US tariffs could push euro to parity with the dollar

The euro risks falling to parity with the US dollar for the first time since late 2022 if a new transatlantic trade war weakens the already struggling eurozone economy, analysts warned.

- Graeme Wearden

The euro sank below $1.04 against the dollar, the weakest level since November 2022, last Friday after a survey of European purchasing managers showed eurozone private sector output has fallen this month.

The threat of new US tariffs on imports from Europe has pushed the euro lower since the US election - it was worth $1.09 on 5 November, but has since dropped against the dollar for three weeks running. It ended last week at $1.041, but could have further to fall once Donald Trump's new administration lays out its economic plans.

Trump has floated the idea of imposing a 60% to 100% levy on Chinese products and a 10%-20% levy on goods from the rest of the world, which would make European exports to the US less competitive and could damage economic growth.