US President Donald Trump’s return to the White House in January has unleashed a transformative agenda that is reshaping his country‘s domestic, foreign and economic landscapes. Reflecting on his first 100 days, his actions can be structured into three overarching themes: efficiency-driven domestic policy, results-oriented foreign policy and interest-driven trade policy.
These pillars not only define Mr Trump’s approach but also challenge global partners, particularly the EU, to adapt to a rapidly evolving world order. This analysis examines these pillars, integrating government efficiency, tariffs, the war in Ukraine and EU-US relations, to assess their implications for the evolving global order.
Governments worldwide face ballooning deficits and inefficient spending, with the US and EU as prime examples. In the EU, member states such as France and Italy struggle with deficits exceeding 3 per cent of gross domestic product, breaching EU fiscal rules.
The US national debt stands at about $36 trillion (123 per cent of GDP in 2024), with interest payments projected to reach $1 trillion annually by 2026, according to the Congressional Budget Office. Mr Trump’s creation of the Department of Government Efficiency, led by Elon Musk, signals a bold attempt to streamline US federal spending. Although Doge’s methods are controversial in some areas, the EU would benefit from efforts to enhance government efficiency.
After all, efficient governance is not just a responsibility towards taxpayers; it’s a necessity to address fiscal crises and restore public trust.
Many observers, especially in Europe, have been closely watching Mr Trump’s initial actions regarding Russia’s war in Ukraine. Although high expectations for a swift end to the war have not yet been met, the ongoing negotiations are a crucial first step towards a ceasefire. It is beyond question that Ukraine’s territorial integrity must be guaranteed and protected. Nevertheless, there will be an end to this brutal and cruel war of aggression only if talks are also held with the aggressor, Russia. This approach distinguishes the new US administration from its predecessor and the EU.
By the end of last year, the war has cost Ukraine $150 billion in infrastructure damage and displaced 6 million people, while Nato allies face economic strain from sanctions and energy costs. The EU is much more affected by that than the US and should, therefore, secure its place at the negotiating table. This means, however, that it must also re-engage in dialogue with Russia.
The Russian invasion of Ukraine and the new US administration have ultimately led to the EU taking greater responsibility for its own defence. This was most clearly expressed by European Commission President Ursula von der Leyen’s announcement to invest €800 billion ($910 billion) in European defence. It is to be hoped that this enormous sum will be put to good use. Looking at Germany, the “Zeitenwende” promised by departing Chancellor Olaf Scholz has so far been nothing more than an announcement that has not been followed by enough deeds. The German defence budget still lacks critical funds and investments in new cutting-edge technologies such as drone technology.
The US is the EU’s largest trading partner, with €900 billion in bilateral trade last year and a €235 billion trade surplus that is now under threat. Germany’s automotive sector, employing 800,000 workers, faces billions in losses from 20 per cent tariffs. Yet, many European leaders, from Mr Scholz to French President Emmanuel Macron, lack rapport with Mr Trump. However, future German chancellor Friedrich Merz, Italian Prime Minister Giorgia Meloni and many others have recognised that a good personal relationship with Mr Trump can be beneficial – a positive development.
Europe could learn from the approach undertaken by the Gulf countries such as the UAE by fostering alliances with the US government and private sector on AI (committing to invest $1.4 trillion in the US) or on renewable energy as driven by Dr Sultan Al Jaber, Minister of Industry and Advanced Technology, who recently met Vice President JD Vance in the US.
Thereby the UAE creates the right conditions for mutual co-operation and innovation laying the foundation for future success and economic prosperity by being early movers on an important technology such as AI. The excellent relationship between Mr Trump and the Gulf states is also reflected in the fact that the US President has chosen the UAE, Saudi Arabia and Qatar for his first trip abroad.
Mr Trump’s tariff policies dominate global headlines, with duties of up to 145 per cent on many Chinese imports and a threatened 20 per cent on EU goods. These measures aim to address trade imbalances but risk igniting a global trade war. The US trade-weighted average tariff has surged from 2 per cent last year to an estimated 24 per cent this month, the highest since 1930.
I grew up in a small export-oriented country in a globalised world and deeply believe in free trade. So naturally, I am not a fan of tariffs. Mr Trump, on the other hand, is known for a very protectionist approach. However, he is also pursuing a fiscal strategy with tariffs: by boosting domestic production, the US could increase tax revenues and attract foreign capital to the US Treasury bonds, which offer 4.5 per cent yields on 10-year notes – the highest in decades. Last year, tariffs generated $80 billion in US revenue; projections for this year estimate $200 billion. This could help the US refinance its $36 trillion debt.
Mr Trump’s first 100 days underscore a multipolar world where economic and security interests dominate. His efficiency reforms, tariffs and new foreign policy focus challenge Europe to adapt. It may feel unfamiliar to many Europeans, but the principle of “Europe First“ – an EU that prioritises its citizens’ interests over lecturing the world – is highly appropriate in these times.
European countries can also learn a lot from others. The Gulf countries, for example – especially the UAE under the leadership of President Sheikh Mohamed – have found an elegant way to maintain a good partnership with the US while at the same time looking after their own interests. Europe must seize this moment to reform its defence, refine its foreign policy and sharpen its economic edge.
The world is not waiting for anyone to catch up – it is time to act before the next global shift leaves it further behind.
