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Bank of Finland chief urges unified EU stance on US tariffs and defense

Xinhua | Updated: 2025-04-23 10:00
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HELSINKI - Bank of Finland Governor Olli Rehn on Tuesday emphasized the necessity for Europe to adopt a unified position not only on defense but also in response to the evolving US tariff policies.

"According to our estimates, US tariffs and the subsequent countermeasures could significantly reduce Finland's projected growth this year," Rehn said at the midterm planning meeting of Finland's coalition government.

He warned that the ongoing trade tensions triggered by US President Donald Trump are harming economic growth in the eurozone, including Finland, as the dispute continues to undermine confidence and economic performance across the region.

Rehn urged the European Union (EU) to take a coherent and strategic approach to reinforce both its economic resilience and collective security.

"Europe must reach a common position - not only on defense - but also in its response to US tariffs, which risk triggering broader trade conflicts," he said.

Calling for diplomatic engagement, Rehn encouraged the EU to seek solutions that could prevent sharp tariff escalations and protect economic stability. He outlined a dual-track strategy already in place: proposing mutual zero tariffs while preparing proportionate countermeasures to bolster the EU's negotiating power.

Moreover, Rehn called for a more ambitious trade policy aimed at expanding global trade partnerships, particularly by concluding more free trade agreements. The EU currently holds 44 free trade agreements with 76 countries, which collectively account for nearly half of the bloc's external trade, he noted.

Turning to the geopolitical challenges, Rehn underscored the need to strengthen Europe's collective defense, especially in light of the ongoing Russia-Ukraine conflict and heightened global instability.

While acknowledging the budgetary pressures facing many EU members, he described collective defense not just as a security imperative but also as a European public good.

"Financing such efforts requires joint solutions," Rehn said, adding that EU bonds could play a key role in supporting shared defense spending. He noted that investor demand for EU bonds is rising, particularly as confidence in US fiscal policy continues to wane.

Rehn's remarks followed new US trade measures introduced in early April, when Trump unveiled so-called "reciprocal" tariffs, including a 10-percent baseline levy on all imports and steeper duties targeting specific trading partners. These actions have rattled global stock markets and fueled widespread concerns.

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