The euro whipsawed against the US dollar on Thursday, as markets scrambled to respond to Donald Trump’s announcement of “immediate” negotiations to end the Ukraine war and subsequent pledge that additional tariffs were imminent.
The euro initially strengthened around half a percentage point against the dollar to hit a high of $1.044, after the US president said on Wednesday that he had spoken to Russia’s Vladimir Putin and Ukraine’s Volodymyr Zelenskyy about ending the nearly three-year-long conflict.
But these gains were quickly reversed after Trump said on Thursday afternoon that “reciprocal tariffs” would be formally announced later that evening, with the euro falling to a low of $1.038.
“THREE GREAT WEEKS, PERHAPS THE BEST EVER, BUT TODAY IS THE BIG ONE: RECIPROCAL TARIFFS!!! MAKE AMERICA GREAT AGAIN!!!” Trump wrote on Truth Social, his media platform.
Trump has repeatedly threatened to match the tax rate other countries charge on imports from the US. “If they charge us, we charge them,” he said last week.
In a further twist, just before 5pm Brussels time, the euro had made an almost full recovery, trading back around $1.043.
The market turbulence comes amid an intense debate among economists about the overall impact of Trump’s policies on the eurozone economy and euro-dollar exchange rate.
Analysts at Bloomberg and Goldman Sachs have estimated that Trump’s campaign pledge to impose a “universal” levy of…
