Barclays Bank Predicts Euro to Fall to Parity with Dollar

Today, Friday, experts at Barclays Bank expected the euro to fall to parity against the dollar if former US President Donald Trump wins the US presidential elections scheduled for November and imposes huge customs duties of 20%, especially on European car manufacturers. The British Bank economists continued that the euro is expected to fall to the level of $1.05 from about $1.08 currently, within its basic scenario of increasing US customs duties on European goods by only 10%, but if customs duties of 20% are imposed on goods. In this case, the euro may reach parity with the US dollar.

It is noteworthy that former US President Donald Trump previously threatened to increase customs duties on US trading partners, saying that he would propose imposing 10% customs duties on imports, and that the expected tax cuts could contribute to alleviating the burden of additional customs duties on American families. Trump indicated that taxes could reduce the impact of the potential negative repercussions of the proposal to increase customs duties, despite this proposal raising concerns about obstructing trade and high costs for American families.

Impact of Trump's Potential Win on the Euro-Dollar Exchange Rate 

Possible Scenarios for the Euro-Dollar Exchange Rate 

There are two possible scenarios for the euro-dollar exchange rate if Trump wins the US election and imposes a 20% customs duty on European goods. The first scenario is that the euro will fall to the level of $1.05, as predicted by Barclays Bank. This would mean that the euro and the dollar would be at parity, with each currency having equal value.

The second scenario is that the euro could potentially fall even further, reaching below the $1.00 mark. This would mean that the euro would be worth less than the dollar, which could have significant implications for the global economy.

Impact on European Car Manufacturers 

One of the main reasons for Barclays Bank's prediction is the potential impact on European car manufacturers. If Trump imposes a 20% customs duty on European cars, it would make them significantly more expensive for American consumers. This could lead to a decrease in demand for European cars, which would ultimately hurt the European economy and weaken the euro.

Moreover, if European car manufacturers are unable to sell their products in the US due to high customs duties, it could also lead to job losses and economic downturn in Europe. This would further contribute to the weakening of the euro against the dollar.

Potential Solutions to Mitigate the Impact 

Proposed Tax Cuts 

In an attempt to alleviate the burden of additional customs duties on American families, Trump has proposed tax cuts. These tax cuts could potentially reduce the impact of the proposed 20% customs duty on European goods. However, it is important to note that these tax cuts may not be enough to completely offset the negative effects of the customs duty.

Furthermore, there are concerns about the long-term implications of these tax cuts, as they could potentially lead to a larger budget deficit and increase the national debt. This could have a negative impact on the US economy in the long run.

Negotiations and Trade Deals 

Another potential solution to mitigate the impact of Trump's proposed policies is through negotiations and trade deals. The European Union has already expressed its willingness to negotiate with the US and find a mutually beneficial solution. This could potentially lead to a reduction in the proposed customs duties and lessen the impact on the euro-dollar exchange rate.

Moreover, the EU could also look into signing trade deals with other countries to diversify its export market and reduce its reliance on the US. This would not only help in mitigating the impact of Trump's policies but also strengthen the European economy in the long run.

Impact on the Global Economy 

The potential fall of the euro to parity with the dollar could have significant implications for the global economy. The US and the EU are two of the largest economies in the world, and any major changes in their exchange rate could have a ripple effect on other countries.

For instance, a weaker euro could make European goods more competitive in the global market, which could hurt the economies of other countries that export similar products. On the other hand, a stronger dollar could make it more expensive for other countries to import goods from the US, leading to a decrease in demand for American products.

Conclusion 

In conclusion, Barclays Bank's prediction of the euro falling to parity with the dollar if Trump wins the US election and imposes a 20% customs duty on European goods is a cause for concern. This could have significant implications for the global economy, especially for the US and the EU.

While there are potential solutions to mitigate the impact, such as negotiations and trade deals, it is important for both parties to find a mutually beneficial solution. Moreover, it is crucial for other countries to closely monitor the situation and prepare for any potential effects on their own economies. Only time will tell how the euro-dollar exchange rate will be affected by the outcome of the US election.