Brussels – Trade tensions with the United States, leading China to export more to the euro area, may trigger adverse effects on employment, with fewer job offers for Europeans and therefore more unemployment. The European Central Bank sounds the alarm in a special report. The question posed in Frankfurt is not new, as the trend so far has shown how increased Chinese presence and competition produce shocks in the twelve-star job market.
“Sectors facing greater competition from China have experienced larger declines in published job vacancies – a signal of weaker labour demand,” the ECB economists warn. Between 2019 and 2024, they point out by way of example, labour demand in the vehicle sector fell by 55 percent, while the decline in the chemical industry is estimated at 95 percent.
Looking ahead, this is a troubling trend, since the ECB itself warns of the risk that the tariff war triggered by the Trump administration could push the People’s Republic even further towards the EU and its eurozone. This can be a good thing, of course, insofar as it can compensate for some of the trade that has become more expensive and challenging. At the same time, there is a risk of stressing the labour market.
https://www.eunews.it/en/2025/06/17/lagarde-warns-on-trump-in-europe-30-million-jobs-at-stake/
“All in all, the rising competitiveness of Chinese exports poses significant challenges for euro area labour markets,” the European Central Bank’s analysis insists. “While at the moment the impact is concentrated in sectors such as vehicles and chemicals, the broader implications might extend to nearly one-third of euro area employment.”
Europe must start preparing. Trade diversion from the United States, coupled with China’s growing competitiveness in high-value-added sectors, suggests that “Euro area firms must adapt to an increasingly competitive global environment.“ The ECB warns that trade shocks “may cause short-term disruptions and shift jobs across sectors.” However, in the long run, total employment may not change much as the economy adjusts through wage changes and shifts of workers between sectors. Finally, a remark that is a suggestion for national governments in terms of reforms: “ challenges like job market inefficiencies, costs of adjustment, and government policies might cause temporary disruptions before the new equilibrium is reached.”
English version by the Translation Service of Withub
