{"id":58886,"date":"2026-02-21T07:08:20","date_gmt":"2026-02-21T11:08:20","guid":{"rendered":"https:\/\/stockmarketwatch.com\/stock-market-news\/panetta-warns-us-economy-bearing-brunt-of-trump-tariffs-calls-for-flexible-ecb-policy\/58886\/"},"modified":"2026-02-21T07:08:20","modified_gmt":"2026-02-21T11:08:20","slug":"panetta-warns-us-economy-bearing-brunt-of-trump-tariffs-calls-for-flexible-ecb-policy","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/panetta-warns-us-economy-bearing-brunt-of-trump-tariffs-calls-for-flexible-ecb-policy\/58886\/","title":{"rendered":"Panetta Warns US Economy Bearing Brunt of Trump Tariffs; Calls for Flexible ECB Policy"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>US economy has borne the primary burden of tariffs<\/strong> imposed by Donald <a href=\"https:\/\/thestockmarketwatch.com\/live\/trump-stock-market\" data-internallinksmanager029f6b8e52c=\"8\" title=\"Trump\">Trump<\/a>, with trade flows restructuring in ways that hurt the US more than its trading partners.<\/li>\n<li><strong>Italy\u2019s economy grew by 0.7% in 2025<\/strong>, demonstrating resilience despite global trade tensions and a complex international environment.<\/li>\n<li><strong>ECB monetary policy must remain flexible<\/strong> as inflation risks are now balanced in both directions following a drop to <strong>1.7%<\/strong> in January 2026.<\/li>\n<li><strong>Europe requires common debt mechanisms<\/strong> to finance essential public goods and sustain growth as the NextGenerationEU program begins to wind down.<\/li>\n<li><strong>Chinese imports have driven a sharper-than-forecast inflation drop<\/strong>, with prices of goods exposed to Chinese competition decelerating faster than the broader market.<\/li>\n<\/ul>\n<p>Speaking at the <strong>Assiom-Forex<\/strong> financial conference on Saturday, European Central Bank (<a href=\"\/stock\/ECB\">ECB<\/a>) Governing Council member <strong>Fabio Panetta<\/strong> delivered a pointed assessment of global trade dynamics, asserting that the <strong>US economy has borne most of the burden<\/strong> of tariffs imposed by Donald <a href=\"https:\/\/thestockmarketwatch.com\/live\/trump-stock-market\" data-internallinksmanager029f6b8e52c=\"8\" title=\"Trump\">Trump<\/a>. Panetta noted that while these protectionist measures were intended to shield domestic industries, they have instead triggered a significant <strong>restructuring of trade flows<\/strong> that has ultimately hurt the US more than other global players.<\/p>\n<p>Panetta emphasized that the <strong>US needs Europe<\/strong> as a stable economic partner, arguing that the interconnectedness of global markets makes isolated trade wars counterproductive. He suggested that the diversion of trade\u2014particularly from China toward European markets\u2014has helped cushion the blow for the Eurozone while leaving the US to deal with the domestic fallout of its own policy shifts.<\/p>\n<p>On the domestic front, Panetta confirmed that <strong>Italy&#39;s economy grew by 0.7% in 2025<\/strong>. While moderate, this growth reflects the &quot;considerable resilience&quot; of the Italian production system in the face of geopolitical shocks and the gradual withdrawal of pandemic-era incentives.<\/p>\n<p>Regarding monetary policy, the Bank of Italy Governor warned that <strong>inflation risks could go both ways<\/strong>, noting that Eurozone inflation fell to <strong>1.7%<\/strong> in January, moving below the ECB&#39;s <strong>2%<\/strong> target. He highlighted that <strong>monetary policy must stay flexible<\/strong> and pragmatic, as the impact of cheap Chinese imports\u2014which have seen volumes rise <strong>27%<\/strong> since early 2024\u2014continues to exert downward pressure on prices.<\/p>\n<p>Panetta also renewed his call for the European Union to establish <strong>common debt<\/strong> to remain competitive with the United States and China. He argued that a &quot;common spending programme&quot; is indispensable for financing the <strong>\u20ac800 billion<\/strong> annual investment required for the green transition, digital revolution, and defense, especially as the current NextGenerationEU funding is set to expire in <strong>2026<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways US economy has borne the primary burden of tariffs imposed by Donald Trump, with trade flows restructuring in 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