Canada's timber industry is already struggling this year with a doubling of tariffs to 16% on exports to the USA. For 2025 – independently of Trump – a further doubling to over 30% is planned. It remains to be seen whether the announced 10% will be added to this, especially since higher timber prices could drive up construction costs in the USA and further fuel inflation.
Meanwhile, the Fed is under pressure to cut interest rates in the US to support new housing construction. But what impact would an unpredictable Trump have on growth, inflation and the repayment of national debt? Trump stands for growth-promoting measures within the USA. However, higher tariffs could raise the prices of imported goods, and tax cuts that stimulate demand are considered by most economists to drive inflation. A continuous interest rate cut is therefore only possible to a limited extent.
On Thursday, the US Federal Reserve cut interest rates by 0.25 percentage points and reduced the key interest rate to a range of 4.50 to 4.75 percent. As long as there are no comparable inflationary pressures in Europe, the ECB is likely to stick to its loose monetary policy and cut interest rates further. This would widen the interest rate differential between the US and the eurozone and further weaken the euro.
A weaker euro compared to the US dollar would noticeably benefit European exporters. While some banks even speak of parity with the dollar, most experts consider such a drastic devaluation of the euro to be unlikely. Deutsche Bank Research currently assumes that the euro could fall to 1.05 USD/€ by the end of the year.
