Trump's victory in this week's U.S. election has immediately sparked concerns in European markets. Deutsche Bank quickly downgraded its forecast for the euro against the dollar, predicting the exchange rate will fall to 1.05. Behind this forecast downgrade is European economists' concern over Trump's impending trade protectionist policies. Several German experts have pointed out that during his campaign, Trump repeatedly proposed radical measures such as imposing tariffs on imported goods, which, if implemented, would inevitably impact Europe's, particularly Germany's, economy.
The director of Germany's Ifo Institute for Economic Research stated that Trump's economic agenda is clearly protectionist, which poses a significant blow to the German economy that relies on exports to the U.S. As the largest sales market outside the EU for Germany, if Trump implements a 20% tariff policy, it is expected to result in economic losses of up to 33 billion euros for Germany, with the Ifo Institute estimating a reduction of approximately 15% in German exports to the U.S.
Goldman Sachs also subsequently lowered its growth expectations for the eurozone economy, anticipating that GDP growth in 2025 will decrease from the previous 1.1% to 0.8%. Analysts suggest that after Trump takes office, the dollar could significantly appreciate, coupled with potential tariff barriers, which will exert more pressure on the euro. The euro has become one of the main currencies suffering losses in the foreign exchange market due to the "red sweep." In response to escalating economic growth risks, the European Central Bank might opt to further cut interest rates by 50 basis points to alleviate economic pressure. The European Central Bank’s next policy meeting is scheduled for December 12, where it is expected to adopt more accommodative policies to address uncertain market prospects.
Additionally, there remains significant uncertainty regarding how the Trump administration's policies will be implemented. Some analysts point out that whether Trump will prioritize tax cuts or adopt a hardline tariff policy during his tenure is still unknown. Analysts at Deutsche Bank concluded, "This U.S. election result is truly historic and will bring vastly different shocks to global markets, potentially altering long-term market correlations."
