"Many of the People Around Trump Subscribe to Crazy Ideas"

"Many of the People Around Trump Subscribe to Crazy Ideas"
In an interview, Barry Eichengreen, one of the most renowned economists in the U.S., expresses deep concerns about the second administration of Donald Trump. Europe, he says, could face stiff economic head winds from Washington.

Interview Conducted by Tim Bartz
13.11.2024, 13.01 Uhr


(Der Spiegel) DER SPIEGEL: Mr. Eichengreen, since Donald Trump's election victory, the mood in the economy seems to have turned around and share prices in the US have risen significantly. Is Trump good for the economy?

Barry Eichengreen: So far, he has been good for the markets, which is, of course, different from saying that he is good for the economy. The markets are hoping for tax cuts, higher profits, demand stimulus. They expect that U.S. companies will benefit when foreign competitors face higher tariffs. But I suspect that the markets are experiencing a kind of sugar rush.

DER SPIEGEL: What do you mean by that?

Eichengreen: Uncertainty about where the country is heading has fallen because the election has been clearly decided. But Trump, with his erratic policies, is an uncertainty machine. So uncertainty will be back. At that point, markets will react negatively.

....(snip)....

DER SPIEGEL: Do your worries extend beyond the end of Trump’s term in 2029?

Eichengreen: Trump will be very old by then. But the much younger Vice President J.D. Vance is his natural heir. Vance is even scarier than Trump because he's smarter, more disciplined and has a longer attention span.

DER SPIEGEL: As in his first term in office, Trump has once again announced that he will impose high tariffs on imports. Europe and China will react to this. Is the world on the brink of a trade war?

Eichengreen: Yes. Hardly anyone will be able to stop Trump, given the extent of his power to re-make U.S. trade policy. U.S. presidents have considerable power to make trade policy unilaterally. And because U.S. trading partners are familiar with this from his first term in office, they are preparing a response. They won’t take U.S. tariffs passively, they will retaliate. They know that meeting force with force is all that Trump understands. The situation is combustible. ...................(more)

https://www.spiegel.de/international/business/whither-the-global-economy-many-of-the-people-around-trump-subscribe-to-crazy-ideas-a-bca05d48-28d6-44a2-bed3-1ae7f569e3c3