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The new US administration has created more “uncertainty” than the pandemic, the European Central Bank vice president has claimed
Washington under President Donald Trump has created more “uncertainty” than the Covid-19 pandemic, Luis de Guindos, the vice president of the European Central Bank (ECB), has claimed.
The official made the remarks in an interview with The Sunday Times during which he bemoaned Trump’s use of tariffs, as well as plans to reform corporate taxes and deregulate the financial system. The actions of the new US administration have been causing short-term volatility in markets while making inflation expectations and interest rates hard to predict, he said.
“We need to consider the uncertainty of the current environment, which is even higher than it was during the pandemic,” the ECB vice president said.
“What we’re seeing is that the new US administration isn’t very open to continuing with multilateralism, which is about cooperation across jurisdictions and finding common solutions for common problems. This is a very important change, and a big source of uncertainty,” he added.
Concerns over what Trump might do next have also damaged consumer confidence, de Guindos believes, noting that the long-awaited increase in business investment and household consumption has not arrived. He blamed the decline in Eurozone growth projections on the actions of the new US administration.
“Real wages have increased, inflation is declining, interest rates are coming down and financing conditions are better. But still, the reality is that consumption is not picking up,” he said.
“This is because consumers don’t always react to developments in their short-term real disposable income. They also consider what might happen with the economy over the medium term, which is clouded in uncertainty. The possibility of a trade war or wider geopolitical conflict has an impact on consumer confidence,” the official added, describing trade wars as a “lose-lose situation for everybody.”
Trump’s 25% tariff hike on steel and aluminum supplies from the EU took effect last week after previous exemptions and exclusions expired. Brussels has already vowed to retaliate, promising what it called “swift and proportionate” countermeasures.
The European Commission has condemned Trump’s disruptive and “unjustified” tariffs, pledging 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.
