Trump tariffs: Americans in France hit by dollar drop

The US dollar fell by more than 1% against the euro immediately after US President Donald Trump announced the introduction of new trade tariffs of 20% on European Union goods.

Mr Trump has said the new tariffs will “revive” American industry and put an end to the “looting” of the United States.

Mr Trump has said that he will sign an executive order instituting “reciprocal tariffs” on US imports, meaning at the same level as those levied by Washington's trading partners. Foreign products will be subject to tariffs of at least 10%, and from the EU specifically, at 20%.

Other countries have fared even worse; China has been handed a tariff of 34%, Vietnam 46%, Japan 24%, India 26%, and Switzerland 31%. The UK has had 10% imposed.

The new European tariffs are set to come into force in France (and the rest of the EU) between April 5-9.

Read also: List: Industries in France at risk of price rises if Trump’s EU customs threat comes in 
Read more: Trump tariff row: How much - and what - does the US export to France and vice versa 

EU ‘prepared to respond’

However, his announcements caused the US dollar to fall by more than 1% last night (around 21:20 French time), with experts - including Ursula von der Leyen, president of the European Commission, warning that the global economy would “massively suffer” from the US moves, including the US.

She said today (April 3) that the European Union was “prepared to respond” to the US, but added that the bloc would prefer to “remove any remaining barriers to transatlantic trade”, reported the Financial Times.

“We will also be watching closely what indirect effects these tariffs could have because we cannot absorb global overcapacity nor will we accept dumping on our markets. Europe has everything it needs to make it through the storm,” she added. “We are in this together. If you take on one of us, you take on all of us.”

The French response

French Prime Minister François Bayrou has already responded to the tariffs, saying today (April 3) during a Senate meeting: “This decision is a disaster for the world of economics. It is an immense difficulty for Europe. I believe it is also a disaster for the United States and for American citizens.”

Similarly, President Emmanuel Macron is set to hold a meeting at 16:00 today at the Elysée, with “representatives of the sectors affected by the announcements”. 

French government spokeswoman Sophie Primas told RTL that France - with the European Union - was “ready for a trade war” with the US.

Read more: 64% of people in France consider boycott of US products amidst trade war 

Two retaliatory measures are planned, she said. 

“The first will be effective around mid-April, which will correspond to his first attack on aluminium and steel,” she said. “And then a second set of retaliatory measures, covering all products and services, will probably be ready at the end of April”. 

“Donald Trump ‘thinks he's the master of the world,” Ms Primas scoffed, as she made her statement.

Read also: Comment: How France should respond to ‘bully’ Trump's tariffs 

Four weeks to retaliate

As for European-wide “retaliation”, the EU has given itself four weeks to convince Mr Trump to reverse his decision, and has ruled out any retaliation until the end of April.

Yet, the US dollar lost 1.09% against the euro last night, and also fell against the pound, losing up to 0.75%.

‘Tariffs are bad for growth’

“The increase in customs duties has been a negative factor for the US dollar [in recent weeks],” said Matt Weller, of financial trading website Forex.com, to BFMTV.

He said that currency traders already fear that the customs surtaxes “will lead to a slowdown in the US economy”.

Similarly, Stephen Innes at SPI Asset Management, said that “tariffs are inherently inflationary and bad for growth”, leaving the market “walking a tightrope”.

Ms von der Leyen added that tariffs would “hurt consumers around the world” and raise the cost of food, medication, and transport.

Already, there are fears that the US Federal Reserve could lower interest rates, which would make the US dollar less profitable to investors.