Goldman Sachs warned that Trump may crash the euro rate in case of election victory.

The euro rate may fall by 10%, - Goldman Sachs

According to the forecast by Goldman Sachs, the euro rate may fall by 10% and drop below 1 dollar if Donald Trump wins the presidential elections in the USA and implements large-scale tariffs and reduces internal taxes.

According to Reuters, former US President Trump is currently on par with Vice President Kamala Harris, but his radical economic policies may affect Europe, which is a key trade partner of the USA and China.

Goldman Sachs says that in case of a Republican victory in the elections and Congress, tariffs will be raised and internal taxes reduced, which will stimulate the economy. Analysts estimate that a 10% tariff on all imports to the USA and a 20% levy on Chinese products may lead to a sharp increase in the dollar and a drop in the euro by 8-10%.

At the same time, there is a possibility of rising inflation, which will lead to higher interest rates in the USA than in Europe, thereby increasing the attractiveness of the dollar.

"We expect that the strongest response in dollars will be received from the Republican campaign, which will open the doors for more significant tariff increases combined with internal tax breaks," wrote Goldman Sachs analyst Michael Cahill.

Analysts also warn that a war between the USA and China, consisting of the imposition of additional tariffs, may lead to a 3% drop in the euro.

In case of a successful victory of the Democrats or a split in the Democratic government, the dollar rate is most likely initially to decrease as markets reevaluate expected tariff changes, noted Goldman Sachs.

Recall, since the beginning of October, the euro rate has fallen by 2.7% as the US economy moves away from Europe, and some investors anticipate tariff increases after a possible Trump victory.