The Trump administration has implemented multiple tariff measures since January, which have caused global market turbulence. This week, Trump threatened to impose a 200% tariff on imported alcoholic beverages from France and the European Union in response to the possibility of the EU imposing tariffs on American made whiskey. Previously, the United States had imposed a 25% tariff on European steel and aluminum products, which sparked strong opposition from the European Union.

Any trade conflict will harm the global economy. Whether it is the initiator, the avenger, or the party that retaliates again, they will ultimately suffer losses. "- Christine Lagarde, President of the European Central Bank

Lagarde emphasized that the unilateral trade policy of the United States not only poses a challenge to the European economy, but may also backfire on its own economy:

Corporate investment confidence has been dampened: the instability of trade policies has increased, making it difficult for multinational corporations to formulate long-term strategies, leading to a slowdown in investment.

Rising inflation risk: High tariffs raise import costs, causing prices to rise and weakening consumer purchasing power.

Economic growth under pressure: If trade conflicts persist, corporate profitability will decline, ultimately affecting employment and overall economic growth.

Trump's decision and subsequent countermeasures have brought unprecedented uncertainty, and we must remain highly vigilant. "- Christine Lagarde

Trade tensions have intensified, with the euro falling to 1.0847 against the US dollar this week, far from its five month high earlier this week. The market's growing concerns about the economic prospects of the European Union have led to an increase in investor risk aversion, with funds flowing into safe haven assets such as the US dollar.

The main reason for the short-term correction of the euro is that major economies such as Germany are still facing economic weakness, and the market is pessimistic about future growth expectations. The escalation of trade conflicts may affect the EU's internal fiscal policy and weaken market confidence. Investors are turning to safe haven assets such as the US dollar, putting pressure on the euro.

Market analysts believe that if the trade conflict escalates, the euro may further fall below the 1.08 mark, and if negotiations make progress, the euro is expected to rebound briefly.

Faced with Trump's tariff threat, the EU may be forced to take countermeasures. Lagarde said that the EU has "no choice" but to respond, but she also emphasized that considering the delay in the implementation of tariff policies, negotiations may still ease current differences.

EU officials have stated that if Trump insists on implementing a 200% tariff, the EU will retaliate against American products, which may involve agricultural products, industrial manufacturing products, and even the technology sector. However, the EU still tends to resolve issues through negotiations rather than immediately escalating the conflict.

Future prospects:

In the short term, trade negotiations may still avoid a full-scale conflict. If the EU and the US can reach an agreement, some tariff threats may be lifted, and the euro is expected to stabilize.

If both sides cannot reach a compromise, the EU may take stronger countermeasures, involving more American products, posing greater risks to the global supply chain, and the euro may continue to be under pressure.

The uncertainty of trade conflicts remains one of the biggest risks to the global economy, and investors need to pay attention to the next steps taken by governments around the world, as well as possible mitigation measures.

Overall, the Trump administration's tariff policies have attracted global attention, and although the EU plans to retaliate, it still hopes for negotiations. In the coming months, the market will closely monitor the progress of US European trade negotiations to determine whether the trade conflict will escalate further and whether the trend of the euro will continue to be under pressure.