①The Managing Director of the International Monetary Fund (IMF), Georgieva, warned European leaders to take action in response to the US-EU trade war; ②Georgieva called on Europe to complete the construction of a unified large market, enhance competitiveness, and fulfill four key tasks to unleash economic potential.
Cailian Press, January 20th, by Editor Niu Zhanlin. As discussions about the US-EU trade war heated up again on Tuesday, IMF Managing Director Georgieva issued a warning to European leaders: ‘It’s time for you to step up and take meaningful action.’
The backdrop is that last Saturday, US President Trump announced that if no agreement allowing the purchase of Greenland could be reached, eight European allies would face escalating tariff measures: a 10% tariff starting from February 1st, increasing to 25% from June 1st.
Trump stated that the countries targeted for new tariffs include Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands, and Finland. Leaders of multiple European nations have responded to this tariff threat while calling for more dialogue with the United States.
On Tuesday, Trump also threatened that if French President Macron refuses to join his proposed ‘Gaza Peace Council,’ the US will impose a 200% tariff on French wine and champagne.
During an interview on Tuesday at the annual meeting of the World Economic Forum (WEF) in Switzerland, Georgieva stated that countries should adopt a pragmatic approach when using targeted tariffs, while Europe has not fully leveraged its economic size to gain appropriate leverage in global geopolitical games.
We have repeatedly called on Europe publicly to complete the construction of a unified large market and focus on enhancing its own competitiveness. Europe already lags behind in productivity and similarly trails in promoting small and medium-sized enterprises to grow into global giants, a situation that must change.
She pointed out that to truly unlock Europe’s economic potential, European leaders must accomplish four key tasks: completing the Capital Markets Union; establishing a truly unified energy union; reducing barriers to labor mobility within the EU to make it easier for businesses to hire across borders; and increasing investment in research and innovation.
Georgieva remarked, “Let Europe’s money work for Europe. Currently, approximately 300 billion euros (about 351.8 billion US dollars) of European savings are flowing to the United States. Moreover, 27 fragmented energy systems cannot form a competitive advantage; even crossing from Germany to France, one cannot freely transfer jobs.”
She added that European policymakers know what needs to be done but are significantly lagging in execution. “If Europeans are watching this interview, stop delaying and engaging in internal friction—take action immediately.”
European leaders have described Trump’s latest tariff threats as “unacceptable” and are reportedly considering countermeasures. France is said to be pushing for the EU to deploy its most powerful economic countermeasure – the Anti-Coercion Instrument.
European Commission President von der Leyen stated on Tuesday that, against the backdrop of escalating geopolitical shocks, Europe can no longer rely on the old world order and must achieve strategic autonomy. “If this change is long-term, then Europe must also make permanent adjustments.”
Von der Leyen emphasized that the territorial sovereignty and integrity of Denmark and Greenland are non-negotiable. She pointed out that the additional imposition of tariffs is a wrong approach.
Trump stated on Tuesday morning that he had agreed to meet with European officials at Davos to discuss his claims regarding Greenland.
The day before, the IMF slightly raised its global economic growth forecast, predicting that the global economy would grow by 3.3% this year and 3.2% in 2027.
Georgieva stated: “An important reason for the upward revision is that the actual impact of tariffs has been relatively limited. A full-scale tit-for-tat trade war has not erupted, and if this situation can be sustained, it will benefit both the global economy and individual nations.”
She noted that countries are now weighing the costs and benefits of trade tools and called on policymakers and market participants to remain calm. “Last year, many people were extremely nervous about the issue of tariffs, predicting economic recessions, but no recession occurred. Why? Because economic rationality ultimately prevailed.”
Georgieva also emphasized that it is still too early to assess the economic impact of tensions surrounding the Greenland issue, but such tensions could become a drag on economic growth.