2026.01.1907:57:55UTC+00Euro Rebounds as Trump Tariff Threats Weigh on the Dollar

The euro strengthened to approximately $1.162, rebounding from an earlier dip to a three-month low of $1.158, as the US dollar weakened due to new tariff threats from President Donald Trump. Trump suggested imposing a 10% tariff on several European nations in an attempt to pressure Denmark into selling Greenland to the United States. Such tariffs could prompt trade redirection within the European Union, with the UK and Germany—holding the most significant export activities with the US—expected to be the most impacted. A 10% tariff might reduce GDP by about 0.1%, while a 25% levy could lower output by 0.2% to 0.3%. However, the euro's further appreciation is hindered by growing concerns about the severe political and geopolitical consequences of this proposed move. Analysts caution that any effort to acquire Greenland might cause lasting harm to NATO and escalate tensions in transatlantic relations. In response, the European Union is evaluating substantial retaliatory actions, potentially imposing tariffs up to €93 billion on American goods.