The Foreign Affairs Interview What Trump Gets Wrong About the Global Economy
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Jun 12, 2025 Adam Posen, the President of the Peterson Institute for International Economics, dives deep into the complexities of Donald Trump's trade policies. He explains why trade wars, especially with China, may not be the 'easy win' Trump claims. Posen discusses the economic uncertainties stemming from tariffs, rising consumer prices, and the disconnect between stock market success and everyday American struggles. He also explores the critical need for strategic partnerships and questions the U.S.'s reliance on global supply chains in a rapidly changing economic landscape.
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Trade War Creates Uncertainty
- Trump's trade war resulted in sustained high tariffs primarily on China, despite backing off initially threatened extreme tariffs.
- The administration's ongoing tariff regime creates lasting economic uncertainty similar to Brexit, hindering investment and trade clarity.
Security Shapes Trade Deals
- Security relationships heavily influence likelihood of trade deals; allies like UK, Japan and Mexico are favored.
- Deals with countries seen as threats, like China or Russia, face much tougher prospects, making economic cooperation politically constrained.
Strategic Tariff Motivations
- The Trump administration's tariff rationale includes political sustainability, creating a bloc of allied countries paying 'insurance' for US security.
- This may form a 'Fortress America' bloc with privileged trade, though risky and economically suboptimal in the long term.
