone. That is large. In order that’s going to present a lift,” she stated, whereas additionally acknowledging that latest unpredictability has clouded readability over the European Central Financial institution’s subsequent financial coverage steps.
The central financial institution is broadly anticipated to proceed with a 25-basis-point rate of interest lower throughout its subsequent assembly on April 17. It additionally eased financial coverage in early March and signaled on the time that its financial coverage had develop into “meaningfully much less restrictive.”
“The basics of the financial system are robust, however the uncertainty and volatility [are] at historic ranges. So it is a actually laborious resolution. So there is no such thing as a doubt that tariffs are a tax on shopper[s], it means slower development, it means increased inflation,” BotÃn stated.
“How a lot slower development and the way a lot increased inflation, we do not know. However when you do not know what is going on to occur within the subsequent few months, you are going to wait to purchase a automobile, you are going to wait to purchase a fridge. For those who’re an organization … you are going to wait to see the place the tariffs hit more durable. So that is going to imply a slowdown in exercise. That’ll level towards decrease charges. Inflation will level the opposite course.”
BotÃn added that, consequently, “there is a case to be made for … charges coming down, however most likely not as quick.”
Chatting with CNBC’s Tso earlier within the day, ECB policymaker Pierre Wunsch additionally indicated that the U.S. tariff warfare had encumbered the financial institution’s decision-making.
“If we overlook tariffs …. we had been stepping into the proper course. Then the query was extra a query of high quality tuning of the tempo of cuts and the place we land,” he stated. “I used to be like, you recognize, inflation is likely to be the boring a part of [20]25, and [20]25 just isn’t a boring yr. However if you happen to add tariffs to the equation, it is changing into extra sophisticated.”
