As Trump successfully dodges the shooting, his chances of winning the 2024 US election increase. Goldman Sachs stated in its report last Friday that the gambling market believes the likelihood of Trump winning in November is about 60%, with some reports over the weekend suggesting that this number has risen again.

Goldman Sachs economists warn that if Trump wins another term, it could have a "profound impact" on the eurozone economy.

Goldman Sachs economists Jari Stehn and James Moberly stated in a report released last Friday, "Our baseline estimates suggest that Eurozone GDP will sharply decline by around 1%, and inflation will moderately rise by 0.1 percentage points. Therefore, Trump's re-election will pose significant downside risks to our constructive growth forecast for the Eurozone

They explained that the uncertainty of trade policies, the increase in defense and security pressures, and the spillover effects of US domestic policies on taxation and other aspects may all affect Europe.

Jari Stehn and James Moberly argue that Trump's trade policies and their uncertainty may be a factor affecting the European economy, just like during his last presidency.

During Trump's previous term, trade tensions between the US government and the European Union intensified. The United States imposed tariffs on European steel and aluminum, leading to the European Union imposing tariffs on American goods. For months, the market has been concerned about whether tariffs on other industries such as automobiles will increase, which has disrupted market sentiment.

Economists say that historically, this uncertainty has had a significant and lasting impact on economic activity in the eurozone. According to Stehn and Moberly, some countries like Germany are expected to be more severely affected as they rely more on industrial production.

Economists say that trade tensions may also lead to a blow to the GDP of the eurozone, although uncertainty in trade policies may cause prices to fall, higher tariffs may push up prices.

It is expected that Trump will also reduce or completely cut US aid to Ukraine and imply that he will not assist countries in the NATO military alliance that have not met the 2% defense spending requirement. Goldman Sachs stated that it is necessary to meet the 2% requirement while potentially offsetting at least some of the US financial support for Ukraine, which could have an impact on the European economy.

Another way in which Trump's policies may affect the eurozone economy is through domestic plans in the United States, such as tax cuts and reduced regulation.

Goldman Sachs economists said, "During Trump's first term, the shift in macroeconomic policies in the United States led to significant spillover effects on Europe through the strengthening of US demand and the tightening of US financial conditions

According to Stehn and Moberly, the expected tax cuts in the United States may boost economic activity in Europe, but combined with other expected market changes, the overall impact may be limited.

Based on the above information, if Trump is really re elected and relevant policies are introduced, it may suppress the eurozone economy as expected by Goldman Sachs, which may become a potential negative for the eurozone. Investors need to remain vigilant about this.

EUR/USD daily chart