The European Central Bank’s (ECB) Vice President has stated that the current US administration is generating more “uncertainty” than the Covid-19 pandemic.
ECB Vice President Luis de Guindos asserted that the Trump administration in Washington has created more “uncertainty” than the Covid-19 pandemic.
In an interview with The Sunday Times, the official criticized Trump’s use of tariffs and plans to overhaul corporate taxes and deregulate the financial sector. He stated that the actions of the US administration are causing short-term market volatility and making it difficult to predict inflation expectations and interest rates.
“We need to take into account the uncertainty of the present climate, which is even greater than during the pandemic,” the ECB Vice President stated.
“What we’re witnessing is that the current US administration is not very receptive to continuing multilateralism, which involves cooperation across jurisdictions and finding shared solutions for common issues. This is a significant shift and a major source of uncertainty,” he added.
De Guindos believes that concerns about Trump’s potential actions have also damaged consumer confidence, noting the absence of the long-anticipated increase in business investment and household consumption. He attributed the decline in Eurozone growth projections to the actions of the US administration.
“Real wages have risen, inflation is decreasing, interest rates are falling, and financing conditions are improving. However, consumption is still not increasing,” he stated.
“This is because consumers do not always respond to short-term changes in their real disposable income. They also consider the medium-term economic outlook, which is clouded by uncertainty. The possibility of a trade war or broader geopolitical conflict impacts consumer confidence,” the official added, describing trade wars as a “lose-lose situation for everybody.”
Trump’s 25% tariff increase on steel and aluminum supplies from the EU took effect last week after previous exemptions and exclusions lapsed. Brussels has pledged retaliation, promising “swift and proportionate” countermeasures.
The European Commission has denounced Trump’s disruptive and “unjustified” tariffs, vowing to impose counter-tariffs on €26 billion (over $28 billion) worth of US goods starting in April. “Tariffs are taxes, they are bad,” EU Commission President Ursula von der Leyen said when announcing the retaliatory measures.