The European Union (EU) is facing some of the greatest challenges in its history. EU’s foreign policy chief, Kaja Kallas, describes U.S. President Donald Trump’s second term as “very intense” and “disruptive.” Kallas emphasized that the initial 100 days of Trump’s administration have been “unlike anything else we’ve seen before from the U.S. administration.” This longstanding time of geopolitical unrest has deeply alarmed EU leaders about their trade relations and geopolitical security.
Following in the footsteps of Trump, he slapped a 20% duty of U.S. goods exported from the EU. While this action first raised concerns over a possible global trade conflict, the Trump administration quickly lowered these duties, leaving the door open for negotiations. The EU, for its part, hastily decided on counter-measures to the tariffs. They chose to shelve those plans when Trump froze his efforts.
Kallas focused on the unpredictability of U.S. tariff actions as the most worrying aspects for EU policymakers. She noted, “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.” As Klaas Knot, the president of De Nederlandsche Bank, said it most vehemently. He likened the current uncertainties to the perils of surviving through the early days of the Covid-19 pandemic.
European Central Bank (ECB) policymakers are earnestly debating how these trade frictions will affect growth in Europe. Robert Holzmann, governor of Austria’s central bank, remarked, “We have not seen this uncertainty now for years.” He went on to say that if the uncertainty drags on without resolution, it may affect the Federal Reserve’s ability to decide what to do with respect to monetary policy.
Germany’s acting finance minister Joerg Kukies admitted huge obstacles, but was hopeful. He commented, in response to an audience question, that he does not think that Europe and the U.S. are in the midst of a crisis in their transatlantic relations. The EU has been a strong backer of Ukraine since the conflict with Russia erupted last year. Yet Trump’s management of the ongoing conflict has made these conditions even worse.
Kallas underlined that it was important to maintain pressure on Russia. This would further strengthen calls for a peaceful resolution to Ukraine’s continued conflict. “International law is very clear: Crimea is Ukraine,” she stated firmly. Her statements underscore the EU’s determination to stand with Ukraine and fight back against Russia’s war on Ukraine.
As the fight continues to take shape, Kallas said that working under Trump’s administration means you need to be flexible. “So this is how we have been operating to try to manage with the new administration,” she explained, indicating a need for strategic adjustments in foreign policy.