Euro plunges amid Trump tariff fears

The euro hit its lowest level against the pound in two years amid concerns that its economy is heavily exposed to the risks of a global trade war.

The single currency has dropped 0.2pc versus sterling to 82.8p, its weakest point since April 2022, and is down about 1.5pc since the election of Donald Trump. 

The incoming US president has pledged to place tariffs on foreign goods entering the American economy, which would be a heavy blow to EU exporters.

The euro slumped to a four-and-a-half-month low against the dollar amid reports that former US Trade Representative Robert Lighthizer, known to be hawkish on tariffs, was to join the new Trump administration.

Althea Spinozzi of Saxo said: “Trump has the executive power to impose tariffs on countries from his first day in office, so from January, these tariffs could be in place and the cost passed on to consumers.”

Europe’s economy is already facing turmoil from China, which announced today that it will impose “temporary anti-dumping measures” on brandy imported from the EU in response to tariffs on its electric cars.

Meanwhile there is political uncertainty in its largest economy after German Chancellor Olaf Scholz said he would be willing to call a vote of confidence before Christmas, paving the way for snap elections following the collapse of his governing coalition.

However, the cost of government borrowing was lower across the UK and Europe as fears over the impact of a Trump presidency subsided.

Jefferies chief Europe economist Mohit Kumar said: “We do not see Republican policies as that bad for the US deficit picture as feared by the market.”

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