why could Europe pay the price? — TradingView News

US VS. CHINA: WHY COULD EUROPE PAY THE PRICE?

The fallout from U.S. tariffs on China could deliver Europe its next macro headache: a wave of cheap, diverted goods hitting an already fragile manufacturing sector, according to UBS.

The warning from the Swiss bank comes as euro zone import volumes from China rose substantially in the first quarter.

However, UBS economist Anna Titareva says it is still unclear whether this spike signals a permanent shift or is just a temporary workaround for goods destined for the U.S.

“It is difficult to disentangle how much of this pick-up is temporary… and how much is due to a genuine pick-up in Eurozone demand or Chinese imports,” she writes in a note.

And while a surge in cheap Chinese imports could sound disinflationary alarms, the bank sees “no strong evidence” for now that Europe is importing deflation from China.

Europe, however, is not standing still, as it grapples with declining competitiveness and a widening trade deficit.

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Thomson ReutersEurope trade with China

UBS notes that the bloc has already imposed anti-dumping duties on electric cars and other goods, and expects sector-specific countermeasures from Brussels in the coming months.

(Danilo Masoni)

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TUESDAY’S OTHER LIVE MARKETS POSTS:

EUROPEAN STOCKS UNFAZED BY TRUMP TARIFF UPDATE CLICK HERE

EUROPE BEFORE THE BELL: STOCK FUTURES STEADY AS TARIFF SHOW ROLLS ON CLICK HERE

TARIFF DEJA VU TAKES HOLD CLICK HERE

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