The Trump administration's unconventional moves are frustrating European allies.

(1) After the Jackson Hole meeting, European Central Bank officials expressed deep concern about the Trump administration breaking longstanding traditions of international cooperation, fearing that US-European tensions could face even more turbulence. Federal Reserve officials tried to reassure, but said they could not provide any guarantees regarding the uncertainties of Trump’s policies.(2) In August, during the US-Japan joint intervention on the yen, the US Treasury sold euros without notifying the Europeans in advance, contrary to usual practice, which greatly angered European officials. One official stated, “This is extremely frustrating,” while another said, “This makes me feel that the US will just do whatever it wants.” US officials argued that the intervention was intended to curb disorderly fluctuations in the yen and was not aimed at any particular country.(3) Bessent’s plan to expand long-term bond repurchase operations also raised concerns among European officials, who questioned whether the US government was willing to adopt unconventional measures to control borrowing costs and worried that the next step might be pressuring the Federal Reserve to buy bonds directly in the market.(4) Some officials fear that political intervention might affect the dollar liquidity support provided by the Federal Reserve to global central banks—Trump might only need to say, “They are taking advantage of us,” and these currency swap arrangements could disappear overnight. Currently, there are no signs that these safeguards are at risk, and it is still expected that they will remain unchanged.(5) After the new Federal Reserve Chair Walsh took office, he visited Europe to build relationships, and took a photo with the Governor of the Bank of Canada at Jackson Hole—a friendly gesture with deep significance, especially as Trump wages a trade war with Canada, and is seen as a positive signal.