Trump’s tariff threats shake the euro: Biggest drop in two decades

5. 02. 2025 | Natalie Bezděková

The euro is facing one of the biggest crises in the last twenty years.

After Donald Trump announced new tariffs on Canada, Mexico and China, the currency weakened sharply after trading began, reaching its lowest level since 2022. At the time, the euro was losing ground because of the war in Ukraine and fears of being cut off from Russian energy.

This time, however, the threat is coming directly from the US. Trump has warned that the European Union will soon see major tariff measures. Investors, who initially saw his words as mere rhetoric, now believe that tariffs are inevitable. If the predictions come true, the euro could fall not only to parity with the dollar, but even to its more than 20-year low.

The Czech koruna is reacting to the situation by weakening noticeably. All the gains it has made against the dollar since Trump’s inauguration are now virtually gone. The anticipated risk of the introduction of tariffs did not materialise at the time, and the markets were therefore lulled into a false sense of security. Today’s events, however, change the situation completely. Both the koruna and the euro are facing severe economic pressures and the future is highly uncertain, with economists warning that a possible escalation of the tariff war would not only damage trade relations between the US and the EU, but also significantly destabilise financial markets. In such a scenario, currency falls could become even more severe.

Photo source: www.pexels.com

Author of this article

Natalie Bezděková

I am a student of Master's degree in Political Science. I am interested in marketing, especially copywriting and social media. I also focus on political and social events at home and abroad and technological innovations. My free time is filled with sports, reading and a passion for travel.

WAS THIS ARTICLE HELPFUL?

Support us to keep up the good work and to provide you even better content. Your donations will be used to help students get access to quality content for free and pay our contributors’ salaries, who work hard to create this website content! Thank you for all your support!

Write a comment