(Bloomberg) -- Klaas Knot, a member of the European Central Bank Governing Council, said that if the United States imposes new tariffs, China may begin selling its goods to Europe at a discount.
In an interview with the Dutch newspaper Volkskrant on Monday, Knot stated that "there is a chance that the Chinese will start offering their goods in Europe at lower and lower prices" under such circumstances.
"That is already taking place in the steel market," he stated. "China is essentially exporting its deflation to us in this way."
When Donald Trump takes office again in January, international policymakers will be keeping an eye on the US for possible trade restrictions. China is at the top of the list of nations that the incoming US president has pledged to impose tariffs on.
ECB Vice President Luis de Guindos stated earlier this month that economic growth would be severely hampered by a trade war brought on by new US tariffs.
"The global economy would suffer greatly from a trade war, especially in terms of growth and inflation," he stated.
Knot repeated what his ECB colleague said.
"Obviously, there is a significant risk of a trade war, which is detrimental to an open economy like the Netherlands," he stated. President Xi Jinping "left the clear impression that China is prepared for anything that could come their way from the US," Knot said, referring to a recent visit to China.
Knot turned his attention to domestic concerns, cautioning labor unions that robust demands for wage increases in Europe could hasten inflation.
"I only say to the unions: it is a question of sizing," he said, acknowledging that the desire to restore purchasing power is reasonable. "Everyone knows deep down that a 7% wage demand is not consistent with a 2% return to inflation."
In an interview with the Dutch newspaper Volkskrant on Monday, Knot stated that "there is a chance that the Chinese will start offering their goods in Europe at lower and lower prices" under such circumstances.
"That is already taking place in the steel market," he stated. "China is essentially exporting its deflation to us in this way."
When Donald Trump takes office again in January, international policymakers will be keeping an eye on the US for possible trade restrictions. China is at the top of the list of nations that the incoming US president has pledged to impose tariffs on.
ECB Vice President Luis de Guindos stated earlier this month that economic growth would be severely hampered by a trade war brought on by new US tariffs.
"The global economy would suffer greatly from a trade war, especially in terms of growth and inflation," he stated.
Knot repeated what his ECB colleague said.
"Obviously, there is a significant risk of a trade war, which is detrimental to an open economy like the Netherlands," he stated. President Xi Jinping "left the clear impression that China is prepared for anything that could come their way from the US," Knot said, referring to a recent visit to China.
Knot turned his attention to domestic concerns, cautioning labor unions that robust demands for wage increases in Europe could hasten inflation.
"I only say to the unions: it is a question of sizing," he said, acknowledging that the desire to restore purchasing power is reasonable. "Everyone knows deep down that a 7% wage demand is not consistent with a 2% return to inflation."
