Governor of the Bank of Finland Olli Rehn at the Smolna in Helsinki on 22 April 2025. LEHTIKUVA
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Bank of Finland Governor Olli Rehn has urged the European Union to adopt a coordinated response to escalating U.S. trade measures and to enhance collective defence spending amid rising global tensions.
Speaking at the midterm planning meeting of Finland’s coalition government on Tuesday, Rehn said that tariffs introduced by U.S. President Donald Trump pose a direct threat to economic growth in Europe.
“According to our estimates, U.S. tariffs and the subsequent countermeasures could significantly reduce Finland’s projected growth this year,” Rehn said.
He described the continuing trade conflict as a drag on eurozone confidence and performance, warning that uncertainty caused by the dispute risks deepening economic vulnerabilities across the bloc.
Rehn called for a dual-track strategy from the EU: diplomatic engagement aimed at preventing escalation, and readiness to impose proportionate countermeasures. He also proposed a mutual zero-tariff solution, while highlighting the strategic necessity of maintaining economic leverage in negotiations.
“Europe must reach a common position — not only on defence — but also in its response to U.S. tariffs, which risk triggering broader trade conflicts,” he said.
Trump’s new “reciprocal” trade policy, unveiled in early April, includes a 10 percent baseline levy on all imports and additional duties targeting key trading partners. The policy shift has unsettled financial markets and raised concerns over global trade disruption.
Rehn argued that the EU must look beyond immediate challenges and expand its global trade footprint. He pointed to the bloc’s 44 existing free trade agreements with 76 countries, which account for almost half of the EU’s external trade, and called for more ambitious negotiations to increase this share.
On defence, Rehn reiterated his support for enhanced EU-level cooperation, framing it as both a geopolitical necessity and a shared public good. He linked security policy with financial strategy, urging joint solutions to fund growing defence needs.
“Financing such efforts requires joint solutions,” Rehn said, adding that EU bonds could play a central role in enabling shared investment in defence infrastructure.
He also cited growing investor interest in EU debt instruments, especially amid waning confidence in U.S. fiscal management.
Rehn’s remarks reflect growing concern in Nordic and EU circles about the broader implications of shifting U.S. trade policy and the fragile geopolitical balance in Europe. The conflict in Ukraine and persistent global instability have added urgency to calls for deeper integration in both security and economic planning within the union.
HT
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Source: www.helsinkitimes.fi
