ECB’s Escriva: There will be effects of this conflict

ECB’s Escriva: There will be effects of this conflict

ECB policymaker Jose Luis Escriva has emphasized that escalating U.S. trade policies, particularly under President Donald Trump’s administration, pose significant risks to global financial stability and economic growth. Escriva, who also chairs the Bank of Spain, highlighted the unpredictability of U.S. tariffs and their potential to erode investor confidence, destabilize markets, and disrupt supply chains according to Reuters. He noted that while Spain’s direct trade exposure to the U.S. is limited, indirect effects through global supply chains and financial channels could amplify the impact on the eurozone’s fourth-largest economy as reported.

Escriva warned that reciprocal tariffs proposed by the Trump administration could raise Spain’s export tariffs to the U.S. from 12% to 18%, further straining economic activity. This aligns with broader ECB concerns about trade tensions dampening growth and complicating inflation projections according to ECB analysis. In a February 2026 Governing Council meeting, ECB officials reiterated the need for scenario analysis to navigate uncertainties, including potential retaliatory measures or prolonged tariff disputes as stated in ECB communications.

The ECB’s latest assessment underscores a fragile global environment, with geopolitical risks and trade policy volatility heightening downside risks to growth. While the eurozone has shown resilience, Escriva stressed the importance of monitoring indirect effects, such as reduced investor confidence and disrupted trade flows, which could undermine recovery momentum according to ECB officials. The ECB remains committed to a data-dependent approach, emphasizing flexibility to respond to evolving risks in the coming quarters.