Europe must “be prepared” for potential trade tariffs from U.S. President Donald Trump, the president of the European Central Bank Christine Lagarde told CNBC at the World Economic Forum in Davos on Wednesday.

Any EU offer to buy more US goods should be backed up by a credible threat to retaliate robustly if Trump goes ahead with tariffs. If there is a full-blown trade war, the EU will have retaliatory tariffs ready: a “negative list” of US products drafted to mirror Trump’s proposed tariffs could serve as a deterrent.

Europe must "be prepared" and anticipate the potential trade tariffs of newly inaugurated U.S. President Donald Trump, European Central Bank President Christine Lagarde told CNBC on Wednesday. "What we need to do here in Europe is to be prepared,