If Donald Trump hikes tariffs after re-entering the White House, China could look to ship masses of cheap goods and 'export' deflation to Europe, a European Central Bank governing council member has stated.
Klaas Knot told Dutch newspaper Volkskrant that if the US starts a trade war, "there is a chance that the Chinese will start offering their goods in Europe at lower and lower prices".
He said this was already happening in the steel market.
"In this way, China is, as it were, exporting its deflation to us," he said.
Knot said there is "a serious chance of a trade war", having made a recent trip to China, he noted that President Xi Jinping gave a "clear impression that China is prepared for anything that could come their way from the US".
If a trade war breaks out, "it is extremely negative for the global economy, particularly for growth but also for inflation."