FRANKFURT, Germany — Europe's economy is holding up better than expected in the face of U.S. President Donald Trump's new tariffs - in part because the European Union didn't retaliate with self-defeating tariffs of its own, the head of the European Central Bank said Tuesday.

Christine Lagarde said the impact of Trump's trade war on growth and inflation in the 20 countries that use the euro currency had also been softened by a stronger euro and by conclusion of a trade deal with Trump. The deal capped tariffs at 15% and took away uncertainty that threatened to delay or disrupt business investment.

“A year ago, most would have assumed that U.S. tariffs... would trigger a major adverse shock to the euro area economy,” Large said in a speech delivered at a central banking conference in Helsi

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