Donald Trump’s trade threats may not stop at U.S. borders. According to new research from the European Central Bank, China could reroute more of its exports toward Europe if tariffs tighten under a second Trump presidencyputting serious pressure on European industest and jobs. The report warns that trade diversion from the U.S., combined with China’s rising edge in high-value sectors, could create major headwinds for Europe’s labor market.
The study, led by ECB economist Clemence Berson, examined data from 2015 to 2022 and found a notable trfinish: every 1,000 ($1,160) increase in Chinese imports per worker in a specific sector corresponded to a 0.1 percentage point drop in that industest’s employment rate. That might sound tiny, but it adds up to an estimated 240,000 jobs across the eurozone either lost or shifted to less exposed sectors. While the initial hit is landing on industries like chemicals and autos, the broader risk could extfinish to nearly one-third of all euro area jobs if competitive pressure continues to mount.
For investors, the ripple effect could reach deeper than labor markets. If companies like Tesla 
TSLA, Volkswagen (VWAPY), or BASF (BASFY) find themselves facing a wave of cheaper Chinese competitors in core product lines, margins could tighten, and strategic shifts may follow. The ECB’s warning lands at a time when Europe is already navigating slow growth, green transition costs, and geopolitical uncertaintycreating this an emerging macro risk worth tracking.
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