European Central Bank: Europe could be a loser in the U.S.-Ki trade war

“We all agree that there is still room for regulating declining rates,” he told Reuters. We're almost on target... and we're still in restrictive territory. ”

Major uncertainty is US trade policy and this could hit Europe hard, even before any direct trade barriers in the bloc, Cypolone argued.

The one that bothers me the most is if President Trump engages in a full trade struggle with China”, Cipolone added. “This is a more serious threat because China has 35% of the world's production capacity. ”

The US imposed a 10% fee for all Chinese imports this week, prompting revenge measures from Beijing.

According to Cypolone, restricting US access would force China to find other markets and can launch discount products in Europe, containing growth and prices.

However, Cypolone appears to downplay the impact of potential tariffs on Europe. He said firms can absorb some of the highest costs by sacrificing profit margins, while the inevitable weakening of the euro against the US dollar would also cover the bloc.

Trade disagreements can delay economic growth, but not enough to boost a recession, especially since other parts of the economy are showing flexibility.

“We may not be flourishing, but I do not expect a recession at all,” he said.