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.

The European Central Bank is "not overly concerned" by the impact of inflation abroad on the bloc, the institution's President Christine Lagarde told CNBC.

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.