Published by Global Banking & Finance Review®
Posted on January 22, 2025
1 min readLast updated: January 27, 2026
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Christine Lagarde critiques Trump's strategy to boost US manufacturing by reducing imports, citing the economy's near-full capacity and low unemployment.
(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)
The main topic is Trump's strategy to bring manufacturing back to the US by reducing imports, which is questioned by Christine Lagarde.
Lagarde argues that the US economy is near full capacity, making it difficult to expand manufacturing quickly.
Lagarde highlights low unemployment and constrained capacity as challenges to Trump's strategy.
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