Donald Trump announced that if he comes to power, he plans to introduce a 10 percent US tariff on all imports and a 20 percent duty on Chinese products, as well as cut taxes.
Specialists from the investment company Goldman Sachs believe that such actions could lead to a sharp rise in the dollar exchange rate and a fall in the euro by 8-10%. In the case of a narrower policy, in which Trump only imposes additional tariffs on China, the euro is expected to fall by about 3%.
Goldman Sachs said a scenario in which Republicans win the presidency and Congress could lead to higher tariffs and lower domestic taxes, which would stimulate the economy.
Trump is now neck-and-neck with Democratic Vice President Kamala Harris, but Trump’s radical economic policies are likely to have a greater impact on Europe, a key trading partner for both the US and China.
A Goldman Sachs analyst believes that a 10% tariff on all imports and a 20% tariff on Chinese goods, combined with tax cuts, could lead to a sharp rise in the dollar and a fall of 8-10% in the euro. The euro was last traded at $1.083. It last traded below parity in November 2022.
Both measures would likely lead to higher inflation, which would mean significantly higher interest rates in the US than in Europe, making the dollar more attractive.
Source: Racurs
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