Tariff uncertainty poses growing downside risk to the economy
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
ING | Bullish | 1.1800 |
UOB | Bullish | 1.1800 |
Rabobank | Bullish | 1.1800 |
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Insights Tariff uncertainty poses growing downside risk to the economy Jan von Gerich 04-04-2025 Trump’s newest round of tariffs hit financial markets and added to downside risks to the economy. Plenty of uncertainties remain, and the USD sentiment has taken a beating. The ECB wi
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UBS CIO's Jason Draho warns that the resurgent tariff threats under President Trump—including a 30% levy on EU and Mexico imports—represent a negative surprise, extending uncertainty past the July 9 reciprocal-tariff deadline. Per the full note [source], the 'Roaring 20s' regime remains intact, but the near-term risk is that escalating trade tensions delay disinflation and complicate Fed policy. The desk views equity resilience as temporary, given the lack of a clear catalyst to break the current range. Consensus is fragmented, with no clear dollar directional call, but the calendar offers no imminent high-impact events to resolve the ambiguity.
UBS On-Air: Paul Donovan Daily Audio 'Better German growth'
The desk interprets recent comments from US President Trump regarding increased tariffs on EU products as a reflection of ongoing policy uncertainty that could impact transatlantic trade dynamics. As outlined in the UBS commentary by Paul Donovan, while markets may initially brush off such threats due to Trump's historical volatility on trade issues, the implications for trade flows and supply chains remain serious, particularly if US manufacturers react by raising prices instead of pursuing market share. This environment adds complexity to the outlook for the European economy, especially following a better-than-expected first quarter GDP report from Germany, which highlights a pattern of initial data underestimating the economic strength in the region. Per the full note [source], this context suggests that investor perception may be overly negative compared to the underlying reality of the German economy.
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