US Dollar Surges as Trump Threatens 30% Tariffs on EU, Euro Drops

The US Dollar rose 0.14% to $97.99 on Monday, while the euro retreated, as US President Donald Trump threatened to impose 30% tariffs on the European Union.

The US Dollar (USD) rose by 0.14% to $97.99 on Monday, as US President Donald Trump threatened to impose a 30% tariff on the European Union (EU). The euro, however, retreated in response to the announcement. This move comes as Trump seeks to establish a more "reciprocal" global trade landscape and follows his recent spate of letters to various trading partners, including Mexico and Canada, setting blanket tariff rates ranging from 20% up to 50% [2].

Trump's tariff threat has sparked concern among investors and financial professionals. The EU, which collectively sells more to the US than any single country, has warned that the new tariffs would disrupt essential transatlantic supply chains, potentially impacting businesses, consumers, and patients on both sides of the Atlantic [2].

The USD's rise can be attributed to the perception that the US economy remains relatively strong, with near-full employment, ongoing economic growth, and inflation above the Federal Reserve's 2% target. However, the potential for higher tariffs could lead to increased uncertainty and volatility in global markets, potentially weighing on the USD [1].

The euro's retreat, on the other hand, reflects concerns about the impact of Trump's tariffs on EU exports to the US. The EU's response to the threat, including its readiness to continue working towards an agreement and its commitment to safeguard EU interests, may mitigate some of the immediate impact. However, the long-term effects of the tariffs remain uncertain [2].

Investors and financial professionals should closely monitor the developments in US-EU trade negotiations and the potential impact of Trump's tariffs on global trade dynamics. The USD's response to the threat and the euro's retreat highlight the importance of geopolitical factors in currency markets.

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L6N3T70W2:0-why-trump-s-push-for-a-1-fed-policy-rate-could-spell-trouble-for-us-economy/
[2] https://www.cnbc.com/2025/07/12/trump-tariffs-european-union-eu-mexico-trade.html