European Central Bank President Christine Lagarde said the euro-area economy, which showed unexpected resilience earlier this year, is now losing momentum as the boost from pre-tariff stockpiling fades. Speaking in Geneva at the World Economic Forum’s International Business Council on 20 August, she noted that output growth had already cooled in the second quarter and is projected to slow further in the current quarter. Lagarde attributed the earlier strength partly to importers front-loading orders ahead of higher U.S. tariffs, a dynamic that is now reversing. The labour market remains firm, with unemployment at 6.2% in June, but the ECB’s June baseline sees growth slipping to around 1.1% next year; a severe trade-shock scenario would cut it to 0.7%, she added. Addressing the recently concluded U.S.–EU trade accord, Lagarde said the deal imposes an effective average tariff of 12%-16% on U.S. imports of euro-area goods—slightly above the ECB’s baseline assumptions yet well below the previously feared level above 20%. While the agreement has reduced trade-policy uncertainty, sector-specific levies on pharmaceuticals and semiconductors remain unresolved, leaving companies cautious. Lagarde signalled that the Governing Council is inclined to keep interest rates unchanged at its September meeting, stressing that updated staff projections to be released then will be pivotal for future policy moves. She also urged the bloc to diversify export markets to cushion the impact of higher trans-Atlantic tariffs.