(Bloomberg) --
Europe will see economic activity weaken if the US imposes tariffs, according to European Central Bank Governing Council member Yannis Stournaras.
“If I can advise our friends in the United States, this is my advice: don’t do it,” Stournaras, who heads Bank of Greece, said at Bloomberg’s “Future of Greek Finance Symposium” in Athens on Monday. Any levies could lead to recession and a period of deflation in the medium term, he said.
Greek Prime Minister Kyriakos Mitsotakis earlier warned of the damage a trade war with the US would cause the European Union and said an accord is possible with the incoming Donald Trump administration.
“I do worry about tariffs because I’m a proponent of free trade, and I believe that tariffs eventually don’t create a net sort of positive impact,” Mitsotakis said at the same event. “A trade war between the US and Europe would clearly not benefit the US or Europe.”
Trump has caused concern in European capitals with his threat to impose 60% tariffs on China and 10% to 20% on the rest of the world. During his first term, Trump hit European steel and aluminum exports with tariffs, triggering a tit-for-tat escalation with the EU, which targeted politically sensitive companies in the US with its own duties.
The EU has already prepared a list of American goods it could hit with tariffs if the new Trump administration follows through on his threat to hit the bloc with punitive trade measures, Bloomberg reported last month. New levies against the US aren’t a base case for the EU and will only be used to retaliate against a move by the White House.
“I think a deal can be made when it comes to the US,” said Mitsotakis, who is one of the few EU leaders who was in office during Trump’s first term. The Greek premier spoke with the incoming American president last week.
He highlighted that the EU sets trade policy for the entire bloc.
“We need to be very clear,” he said. “The European Union is negotiating as a whole, there is no room to have bilateral agreements.”
(Updates with Stournaras comments starting in first paragraph)
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