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PARIS (Reuters) -Trade tariffs imposed by U.S. President Donald Trump will increase economic uncertainty, French central bank governor Francois Villeroy de Galhau said on Monday.
"Looking at the economic news, there are some rather positive elements, there is a recovery of purchasing power ... however, the decision of Mr. Trump to impose strong tariffs will increase economic uncertainty," Villeroy told France Info, adding that this was a very worrying development.
Villeroy, who is also a member of the European Central Bank (ECB), said Trump's tariffs were "very brutal" and would hit the autos sector especially.
"Everybody loses in this kind of protectionist trade war," he said.
Asked whether the European Union should respond in kind if Trump hit the EU with tariffs, Villeroy said such a response should not be excluded but he urged caution.
"The key is to make our economy stronger," he said.
Trump on Saturday ordered sweeping tariffs on goods from Mexico, Canada and China, demanding they stanch the flow of fentanyl - and illegal immigrants in the case of Canada and Mexico - into the United States, kicking off a trade war that could dent global growth and reignite inflation.
Villeroy also said there will likely be further rate cuts by the ECB.
Last week, the European Central Bank cut interest rates, and policymakers guided for a further reduction in March as concerns over lacklustre economic growth supersede worries about persistent inflation.
(Reporting by Sudip Kar-Gupta and GV De Clercq)
