EU in Shock After Trump’s First 100 Days of Second Term Bring Rising Trade and Geopolitical Uncertainty

European leaders have been left stunned following the first 100 days of U.S. President Donald Trump’s second term, which have been marked by escalating geopolitical tensions and growing trade disputes.

Speaking to CNBC’s Europe Early Edition, European Union foreign policy chief Kaja Kallas said, “It’s unlike anything we have previously experienced from a U.S. administration,” when asked about the impact of Trump's early actions on the EU.

Europe now faces heightened instability on two major fronts: international trade and Russia’s ongoing war in Ukraine.

Trump initially introduced sweeping 20% tariffs on EU exports to the United States, only to later temporarily reduce them to allow for further negotiations. In response, the EU drafted its own retaliatory measures but has delayed their implementation following Trump's pause. Nonetheless, European goods, particularly aluminium, steel, and automobiles, remain subject to U.S. tariffs.

Even if a new trade agreement is reached, analysts expect the European Union to feel the knock-on effects of continued disputes between the United States and major trading nations like China.

The economic outlook for Europe is clouded by the turbulence. European Central Bank (ECB) officials warned last week during the IMF-World Bank Spring Meetings that economic growth is likely to slow due to trade tensions, while the potential impact on inflation remains highly uncertain.

“We have not experienced this level of uncertainty for many years,” said Robert Holzmann, governor of Austria’s central bank. “Until this uncertainty is resolved through appropriate decisions, we will be forced to delay several of our policy actions. As a result, the future path for ECB interest rates remains unclear,” he explained.

Meanwhile, Klaas Knot, president of the Netherlands’ central bank, likened the current unpredictability to the early days of the Covid-19 pandemic.

“In the short term, it is very clear that the uncertainty created by the U.S. administration’s unpredictable tariff measures acts as a significant drag on economic growth,” Knot stated.

(Sources: cnbc.com)