Europe
EU exports face double threat from US tariffs and robust euro
Alongside US President Donald Trump’s tariffs, a strong euro is making the future even gloomier for European exporters.
Following the tariffs, the relative weakness of the dollar has also added to the woes of EU exporters, who had hoped a strong dollar would cushion the blow of tariffs by making their goods cheaper relative to American exports.
Sander Tordoir, chief economist at the Centre for European Reform, told Euractiv, “This has been a double whammy for Europeans exporting to the US, because not only were they hit by tariffs, but the balancing effect that a dollar appreciation against the euro would normally provide did not kick in; on the contrary, the opposite happened.”
A European exporter dependent on the US market is therefore feeling both negative effects, and the situation is worsening.
Weak dollar puts European automotive exports in difficulty
According to the European Commission, the EU exported €531.6 billion worth of goods to the US last year, of which €380 billion (about 70% of total exports) are subject to Trump’s tariffs.
The tariffs include 25% duties on steel, aluminum, and automobiles, as well as a 10% “base” tariff on most other goods.
Although exporters often hedge against currency fluctuations to protect their revenues, industry groups are increasingly voicing their concerns about the impact of the dollar’s depreciation on European companies.
Manuel Kallweit, chief economist at the German automotive industry group VDA, said, “The weakness of the dollar is adding to the pressure already created by tariffs and could weaken profitability,” adding that the US was the “most important sales market” for German car exporters last year.
According to the German Federal Statistical Office, the US market accounted for 13.1% of Germany’s total 3.4 million vehicle exports in 2024.
Measuring the impact of the strong currency is difficult for now
Kallweit’s statements were echoed by European alcohol exporters, who are heavily dependent on US demand. According to Eurostat, about 30% of all EU alcohol exports were sold to America last year, with €4.9 billion worth of wine and €2.9 billion worth of spirits and liqueurs sent across the Atlantic.
A spokesperson for CEEV, the lobby group representing EU wine producers, said the current euro-dollar exchange rate of $1.13 is in the middle of the $1.03-$1.25 range seen over the last decade, but it is still at a level that affects the EU’s competitiveness.
“At today’s exchange rate, the value of the euro will have less impact than tariffs, but it is making the situation worse,” the spokesperson said.
SpiritsEurope similarly stated that a strong euro would have a “mechanical effect” on exports. However, the group’s spokesperson said it was “impossible” to know whether the currency’s appreciation would have as severe an impact as Trump’s tariffs, as it is not known what the tariffs will be, adding that tariffs also affect the euro-dollar exchange rate.
The spokesperson also noted that the bloc’s spirits exporters have previously “lived and managed” with exchange rates as high as $1.5.
Prospect of US recession, interest rate cuts, and a new ‘Plaza Accord’
According to analysts, the long-term strength of the euro, and thus its impact on EU exporters, will ultimately depend on a number of factors.
The first of these is whether Trump’s tariffs will lead to a recession in the US. In such a scenario, the US Federal Reserve (Fed) would be forced to cut interest rates more quickly than the European Central Bank (ECB), which would further weaken the relative value of the dollar.
The second is whether there will be a “Mar-a-Lago agreement,” similar to the 1985 Plaza Accord, aimed at reinforcing the dollar’s weakness in the global financial system.
Could money flow out of US bonds and into Eurobonds?
But perhaps the most important factor is the possibility of intensified “de-dollarization,” with other major central banks and investors reducing their investments in dollar-denominated assets like US Treasury bonds.
Carsten Brzeski, global head of macro at ING research, said the process of moving away from the dollar’s influence will largely depend on how “attractive” an alternative the euro becomes against the dollar.
Brzeski stated that if EU policymakers deepen the capital markets union and issue more safe assets denominated in euros, such as Eurobonds, investors would be more willing to move away from the dollar.
“Otherwise, Europe or the Eurozone will not have the capacity to absorb all the capital in the financial markets,” Brzeski said, adding that as long as Europe cannot absorb this money, “there will not be a more prolonged weakening of the dollar.”
But many analysts are confident that the euro’s strength will continue. Deutsche Bank noted in a recent report that the dollar’s recent decline could be “the beginning of a slow downward trend.”
“Recent policy and market volatility is concerning enough to warrant a rethink on investing in the US,” the bank said.
The upside of a strong euro: Disinflation
Analysts and EU officials have also highlighted the positive effects of a strong euro. Brzeski noted that, in particular, by lowering import prices, it alleviates inflationary pressures, and the slowdown in price increases could give the ECB room to cut interest rates, thereby stimulating the private sector.
Brzeski’s comments were echoed on Monday by European Commissioner for Economy Valdis Dombrovskis, who described the strong currency as a “double-edged sword.”
Dombrovskis said, “The strengthening of the euro has positive aspects because it has disinflationary effects… but it can also negatively affect EU exports.”
The euro’s appreciation also contributed to Brussels’ decision on Monday to lower its inflation forecast for the Eurozone next year from 1.9% to 1.7%, a forecast that falls further below the ECB’s 2% target rate.
Euro’s firm stance could make competition with China difficult
While some analysts pointed to its disinflationary effect, they also warned that the euro’s strength could harm the EU’s competitiveness against China.
The euro has gained more than 7% against the renminbi since January, hindering the ability of EU industries to compete with increasingly competitive Chinese rivals.
Some analysts said the renminbi’s weakness is also primarily a result of the dollar’s own depreciation.
ING said in a recent note, “The recent depreciation of the CNY [renminbi] against currencies other than the US dollar is not a deliberate move to devalue the yuan, but almost entirely a reflection of US dollar weakness and a focus on USD/CNY stability.”
Europe
Mutual accusations of blackmail and assault overshadow AfD state election congress in Germany
The Alternative for Germany (AfD) state congress in North Rhine-Westphalia ended in chaos on Sunday.
During the selection of the 22nd position on the candidate list for next year’s state elections, delegates aligned with the far-right Bundestag member Matthias Helferich proposed more than 100 candidates. This move was reportedly designed to block the vote in the town of Marl, halting progress on the list to force negotiations for subsequent positions.
Earlier in the candidate selection process, supporters of State Co-Chairman and lead candidate Martin Vincentz, who represents the moderate wing of the party, had prevailed. The defeat of Zacharias Schalley—a figure close to Helferich—by a candidate from the Vincentz camp triggered significant discontent within the radical wing of the party. Representing approximately 40% of the delegates, Helferich’s supporters reportedly demanded strong representation in the next state parliamentary group.
During the congress, Helferich claimed that Bundestag member Knuth Meyer-Soltau, a member of the Vincentz camp, physically assaulted him. Speaking to the newspaper WELT on Sunday, the 37-year-old Helferich described the incident:
“Meyer-Soltau was passing by the row where I was sitting. He was arguing with another member. When he turned back, while I was sitting in my chair, he shouldered me and shouted, ‘Shut up, you idiot!'”
Helferich added: “I do not know if he wanted to knock me out of my chair. However, because he insulted me in anger, I cannot rule out the possibility that this was a deliberate attack.”
An email exchange sent to the federal executive board and state management revealed that Helferich filed a criminal complaint on Monday.
“Meyer-Soltau hit my chair and my body, either intentionally or through negligence”
In the complaint filed by Helferich, he stated: “Meyer-Soltau hit my chair and my upper body hard, either intentionally or through negligence; I was only able to avoid falling by holding onto the edge of the table.” The complaint also named two witnesses.
In his letter to the party leadership, Helferich wrote: “Since numerous similar incidents of electoral law significance occurred at the state election congress, I believe the duty to maintain party order falls to the Federal Executive Board.”
Meyer-Soltau, a 61-year-old lawyer like Helferich, denied the allegations. Speaking to WELT on Sunday, the lawmaker said: “I reject the accusation being made.”
Meyer-Soltau suggested that Helferich viewed him as a powerful opponent because he had previously acted as the negotiator for the state executive board in the party’s expulsion proceedings against Helferich before the Federal Arbitration Court. The party court recently rejected the expulsion request.
“It is clear that this situation has not had a positive impact on our relationship,” Meyer-Soltau said. “Mr. Helferich, having suffered a heavy defeat at the nomination meeting, is clearly seeking satisfaction through other means. I will hand the matter over to my lawyer and take legal action.”
A letter sent to Helferich by Meyer-Soltau’s lawyer, which was leaked to the press, stated: “My client has never insulted you or physically assaulted you.” The letter demanded that Helferich cease repeating the claim and sign a cease-and-desist declaration carrying a contractual penalty.
Additionally, Meyer-Soltau’s lawyer filed a criminal complaint with the Dortmund Prosecutor’s Office for defamation. The petition submitted to the prosecutor’s office stated: “The accusation of physical assault is highly defamatory, calculated to permanently damage my client’s public reputation, and socially discredit him.”
Allegations of blackmail made against delegates at the congress
Allegations of threats against delegates also emerged at the state congress in Marl. Helferich ran against Klaus Esser, a close associate of Vincentz, for the 13th position on the candidate list. Esser, who needed just one vote to be elected in the first round, only secured a majority in the second round of voting.
Following the announcement of the results, a delegate took the stage to claim that before the second round, a state executive board member from the Vincentz camp went to the rows of the Wuppertal district association and threatened that a state lawmaker from Wuppertal would be expelled from the parliamentary group if the necessary votes for Esser were not delivered. The delegate announced that a complaint would be filed regarding the matter.
A spokesperson for AfD Co-Leader Alice Weidel told the media outlet “The Pioneer”: “Weidel does not approve of this situation. Such things must not happen.”
Other allegations of threats were voiced through the hall microphones during the congress. One delegate claimed that a candidate had been threatened by a district councilor and a district chairman.
“He was told that if he did not withdraw his candidacy, he would have no future in this party. There are numerous witnesses who can confirm this,” the delegate asserted.
Another delegate reported that a young woman was pressured by a district chairman who asked whether she would “lend herself to this game and submit to blackmail,” warning her that the situation would have “consequences for her in the district association.”
Marco Vogt, the Deputy Chairman of the Düsseldorf AfD and an ally of Helferich, said during his candidacy speech that young members who participated in the list disruptions had been threatened by their employers present in the hall.
Another candidate, a municipal councilor from Würselen, stated that a district administrator from the Aachen region had issued an implicit threat, telling him he would make many enemies in his own association if he did not withdraw his candidacy.
Candidate Leon Biallawons directly targeted lawmaker Knuth Meyer-Soltau, saying: “I tell you clearly, dear Knuth, I will not allow myself to be threatened by you. Because, dear Knuth, it is not you but the grassroots who will decide who succeeds in this party, and the grassroots will assert their will in the long term.”
Meyer-Soltau declined to comment on these allegations, stating: “I do not wish to comment on such baseless claims.”
Other tactics were used to slow down the proceedings at Sunday’s congress. One delegate requested a 30-minute recess because “there is an ice cream truck outside,” though this request was rejected. The convention manager, Julian Flak, was heard calling out to a delegate: “Take that garden furniture outside immediately!”
A message shared on Saturday in a chat group close to Vincentz stated that the “self-proclaimed patriotic group” had threatened to completely block the congress. It was alleged that the core group led by Helferich planned to deliberately disrupt the flow of the congress to force their opponents to the negotiating table.
Weidel accused of undermining efforts in chat group
On Sunday, in the same chat group, it was written that the sabotage action was being coordinated by Federal Deputy Chairman Sven Tritschler and Helferich. The message claimed that Tritschler had discussed the move with “his boss Alice Merkel”—a reference to AfD leader Alice Weidel. “This is a clear operation of attrition. We will not bow to an Alice Merkel,” the message read.
By Monday night, the ballot for the 22nd list position contained the names of 81 candidates. Some individuals who announced their candidacies withdrew before speaking. The results are expected to be announced next weekend.
The North Rhine-Westphalia AfD association has allocated a total of four weekends for candidate selection meetings. With the party projected by public opinion polls to win between 30 and 40 seats in the state parliament, competition for the top spots on the list remains intense.
An article titled “AfD-NRW Grassroots Resist Cartel Partyization,” published Monday on a Telegram channel close to Helferich, described the events as a “heroic act” and an “impressive reaction of an alert, idealistic grassroots.” The mass candidacy process was characterized as a “combination of Carl Schmitt’s partisan theory with a democratic liberation move unprecedented in AfD history.”
The article argued that if lead candidate Vincentz wants to translate polling success into a strong election result, he must unify the party by granting Helferich’s supporters viable, electable positions on the list.
Europe
EIB to unveil 15 billion euro tech initiative to scale European startups
The European Investment Bank (EIB) will announce a €15 billion initiative today, in collaboration with EU capitals and private investors, aimed at supporting the growth of European technology companies.
For decades, startups on the continent have struggled to raise the large-scale funding rounds necessary to scale on this side of the Atlantic, frequently turning to US investors or relocating abroad as they expand.
“We are catching up. Now we need to accelerate,” EIB President Nadia Calviño said.
Under the existing European Tech Champions Initiative, the EIB had already pooled resources with six EU governments to establish funds that invest in high-growth companies across the EU.
Calviño described the initiative as “very successful,” noting that it has supported 12 European “unicorn” companies valued at over $1 billion, including the German artificial intelligence translation firm DeepL.
The bank is now expanding the program with a new phase nearly four times the size of the original.
Twenty-five EU governments, alongside private investors such as Santander and Danske Bank, are expected to participate in the program.
This initial €15 billion aims to mobilize up to €80 billion in total investment. Calviño stated that this estimate is based on the multiplier effects achieved under previous programs.
As part of these efforts, the EIB also aims to attract European pension funds, which manage immense pools of capital but have historically allocated fewer resources to technology investments compared to their US counterparts.
In addition to the new funding, Calviño noted that the EIB will create a platform providing a single point of access for existing European scale-up initiatives, including the European Commission’s Scaleup Europe Fund, France’s Tibi initiative, and Germany’s Win initiative.
Europe
Germany to purchase US Tomahawk missiles to build own long-range strike capability
Germany will purchase Tomahawk cruise missiles from the United States and deploy them on German territory, Chancellor Friedrich Merz announced on Thursday.
The move marks a shift away from planned US deployments and toward Germany establishing its own long-range strike capability.
Merz told lawmakers that he finalized the agreement with the US government during the NATO summit in Ankara, adding that the talks held on Tuesday and Wednesday had exceeded his expectations.
“While we close a critical strategic gap in our defense, we are also working to develop our own European systems and deploy them in Europe,” the Chancellor said.
According to German government sources, Washington committed in a letter of intent signed on Tuesday to approve Germany’s acquisition of Tomahawk missiles and their land-based Typhon launchers in August.
The number of missiles and launchers Germany plans to purchase was not disclosed because the information is classified.
The planned acquisition appears aligned with US President Donald Trump’s pressure on European allies to cover their own security costs, such as by purchasing US weapons.
The fate of the Tomahawk procurement had become uncertain after Trump announced in May that he would reduce the US military presence in Germany.
That development was seen as a cancellation of a plan made under the previous administration to deploy a US battalion equipped with long-range Tomahawk missiles to Germany.
That original plan was designed as a temporary solution to serve as a strong deterrent against Russia while Europeans developed their own versions of such weapons.
Germany produces its own cruise missile, the Taurus, but its range of approximately 311 miles is three to five times shorter than that of the Tomahawk missiles.
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