The White House’s protectionist policies could hit the U.S. harder than Europe in the short term, Banco Santander‘s executive chair told on Thursday, as tariffs take a toll on domestic consumers.
“Tariffs [are] a tax. It’s a tax on the consumer.” Ana Botín said in an interview with ‘s Karen Tso in Brussels on the sidelines of the 2025 IIF European Summit. “Ultimately, the economy will pay a price. There will be less growth and there will be more inflation, other things equal.”
President Donald Trump has imposed — and at times suspended or revoked — a slew of tariffs on imports into the U.S. since his second administration began in January. He is seeking to promote domestic manufacturing and reduce trade deficits between the world’s largest economy and its commercial partners.
Botín is not alone in her warning regarding tariffs’ negative impact on the U.S., with many analysts also saying the duties could ultimately cause higher inflation and strain the wallets of U.S. consumers.
“On a relative basis, in the short term, Europe will be less affected than the U.S.,” Botín said Thursday.
The imposition of blanket and country-specific duties — which include Wednesday’s news of a 25% tariff on all car imports into the U.S., effective from April 2 — have led to a number of retaliatory measures, including from the U.S.’ historical transatlantic ally, the European Union.
The bloc has also taken steps to bolster its autonomy through a package of proposals that could critically relax previously ironclad fiscal rules and mobilize nearly 800 billion euros ($863.8 billion) toward the region’s higher defense expenditures.
“European banks today are ready to lend more and support the economy more. We are strong. We have the capital,” Botín said. She also called for more “flexibility” in EU regulations that currently determine the “buffers” European lenders must hold on top of minimum capital requirements to bolster their resilience in the event of financial shocks.
The latest EU plans — and Germany’s steps to overhaul its long-standing debt policy to accommodate bolstered security spending — have boosted German and European defense stocks in recent weeks.
However, Germany is heavily reliant on its beleaguered auto sector — leaving the world’s third-largest exporter vulnerable to stark shifts in trade patterns and potentially exposed to recessionary risks as a result of U.S. tariffs, German central bank Governor Joachim Nagel warned earlier this month.
Botín — whose bank is the fifth-largest auto lender in the U.S. and has been pushing to expand its operations transatlantic while shuttering some physical branches in the U.K. — painted an optimistic picture of the state of the European economy, however.
“As of today, we believe the U.S. will slow down more than Europe, other things equal, because Germany is one third of the economy of the euro zone. That’s huge. So that’s going to give a boost,” she said, while also acknowledging that recent unpredictability has clouded clarity over the European Central Bank’s next monetary policy steps.
The central bank is broadly expected to proceed with a 25-basis-point interest rate cut during its next meeting on April 17. It also eased monetary policy in early March and signaled at the time that its monetary policy had become “meaningfully less restrictive.”
“The fundamentals of the economy are strong, but the uncertainty and volatility [are] at historic levels. So it’s a really hard decision. So there is no doubt that tariffs are a tax on consumer[s], it means slower growth, it means higher inflation,” Botín said.
“How much slower growth and how much higher inflation, we don’t know. But when you don’t know what’s going to happen in the next few months, you’re going to wait to buy a car, you’re going to wait to buy a fridge. If you’re a company … you’re going to wait to see where the tariffs hit harder. So this is going to mean a slowdown in activity. That’ll point toward lower rates. Inflation will point the other direction.”
Botín added that, as a result, “there’s a case to be made for … rates coming down, but probably not as fast.”
Speaking to ‘s Tso earlier in the day, ECB policymaker Pierre Wunsch also indicated that the U.S. tariff war had encumbered the bank’s decision-making.
“If we forget tariffs …. we were going in the right direction. Then the question was more a question of fine tuning of the pace of cuts and where we land,” he said. “I was like, you know, inflation might be the boring part of [20]25, and [20]25 is not a boring year. But if you add tariffs to the equation, it’s becoming more complicated.”
