President Trump put his brand of confrontational and disruptive diplomacy on full display Thursday, unsettling NATO allies with a blustering performance in Brussels and then, in a remarkable breach of protocol, publicly undercutting Prime Minister Theresa May of Britain in an interview published hours after landing in her country.
I looked it up out 2 means:
to sell goods or a service at a lower price than another company
to make something weaker or less effective
I think here "undercut" is an extended meaning.