The US-China Trade Conflict Will Hit Europe and the Euro

Abstract

While the trade conflict between the US and China seems to be abating, their rivalry on technology is heating up. Their race for leadership will likely extend into the monetary realm. China has indicated it could respond to tariffs or tech-related measures by the US with currency movements. If so, Europe will inevitably be dragged into the conflict. The euro area needs to be proactive to prevent the euro from becoming a variable in an economic conflict in which it cannot remain an innocent bystander.