European leaders have been left reeling after the first 100 days of U.S. President Donald Trump’s second term saw increasing geopolitical and trade turmoil.
“It’s unlike anything else we’ve seen before from the U.S. administration,” European Union foreign policy chief Kaja Kallas told CNBC’s “Europe Early Edition” when asked what Trump’s first 100 days have meant for the bloc so far.
Kallas told CNBC’s Silvia Amaro it had been a “very intense” and “disruptive” time, adding that there was “a lot of unpredictability.”
“So this is how we have been operating to try to manage with the new administration,” she said.
Europe faces mounting uncertainty on two fronts as a result of Trump’s policies: trade and Russia’s war on Ukraine.
Trump imposed, then temporarily reduced 20% blanket duties on the EU’s U.S. exports to allow for negotiations. The bloc has prepared its own counter-measures, but these were also put on hold after Trump paused his own policies. It is also facing U.S. tariffs on aluminum, steel and autos.
However, even if a deal is struck, the EU is widely expected to still be impacted by some of the fallout from the ongoing trade disputes between the U.S. and other trade partners like China.
European economic growth is expected to suffer as a result of trade tensions, while the impact on inflation is murky to say the least, European Central Bank policymakers told CNBC last week during the IMF World Bank Spring Meetings, where “uncertainty” was the name of the game.
“We have not seen this uncertainty now for years,” said Robert Holzmann, governor of Austria’s central bank. “Unless the uncertainty subsides, by the right decisions, we will have to hold back a number of our decisions, and hence, we don’t know yet in what direction monetary policy should be best moved,” he added in reference to the outlook for ECB interest rates.
Klaas Knot, The Netherlands Bank president, meanwhile compared the current uncertainty to what was experienced during the early days of the Covid-19 pandemic.
“In the short run, it’s crystal clear that the uncertainty that is created by the unpredictability of the tariff actions by the U.S. government works as a strong negative factor for growth,” he said.
Others struck a somewhat more positive tone, with acting German finance minister Joerg Kukies saying he did not think the Europe-U.S. relationship was “anywhere near a crisis moment.” Much more would need to happen for trust between the two parties to break, he added.
Trump’s approach to the Russia-Ukraine war has also ruffled feathers in Europe as questions remain around U.S. financing and aid support for Ukraine.
Kallas told CNBC that the EU and its members had “supported Ukraine more than anybody else,” while acknowledging that the U.S. had also contributed a “great share.”
“If they are not supporting Ukraine anymore then it’s becoming more difficult. But the question is for Europe, can we do this? I think in terms of the monetary means we can do this… Of course the question regarding some military capabilities is much more difficult,” she said, adding that she hoped the U.S. would “remain on the right side of history.”
Trump initially said he would end the war within a day, but has since rowed back those comments. While his administration did begin conversations about a ceasefire deal quickly, there has been limited progress.
Kallas on Monday said more pressure needed to be put on Russia to push the country towards wanting peace.