European Central Bank interest rates have room to fall further as inflation moderates, ECB board member Piero Cipollone said, warning that the U.S. administration's trade war with China could have a detrimental impact on the 20-member euro zone.

The first punches have been thrown between the United States and China in what could amount to a short-lived trade dispute with limited economic fallout or the start of yet another lengthy and painful trade war reminiscent of President Donald Trump’s first term.

So what are the potential economic consequences of these opening salvos and could this turn into a broader trade war? China is subject to significant US tariffs already and has been since Trump's first term.

China's stocks and currency came under pressure as markets returning from a week-long break were greeted by a new trade dispute with the United States and ructions in the global artificial intelligence sector.