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European leaders are grappling with significant challenges as they assess the first 100 days of U.S. President Donald Trump’s second term, which has been marked by escalating geopolitical strains and trade disputes.
Kaja Kallas, the European Union’s foreign policy chief, described this period as “unlike anything else we’ve seen before from the U.S. administration,” highlighting the intense and disruptive nature of the times, characterized by considerable unpredictability.
In her conversation with CNBC’s Silvia Amaro, Kallas emphasized how the EU has had to adapt to the shifting dynamics introduced by the new administration.
Europe is facing significant uncertainty on multiple fronts due to Trump’s policies, particularly concerning trade relations and the ongoing conflict in Ukraine.
The Trump administration has implemented a series of tariffs, initially imposing blanket duties of 20% on EU exports, which were later temporarily reduced to facilitate negotiations. In response, the EU had prepared its countermeasures, but these were also paused following Trump’s decision. The bloc continues to contend with existing U.S. tariffs affecting aluminum, steel, and automotive industries.
Even if a trade agreement is eventually reached, the EU is expected to experience lingering repercussions from the ongoing trade tensions not only with the United States but also with major partners such as China.
The economic outlook for Europe appears dim, given the potential for diminished growth stemming from these trade conflicts. Additionally, the impact on inflation remains uncertain, as noted by European Central Bank officials during discussions at the IMF World Bank Spring Meetings, where the overarching theme was one of uncertainty.
“We have not seen this uncertainty now for years,” remarked Robert Holzmann, governor of Austria’s central bank. He pointed out that without a resolution to this unpredictability, vital decisions regarding monetary policy may be delayed.
Klaas Knot, president of the Netherlands Bank, echoed these sentiments, drawing a parallel between the current climate and the initial phase of the Covid-19 pandemic, indicating that the unpredictability of U.S. tariff policies poses a significant challenge for growth.
On a more optimistic note, acting German finance minister Joerg Kukies expressed his belief that the relationship between Europe and the U.S. is not at a crisis point and stated that further actions would be needed to jeopardize trust between the two entities.
Trump’s stance on the Russia-Ukraine conflict has also created tensions in Europe, raising concerns over U.S. financial and military support for Ukraine. Kallas pointed out that the EU has been a leading supporter of Ukraine, while also acknowledging substantial contributions from the U.S.
“If they are not supporting Ukraine anymore then it’s becoming more difficult,” Kallas noted, emphasizing Europe’s capability to provide monetary assistance but expressing concerns over military resources. She conveyed her hope that the U.S. would continue to be a champion for justice regarding Ukraine.
Initially, Trump suggested he could end the war swiftly, but those assertions have since been tempered. Although his administration began discussions for a ceasefire early on, tangible progress has been limited.
Kallas stated earlier this week that it is crucial to apply more pressure on Russia to encourage a desire for peace.
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