The U.S. Economy has absorbed the majority of the economic damage resulting from tariffs implemented by former President Donald Trump, according to Fabio Panetta, a member of the European Central Bank’s Governing Council.
Panetta’s assessment, made public on Thursday, February 21, 2026, directly challenges narratives that portrayed the tariffs as a successful strategy for bolstering American manufacturing and trade. He stated that the tariffs have disproportionately harmed the U.S., despite being intended to address trade imbalances.
The remarks came as the European Central Bank faces increasing uncertainty with the potential departure of President Christine Lagarde. Reports suggest Lagarde may step down before the end of her mandate, potentially to ensure a successor is in place ahead of upcoming elections in France, where far-right parties are gaining traction. Although the ECB has not confirmed these reports, Lagarde herself has offered carefully worded statements that do not explicitly deny the possibility of an early exit.
Panetta, who has served as the Governor of the Bank of Italy since 2023, has been a vocal advocate for a more flexible monetary policy within the ECB. In November 2024, he called for a more robust approach to interest rate cuts to combat sluggish economic growth and an industrial slump within the Eurozone. He argued that with inflation nearing the ECB’s 2 percent target, the focus should shift to stimulating economic activity. Bank of France Governor François Villeroy de Galhau echoed similar concerns, suggesting a shifting balance of risks towards slower growth.
The ECB cut its benchmark interest rate by a quarter-point to 3.25 percent in October 2025, responding to weak economic data. Panetta has advocated for a “directional guidance” approach to monetary policy, aiming to provide clearer signals to businesses and households and avoid abrupt policy shifts.
Panetta’s comments on the tariffs align with broader concerns within the ECB regarding the potential impact of renewed protectionist measures from a potential second Trump administration. In December 2025, Panetta delivered a speech outlining the challenges to the international monetary system, noting that the U.S. Announced the steepest tariff increase since the Great Depression in April of that year, triggering market volatility and a weakening of the dollar.
The ECB has not issued a formal response to Panetta’s latest remarks regarding the tariffs. Lagarde, when questioned about her future at the ECB, stated her “baseline” is to complete her mandate, but stopped short of a definitive commitment.
