EU-US trade deal 'has not gone down well' as EUR takes hit
|It’s safe to say that the details of the US-EU trade deal have not gone down particularly well among European officials. French PM François Bayrou described the EU as having “resigned itself into submission”, while German Chancellor Friedrich Merz warned that the tariffs would cause “considerable damage” for all parties involved.
We see the terms of the deal as perhaps the lesser of two evils. While the 15% tariffs are a full five percentage points higher than the 10% rate that European negotiators were reportedly pushing for during negotiations, they are also much lower than the 30-50% threatened by Trump in recent weeks.
The point of frustration for Europeans will be whether officials could have negotiated harder and smarter in order to achieve a less economically damaging baseline tariff rate.
We suspect the answer is probably yes, but at what cost? Would it have been worth missing the 1st of August deadline, resigning the bloc to significantly higher tariffs in the near-term and guaranteeing a more prolonged period of uncertainty for businesses and consumers? Very tough to say.
At any rate, with markets seeing the deal as skewed in favour of the US and American assets, rather than Europe, there now appears room for a further correction in the euro against the dollar, particularly from current elevated levels.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.