It's Trump's world economy now
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Illustration: Sarah Grillo/Axios
When Donald Trump first ascended to the presidency in 2017, it seemed to global elites like a temporary aberration. Now, his leadership is set to define an era for the world economy.
Why it matters: The economic thrust that prevailed for decades — a period of nations becoming ever more interconnected, with the U.S. as the unquestioned protector of that world order — has receded fast, and doesn't look likely to return.
- President Trump's "America First" priorities, transactional style, and willingness to threaten and cajole major companies and leaders of America's closest allies are all simply the way things are now.
- The ripple effects of that new geopolitical and economic landscape could extend long after his term ends.
What they're saying: "[W]hereas the first Trump administration could be seen by some as a blip, the second should be seen more as an inflection point for the political and economic order," according to the World Economic Forum's chief economists' outlook.
- Those economists anticipate huge changes in trade, migration, regulation, fiscal and foreign policy and more, "with a solid majority of 61% characterizing this change as a long-term shift rather than a short-term disruption."
- "We're living in an environment that definitely seems to imply higher rates, higher inflation, more subdued growth relative to pre-pandemic," BlackRock chief operating officer Rob Goldstein told a group of reporters Tuesday in Davos.
Between the lines: The sense that the ground is shifting beneath the feet of top economic policymakers is palpable. In effect, Trump's re-ascendence to the top of the world's biggest economy will force introspection as to what isn't working in their own countries.
- In an address to Davos attendees on Tuesday, the euro area's top official said the bloc's longtime economic model is no longer viable. A complete revamp is necessary — one that accounts for a new, Trumpy economic backdrop.
- "In the last 25 years, Europe has relied on the rising tide of global trade to drive its growth," said European Commission president Ursula von der Leyen. "It has relied on cheap energy from Russia. And Europe has too often outsourced its own security. But those days are gone."
Hours later, China's Vice Premier Ding Xuexiang warned the same crowd about high-stakes changes underway.
- "Transformation not seen in a century is accelerating across the board with imminent tariff wars and trade wars," Ding said. He added: "Human society has once again come to a critical crossroads."
The bottom line: The forces Trump is setting in motion for the global economy have momentum of their own and are likely to outlast him.
- "Policies, once put in place, develop constituencies that like to see the policies remain," Raghuram Rajan, a University of Chicago economist and former governor of India's central bank, tells Axios. "These things have more of a life than one administration."
