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
CDU youth wing urges military deployment against student protests
As school strikes against the reintroduction of compulsory military service continue across Germany, the Christian Democratic Union (CDU) has faced calls to deploy the military against student demonstrations.
The next nationwide school strike in the country is scheduled for 20 November. Like earlier school walkouts, it is primarily directed against the reintroduction of compulsory military service, which is clearly looming on the horizon.
In addition, coalitions of high school and university students are calling for fresh demonstrations this Saturday (31 October). These actions take French student protests as a model, but go even further in opposing mass militarization in Germany.
So far, demonstrations have been announced in just under a dozen cities, and these protests also face the threat of growing state repression.
In Hamburg, for instance, a police spokesperson announced that there would be a “very strong police presence” and that drones would also be deployed against demonstrators.
Going a step further, the Berlin-Mitte branch of the Junge Union (JU), the CDU youth wing, demanded the deployment of the Bundeswehr [German Armed Forces] as a precautionary measure against high school and university student demonstrations “to defend our liberal order.”
Meanwhile, debates over banning political parties are currently underway within conservative circles, echoing developments in France with La France Insoumise (LFI).
Years ago, during his tenure as secretary general of the Christian Social Union (CSU), Federal Interior Minister Alexander Dobrindt raised the possibility of banning Die Linke (the Left Party).
Frankfurter Allgemeine Zeitung (FAZ), an influential German newspaper, also recently brought the issue to the fore.
In an editorial, the newspaper asked openly: “Why not ban Die Linke?”
Against this backdrop lies Die Linke’s victory in the Berlin Senate elections. If the party becomes too powerful, the threat of a ban looms.
According to author Jasper von Altenbockum, the Left Party can act as it pleases in Berlin because the Social Democratic Party (SPD) and the Greens have not applied the “firewall” strategy against it that the CDU maintains against the Alternative for Germany (AfD).
Describing the party’s lead Berlin candidate, Elif Eralp, as “the vanguard of a movement that sympathises with leftist and Islamist terrorism, shows ‘respect’ to organised criminals, fuels immigrant and radical left antisemitism, and seeks to practice anticapitalism through expropriation,” the author continued:
“If the standards applied to extremism in the AfD were applied to the Left Party’s rhetoric, tactics, and ideology, then a debate on banning the party would emerge, and politicians from the Left Party would be subjected to the same treatment as those at the other end of the ‘horseshoe.’ But that is not the case at all: Left Party politicians are fixtures on morning shows; Left Party politicians determine who may call themselves a democrat and who may not.”
Arguing that the SPD and the Greens in Berlin face the exact same predicament that the CDU confronts in Saxony-Anhalt, Thuringia, or Saxony, the FAZ author contends that if the Christian Democrats fail to devise a counter-strategy, they will have to accept either a “red-green” coalition in Berlin or a shift of votes toward the AfD.
Europe
Vučić scrapped plan to hold power after phone warnings, report says
Former Serbian President Aleksandar Vučić was preparing to retain power by force following the country’s parliamentary elections, according to a report by the British newspaper The Times, citing politicians and a former commander of a specialised police unit.
However, he abandoned this scenario after receiving phone calls urging him to back down.
Spasoje Vulević, the former head of the Serbian police counter-terrorism unit, told the newspaper that 4,000 police officers and 3,000 people whom he described as “thugs” were deployed to central Belgrade on voting day, 25 October.
According to Vulević’s assessment, Vučić was preparing to reject the election results.
Vučić’s spokeswoman denied the claim. Speaking to The Times, she said the police presence in Belgrade was a response to threats of violence from protesters and was unrelated to any attempt to seize power.
Member of the European Parliament Sandro Gozi also said he received alarming messages from diplomatic sources on election day indicating that Vučić was preparing for a scenario involving the use of force.
According to the newspaper, Gozi’s political group issued a statement around 21:00 local time, as initial projections were being released, warning that supporters of Vučić’s party could be mobilized to provoke clashes.
Where did the calls forcing Vučić to back down come from?
Radomir Saičić, a leading candidate from the winning Student List, also argued that plans had been made to alter the results by force if the vote margin between the sides was narrow.
“If the results were close, there were plans to overturn the outcome of the vote by brute force,” Saičić said. “However, according to the information I obtained, numerous calls to him from the police and other figures prompted him to change his mind. They convinced him that executing this plan would end very badly for him.”
Former commander Vulević, on the other hand, was sceptical that police officers could have played a decisive role.
Noting that Vučić personally selected the unit commanders in Belgrade and that these figures were unlikely to oppose him, Vulević said: “I suspect that representatives of European governments called Vučić; these were talks conducted at the highest level.”
European Parliament member Gozi did not confirm the claim that the telephone calls had a decisive effect.
“I cannot rule out the possibility that phone calls took place, but in any case, the vote margin against him was far too large,” Gozi said. “Vučić was stunned.”
According to The Times, roads were closed in Belgrade during the evening, gendarmerie personnel appeared on the streets, and groups of men dressed in black headed toward the city’s Pioneers Park (Pionirski Park).
Vulević claimed these individuals arrived in groups of 20 to 30. However, the newspaper reported that at 21:30, an hour and a half after polls closed, Vučić backed down and his assembled supporters dispersed.
From the Novi Sad collapse to early election defeat
Early parliamentary elections were held in Serbia on 25 October.
According to Election Commission data, after processing results from 8,139 ballot boxes, the Student List secured 52.65% of the vote, while Vučić’s United Serbia coalition remained at 39.22%.
Vučić conceded defeat without waiting for the final results.
“It is obvious that we have lost these elections. The Student List has won,” the politician said, attributing the opposition’s success to support from European countries and the US “deep state”.
Prior to the election, the country was the scene of prolonged mass protests that began after the collapse of a railway station canopy in the city of Novi Sad in November 2024.
Protesters initially demanded accountability for those responsible and an investigation into corruption allegations, before subsequently calling for the government’s resignation.
Having dissolved parliament in September 2026 and announced his resignation from the presidency, Vučić was subsequently nominated as the candidate for prime minister by his party.
Europe
EU scrambles for takers for remaining €21B in SAFE defence loans
The European Commission has until the end of the year to convince EU member states to take up around €21 billion in unused defence loans and support Ukraine’s defence.
The worsening security situation in the Black Sea could encourage Romania to seek additional loans. Bucharest has already secured €16.7 billion under SAFE.
The remaining figure became final after Hungary and Italy significantly scaled back their requests under the EU’s €150 billion Security Action for Europe (SAFE) programme.
On Wednesday, after approving Hungary’s spending plan, the final pending application, the Commission announced that it would soon launch a second call for applications.
The situation is very different from August 2025, when Brussels was confident that demand would far exceed the available €150 billion.
Applications from 19 EU countries eventually exceeded that sum by around €40 billion.
Now, national elections and pressure on public finances may make governments reluctant to take on additional debt.
Some EU diplomats told Rapporteur that the conditions for the second round remain unclear, making it difficult to say whether their countries would apply.
The Commission must publish the second call by the end of December. Unlike the first round, where countries could use the loans for national procurement contracts until May 2026, the remaining money must be spent on joint procurement.
Poland benefited from the previous flexibility, securing €43.7 billion, the largest national allocation, and moved quickly to sign contracts.
Warsaw announced that 90% of the money would go to Polish companies.
Brussels also hopes the remaining money will be used to bolster Ukraine’s defence.
In July, during an official visit to the country, Commission President Ursula von der Leyen suggested that around €10 billion in unused SAFE loans could be directed to Kyiv.
Defence Commissioner Andrius Kubilius mentioned the Freyja anti-ballistic missile project among the initiatives under consideration while discussing the second SAFE call at an E5 meeting in Paris this week.
Military sources told Rapporteur that participation in the second round had been considered under Romania’s previous government, but the proposal would now require a fresh political assessment.
Diplomatic sources in Athens told Rapporteur that Greece has also shown interest. The country had previously made an unsuccessful push to increase its allocation by several billion euros.
Polish Deputy Defence Minister Magdalena Sobkowiak-Czarnecka told Polish media this week that Poland was also discussing the conditions for another possible application, while Ireland has shown interest in the remaining funds.
Italy, having already reduced its initial request, is considered unlikely to participate in the second round.
-
America2 weeks agoHow Elon Musk fuses private empire with state power, Ben Tarnoff explains
-
Europe2 weeks agoAfD leader Weidel calls funding lost Ukraine war a grave mistake
-
Middle East2 weeks agoEgypt delays parliamentary vote on deploying troops to Saudi Arabia
-
America1 week agoUS wealthy demolish multimillion-dollar mansions for land
-
America1 week agoAt least 47 major US data centre projects halted or cancelled
-
Middle East1 week agoNetanyahu unveils security doctrine and regional alliance map
-
Europe1 week agoEU rejects US proposal to resume Russian gas flows through Ukraine
-
Middle East1 week agoNetanyahu trails Eisenkot in Israeli polls despite Trump backing
