ECB’S Knot: Tariffs could push China to undercut prices in Europe

European Central Bank (ECB) Governing Council member Klaas Knot has warned that China may begin selling its products to Europe at discounted rates if the United States imposes new tariffs under President Donald Trump.

Knot suggested in an interview with Dutch newspaper Volkskrant that if a trade war were to erupt, China might respond by offering goods in Europe at lower prices, effectively exporting deflation to the region. He noted similar trends already visible in the steel market.

The warning comes as global policymakers brace for Trump’s return to the White House in January, with plans to target China and other countries with tariffs.

Earlier, ECB Vice President Luis de Guindos cautioned that a US-led trade war could harm global growth and increase inflationary risks.

Domestically, Knot urged European labour unions to moderate wage-increase demands, cautioning that excessive raises could fuel inflation, delaying its return to the ECB’s 2 per cent target.

Attribution: Bloomberg

Subediting: Y.Yasser