ECB President Christine Lagarde said the European Central Bank is ready to take action if US President Donald Trump's tariffs threaten financial stability.

The ECB "is always ready to use the tools at its disposal," Lagarde said in Warsaw after talks with eurozone finance ministers on how Europe can avert a trade war - and protect its economy if negotiations to avoid US levies fail.

"What we have seen recently, of course, is a certain instability. In Europe, and particularly in the eurozone, we are seeing market infrastructures and the functioning of markets, including bond markets, functioning in an orderly way," Lagarde said.

In less than a week, the ECB will meet to decide on monetary policy.

Despite Trump announcing a 90-day pause on his harsh tariffs, the trade war between China and the US continues to escalate. With no end in sight, their struggle has caused volatility in the markets, especially in Asia. | BGNES, AFP