The euro could fall by 10% if Donald Trump wins the election as he plans to impose wide-ranging tariffs and cut domestic taxes.
Such a forecast is given by Goldman Sachs, one of the largest investment companies in the United States and the world, Reuters reports.
Experts at Goldman Sachs believe that a scenario in which Republicans win the presidential election and win Congress could lead to higher tariffs and lower domestic taxes, which would stimulate the economy.
As a result, a 10 percent US tariff on all imports and a 20 percent duty on Chinese products, combined with tax cuts, could lead to a sharp rise in the dollar and a drop in the euro by 8-10 percent. The euro last traded at $1.083, and below parity, in November 2022.
Both measures are likely to lead to higher inflation — meaning much higher interest rates in the US than in Europe, making the dollar more attractive.
In the case of a tighter policy, in which Trump only imposes additional tariffs against China, the euro is expected to fall by about 3%.
"A Democratic victory or a divided Democratic government is likely to lead to some initial decline in the dollar as markets reevaluate the prospect of more dramatic changes in tariffs," Goldman Sachs said.
The euro fell 2.7% in October as the U.S. economy pulled away from Europe and some investors expected more tariffs after a possible Trump victory.
- Brussels is developing a two-stage trade strategy to counter Donald Trump in case he becomes US president again, the Financial Times reported in July. The EU believes that the already announced 10% universal tax on imports by Trump will reduce exports from the EU by approximately €150 billion every year.
- During his presidency, Trump has already imposed tariffs on goods from the EU. This happened in 2018, when he imposed tariffs on steel and aluminum imports from the EU and other countries worth €6.4 billion for national security reasons, the EU responded by imposing tariffs worth €2.8 billion. At that time, Ukrainian steel products also fell under these duties.
For more news and in-depth stories from Ukraine please follow us on X.