Trump creates more uncertainty than Covid, says ECB vice president

The European Central Bank (ECB) Vice President Luis de Guindos expressed concerns about the impact of the new US administration under President Donald Trump during an interview published in The Sunday Times. He emphasized that the uncertainty stemming from Trump's policies—including tariff hikes on steel and aluminum imports from the EU and proposed changes to corporate taxes—has made economic forecasting challenging, even more so than during the Covid-19 pandemic. De Guindos argued that the lack of multilateralism and cooperation from the US government has disrupted global economic stability and reduced consumer confidence worldwide, particularly in the Eurozone. He cited a noticeable decline in growth projections for the Eurozone, attributing it to the unpredictability of Trudeau’s actions, which have dampened both business investment and household consumption. This increase in volatility has caused consumers to become more hesitant, leading to a stagnation in spending, even with improvements in real wages and financing conditions. The tariffs instituted by Trump were particularly damaging, according to the ECB vice president, not only straining transatlantic relations but also prompting the European Union to consider retaliatory measures that could heighten trade tensions. In response, EU leaders condemned the tariffs as unjustified and have indicated plans to impose countermeasures against US goods totaling over $28 billion. As tensions rise further, de Guindos urged that the fears surrounding potential trade wars contribute to an environment where consumers hesitate to engage in economic activities, leading to a broader concern about future economic stability and growth.