Published: 2024-12-23T08:24:58.000Z
EUR/USD flows: Trump Threats
Director of Research , Macroeconomics and Strategy
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Some focus on Trump threats in Europe today, after tariffs threats on the EU on Friday if it did buy more oil and gas from the U.S. and demands from president elect Trump that NATO countries defence spending should be 5% of GDP.
Traders view these as maximum Trump negotiating rhetoric along the lines of the threats of 25% against Mexico and Canada, with an eventually agreement likely to be less. A number of leading EU countries are already pushing for a 3% 2030 defence spending commitment, while the EU has already said it is willing to buy more U.S. LNG. Even so, EU and NATO agreements will likely take 6 months, which could be too slow for Trump and actually led to tariff announcement at some stage in 2025, which would hurt EZ economic sentiment and potentially deepen ECB rate cuts.