Goldman Sachs Warns of Euro Drop if Trump Wins

Goldman Sachs predicts that the euro could decline by up to 10%, potentially falling below parity with the dollar, if Donald Trump wins the upcoming U.S. presidential election and implements significant tariffs along with domestic tax cuts. The bank outlines that a 10% tariff on all imports and a 20% levy on Chinese goods could lead to a substantial appreciation of the dollar, driven by increased inflation and higher interest rates in the U.S. compared to Europe. Additionally, a narrower trade war focused solely on tariffs against China could still result in a 3% drop in the euro. Current market expectations have already seen the euro depreciate by 2.7% since early October, reflecting concerns about potential tariff increases. Analysts emphasize that the outcome of the elections will significantly influence currency dynamics, with a Republican victory likely leading to a stronger dollar and a weaker euro.