Trump aim of bringing home manufacturing a questionable strategy, Lagarde says

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January 22, 2025 3:30 AM EST

European Central Bank (ECB) President Christine Lagarde addresses the media following the Governing Council's monetary policy meeting at the ECB headquarters in Frankfurt, Germany, December 12, 2024. REUTERS/Kai Pfaffenbach/File Photo

(Reuters) - U.S. President Donald Trump's aim to bring home manufacturing by increasing trade barriers is a questionable approach given that the economy is already running near capacity, European Central Bank President Christine Lagarde said on Wednesday.

"This theory of substitution, in other words that I will lower imports from Europe to beef up manufacturing at home, is questionable, because the U.S. economy ... is almost running hot at the moment," Lagarde told CNBC in an interview in Davos.

Unemployment is low and capacity is constrained so installing extra manufacturing capability would take time, Lagarde argued.

(Reporting by Balazs Koranyi and Francesco Canepa; Editing by Sharon Singleton)


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