As U.S. President Donald Trump marks the centenary of his second term in office, European Union leaders find themselves grappling with a cascade of unpredictable policies that have upended transatlantic trade relations, shaken security alliances and injected fresh uncertainty into the bloc’s economic outlook.

From sweeping new tariffs on steel, aluminum and automobiles to wavering commitments on Ukraine and climate change, Trump’s first 100 days have delivered what EU foreign policy chief Kaja Kallas calls “an intensity and disruption unlike any we have seen before.” Across Brussels, national capitals and Frankfurt boardrooms, officials are still scrambling to chart a course through a series of escalating trade spats and diplomatic surprises.

Trade Turbulence on Multiple Fronts

Shortly after his inauguration, Trump reimposed a 20 percent levy on all European car imports, a dramatic reversal of a temporary truce clinched late last year. The move threatened to saddle the bloc’s battered automakers—especially Germany’s BMW, Mercedes-Benz and Volkswagen—with hefty duties on exports to their most important single market. At the same time, U.S. steel and aluminum tariffs remain in effect, subjecting EU producers to an additional 25 percent duty that has already added hundreds of millions of euros to the cost of raw-material imports.

Brussels, which had prepared retaliatory tariffs on a list of iconic American products—from bourbon whiskey and Harley-Davidson motorcycles to Levi’s jeans—was forced to hold fire when Trump unexpectedly paused his own measures. The cease-fire, however, offers little comfort: it carries no firm expiration date and leaves open the possibility that duties could be reinstated with little warning.

“The unpredictability of U.S. trade actions is the real poison pill,” says one senior official at the European Commission. “It makes planning impossible, whether you’re a carmaker in Stuttgart or a steel mill on the Ruhr. You don’t know if your next shipment will sail through or be taxed out of the market.”

Monetary Policy on Hold Amid Heightened Risk

The fallout extends beyond goods markets. At last week’s International Monetary Fund and World Bank spring meetings, European Central Bank (ECB) policymakers voiced deep unease over the uncertain outlook. ECB Executive Board member Isabel Schnabel warned that “continued tariff threats” could curb investment, slow growth and stoke financial-market volatility. Austria’s central bank governor, Robert Holzmann, echoed that sentiment, saying “we have not seen this level of uncertainty in decades” and signaling that the ECB may defer any interest-rate changes until the dust settles.

Dutch central bank president Klaas Knot went further, likening the current climate to the early days of the COVID-19 pandemic. “In the short run, tariff unpredictability acts as a strong drag on growth,” he told reporters in Washington. With inflation only modestly above the ECB’s 2 percent target and growth projections for the eurozone trimmed to just 1.3 percent this year, policymakers are caught between the threats of over-stimulating the economy and allowing tariffs to undermine the fragile recovery.

Strained Security Ties Over Ukraine

Trade is only half the story. Trump’s approach to the war in Ukraine has sent shockwaves through European capitals. While EU member states have collectively provided billions in military and financial support to Kyiv, Trump’s mixed messages—first hinting at a reduction in U.S. aid, then vaguely pledging to remain “on the right side of history”—have left European leaders fearing a sudden withdrawal of American backing at a pivotal moment.

“Europe has stepped up its support for Ukraine more than any other partner,” said Kallas in an interview. “But U.S. leadership remains indispensable. If Washington cuts its commitment, we will need to find both the financial wherewithal and the military capacity to compensate, which is a far more difficult task.”

German Chancellor Olaf Scholz, traditionally one of the staunchest U.S. allies, admitted in a recent press conference that “we must prepare for all eventualities” and accelerate European defense cooperation. Plans to boost funding for the European Peace Facility and deepen coordination within NATO’s European pillar are already under discussion, reflecting a push to reduce strategic reliance on U.S. force posture.

Climate Pivots Add to Diplomatic Jitters

On the environmental front, Trump’s second-term agenda has dashed European hopes for a renewed U.S. climate partnership. Within weeks of taking office, the president reversed a tentative pledge to rejoin the Paris Agreement, citing concerns over U.S. competitiveness and alleged “unfair burdens” on American industry. The decision has left Brussels scrambling to fill a leadership void ahead of November’s UN climate summit in Cairo, where negotiators will seek to chart a path toward more ambitious emissions cuts.

“I’m deeply disappointed,” said Frans Timmermans, the European Commission’s executive vice president for the European Green Deal. “We had hoped the U.S. would return as a full partner. Instead, we’re once again left to shoulder the bulk of the fight against climate change.”

Not all European leaders have sounded the alarm. French President Emmanuel Macron struck a more measured tone, saying that while “differences remain,” the Franco-American relationship is “built on shared values that outlast any single administration.” Similarly, Acting German Finance Minister Joerg Kukies expressed confidence that transatlantic bonds remain “stronger than any crisis,” even as he acknowledged the need for renewed dialogue.

European Parliament President Roberta Metsola has spearheaded calls for a special EU-U.S. summit this summer, proposing a formal mechanism for early warning on trade measures and a new high-level working group on geopolitical risk. “We cannot allow knee-jerk tariffs to dictate our future,” she said.

Business Community in Survival Mode

Industry groups are already feeling the strain. The European Automobile Manufacturers’ Association warns that even a brief spike in U.S. duties could wipe out up to €15 billion in annual export revenues. Steel producers on the continent are calling for tariff relief or compensatory state aid to stave off plant closures. Meanwhile, executives at major chemical and pharmaceutical firms have put ambitious investment plans on hold pending clarity on U.S. trade policy and the prospect of additional levies.

SMEs—notably those in border regions—face particular pressure. The Bavarian Chamber of Commerce estimates that over 8,000 small and mid-sized exporters could see profitability eroded by up to 4 percentage points if current tariff threats materialize. “We’re in crisis mode,” says a Bavarian auto-component supplier. “We recalibrate our cost base every week, only to have the ground shift under us again.”

Seeking Stability in Unstable Times

As Trump’s unpredictable first 100 days bleed into Europe’s spring political calendar, Brussels is seeking both damage control and strategic options. Plans for a “transatlantic reset” summit in October are being drawn up, aimed at forging common ground on trade, security and climate. In parallel, EU officials are redoubling efforts to diversify partnerships—strengthening ties with Canada through CETA, deepening ties with Indo-Pacific nations under the new EU-ASEAN pact and exploring closer economic links with Latin America.

Yet for many in Brussels, the overriding sentiment is one of precarious adjustment. “We must learn to manage in an environment where American policy is no longer predictable,” says a senior EU diplomat. “That means building our own resilience—economically, militarily and diplomatically—so that no single presidency can hold us hostage.”

In the corridors of power, EU officials are acutely aware that the next 100 days—and beyond—will set the tone for Europe’s long-term role on the world stage. The question on everyone’s mind: can the EU find stability amid the whirlwind unleashed by Trump’s return to the Oval Office? Only time—and deft diplomacy—will tell.

(Adapted from CNBC.com)

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