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Economy
According to The Economist editor-in-chief Zanny Minton Beddoes, 2025 is shaping to be a historic turning point defined by three massive global shocks. “Each of which is big enough for our grandchildren to have a chapter in their history books,” she warns on GZERO World with Ian Bremmer.
The first is geopolitical: the United States, once the architect of the global alliance system, is now actively challenging—and possibly undermining—it. The second is economic: the U.S. has abandoned free trade in favor of escalating tariff wars, threatening the global trading system that has defined the past 80 years. And the third, perhaps most transformative, is technological: the rapid rise of artificial intelligence, which is reshaping industries and economies faster than governments can respond. The combination of these three forces, Beddoes argues, creates massive uncertainty with the potential for severe damage.
While acknowledging that some aspects of the Trump administration’s policies—such as cutting bureaucracy and rationalizing government—may have merit, Beddoes is deeply concerned about its overall trajectory. “I just find the combination of this… bullying, transactional approach, where the view is that your gain must be my loss… fundamentally misguided,” she says. With global institutions struggling to keep pace with these shifts, the question is no longer whether the old order will survive—it’s whether the world can build a new one before chaos takes hold.
Watch full episode: Trump’s trade war: Who really wins?
GZERO World with Ian Bremmer, the award-winning weekly global affairs series, airs nationwide on US public television stations (check local listings).
New digital episodes of GZERO World are released every Monday on YouTube. Don't miss an episode: subscribe to GZERO's YouTube channel and turn on notifications (🔔).GZERO World with Ian Bremmer airs on US public television weekly - check local listings.
As Trump’s second term unfolds, European leaders are no longer just questioning America’s reliability—they’re beginning to worry that the US is actively hostile. Economist editor-in-chief Zanny Minton Beddoes points to growing frustration across the continent, and it's not just about America's reliability on defense. Trump’s aggressive trade policies, including escalating tariffs on European goods, have compounded the rift. “You have an anger at the United States amongst its allies that is damaging,” Beddoes warns.
But beyond policy, it’s Trump’s approach to foreign relations that is sparking the greatest alarm. Beddoes argues that his White House operates with a “mafia mobster kind of foreign policy,” where allies are strong-armed rather than supported. The result? Europe is starting to hedge its bets, strengthening its own defense industries and reducing economic reliance on the U.S. If Trump continues treating allies like adversaries, they may start acting accordingly.
Watch full episode: Trump’s trade war: Who really wins?
GZERO World with Ian Bremmer, the award-winning weekly global affairs series, airs nationwide on US public television stations (check local listings).
New digital episodes of GZERO World are released every Monday on YouTube. Don't miss an episode: subscribe to GZERO's YouTube channel and turn on notifications (🔔).GZERO World with Ian Bremmer airs on US public television weekly - check local listings.
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“Who benefits from this trade war?” That’s the question that Zanny Minton Beddoes rhetorically poses midway through her interview with Ian Bremmer on GZERO World. And it’s the question at the heart of this episode. US President Donald Trump has a simple answer: We do. The rest of the world, though, may beg to differ. So how does Trump’s tit-for-tat tariff war threaten to reshape the global economy? And is it necessarily a bad thing if it does?
GZERO World with Ian Bremmer, the award-winning weekly global affairs series, airs nationwide on US public television stations (check local listings).
New digital episodes of GZERO World are released every Monday on YouTube. Don't miss an episode: subscribe to GZERO's YouTube channel and turn on notifications (🔔).GZERO World with Ian Bremmer airs on US public television weekly - check local listings.
Listen: On the GZERO World Podcast with Ian Bremmer, we ask The Economist's editor-in-chief Zanny Minton Beddoes: Did Wall Street get President Trump wrong?
Candidate Trump promised to lower taxes and drastically reduce government regulation. This message resonated as much with Wall Street as it did with Main Street. After surviving, if not thriving, under President Trump's first term in office, the business community no longer feared Trump's unpredictability. They overlooked his fixation on tariffs and his promises of mass deportations.
However, the first months of Trump 2.0 have been a time of economic warfare and market volatility. President Trump slapped tariffs on America's largest trading partners and closest allies and began to make good on a promise to deport millions of illegal immigrants. So where is this all heading, and what does it mean for the rest of the world?
Bottles of Champagne are seen on display for sale in a wine shop in Paris, France, on March 13, 2025.
The party ended abruptly last week, and the last bottle of European champagne may have popped.
After President Donald Trump imposed 25% tariffs on all steel and aluminum imports, US allies quickly announced countermeasures. This included a European Union plan to introduce 50% tariffs on US whiskey. Further accelerating any impending trade war, Trump responded by threatening a 200% tariff on all EU wines, champagnes, and alcoholic products. In the words of former President Thomas Jefferson as interpreted by Lin-Manuel Miranda in “Hamilton,” “Look, when Britain taxed our tea, we got frisky. Imagine what gon’ happen when you try to tax our whiskey.”
European leaders caught between the rock of needing Trump to help bring an end to the war in Ukraine (while they aim to beef up collective defense) and the hard place of fearing economic contraction from US tariffs are quickly realizing that nobody is having fun anymore.
Lessons of a tariff man
As Europe and others look to rebound from the latest round of the Trump administration’s trade offensive, a few misguided lessons are being drawn. The first is about Trump’s attachment to tariffs and protectionist trade policy. Many headlines in recent weeks have propelled a narrative of the Trump “whipsaw” or the view that the administration quickly U-turns on trade policy. Examples like the retreat on Colombia or the initial deferral for Canada and Mexico are frequently cited as evidence of the tendency toward reversals. What these perspectives underappreciate, however, is both how longstanding Trump’s regard for tariffs has been, and how fundamental the administration sees it to its broader policy objectives. The concession-reprieve cycle is the noise, while economic security as national security is the signal.
Trump’s zest for tariffs dates back to the 1980s and was widely written about during his first administration. Now, this four-decade history seems to have been overtaken by disorientation and incredulity. In an interview given in 1989, Trump reportedly said “America is being ripped off … We’re a debtor nation, and we have to tax, we have to tariff, we have to protect this country.” Taking to social media last week, Trump echoed these sentiments, posting, “The US doesn’t have Free Trade. We have ‘Stupid Trade.’ The Entire World is RIPPING US OFF!!.” In short, there is no new Donald Trump.
But it is not just that Trump may be ideological about tariffs; it is also that he and his team have placed these beliefs at the center of their second-term ambitions. In a Day 1 presidential action, the administration announced that “Americans benefit from and deserve an America First trade policy.” For the Trump administration, “America First trade” means promoting investment and productivity, enhancing US industrial and technological advantages, and defending economic and national security to benefit American workers. Each of these objectives will be backed up by efforts to address unfair and unbalanced trade – tariffs and other measures – and wider economic security considerations, including reviews and investigations, with special attention given to economic and trade relations with the People’s Republic of China. The administration has laid it all out by executive action. When Trump orders the creation of an External Revenue Service to collect tariffs, duties, and other foreign trade-related revenues, he plans to collect the money.
Missed connections
The other lesson that should be gleaned from what has unfolded in recent weeks between the US and its allies, particularly in Europe, is about a mismatch in intentions. Trump and his trade team believe that protectionist policies will restructure the global trade system in favor of US industrial and manufacturing strength. Imposing tariffs across the board on steel and aluminum is aimed at reigniting the US metals industry, whether this comes to fruition will take years to assess.
When Europe responds to industrial tariffs by targeting goods with only limited substitutability like US whiskey, the goal is to find a pain point and apply leverage. The downside of such an approach, however, is exactly what analysts, the financial market, and those targeted by US tariffs have lobbed at Trump: It will be domestic consumers that are most hurt. Will Europeans turn to the United Kingdom to replace American whiskey with Scotch? Perhaps. But the UK is no longer in the EU anyway. France, Germany, and others seem unlikely to invest in their own domestic distilling for near-term gain. Instead, Europeans will be left to pay a heftier price for whiskey or go without. Likewise, Trump’s proposed countermeasures on European champagne put US consumers in an analogous position. The US domestic wine market may be robust, but champagne can only be made in Champagne, France.
As the potential domestic impact ratchets up, US allies will likely discover that retaliation leaves a bitter aftertaste, especially for the Transatlantic relationship. This is the forcing function of tariffs that the Trump administration is hoping to see.
US presidents who came before Trump like William McKinley and Herbert Hoover found that the best tariff intentions do not always turn out as planned, instead bringing domestic price increases and economic downturns. In the current interconnected world where supply chains are truly global, the historical experience may not directly apply. Still, there is a real risk that it might. The question is, when the music stops, who is left with a seat and a glass of bubbly?
Lindsay Newman is a geopolitical risk expert and columnist for GZERO.
Trump in front of a downward trending graph and economic indicators.
For someone who campaigned on lowering grocery prices on day one and rode widespread economic discontent to the White House, Donald Trump sure seems bent on pursuing policies that will increase that discontent.
If you don’t believe me, take it from the president himself, who refused to rule out a recession last Sunday and acknowledged that his sweeping tariff plans would cause “a little disturbance.” But, he added, “we are okay with that.”
Are we okay with that, though?
From Trump pump to Trump dump
Trump’s election victory unleashed “animal spirits” as many business leaders and investors hoped he’d follow through on his campaign promises to cut red tape and lower taxes while ignoring the more disruptive planks of his economic platform: tariff hikes and immigration restrictions. Surely much of it was posturing and bluffing, they thought, and Trump’s more extreme impulses would be checked by market-friendly advisers like Treasury Secretary Scott Bessent. In the worst-case scenario, they assumed Trump would course correct when confronted with sliding stock prices or signs of economic cracks.
Slowly but surely, they are starting to realize they got it wrong. Trump meant what he said and is less bound by constraints than during his first term. (I hate to say I told you so, but it wouldn’t have taken them so long to figure this out if they subscribed to this newsletter.)
The S&P500 has dropped by 8% over the last month (so far) as the president’s promised “golden age” of growth collided with the chaotic reality of Trumponomics. American equities are not only lower than they were before Trump’s inauguration but have erased all gains since he became the odds-on favorite to win the race in October. This represents the worst stock market performance in a president’s first 50 days since Barack Obama took office in the midst of the global financial crisis.
But it’s not just Wall Street that’s souring on Trump’s plans. Consumers, small businesses, and CEOs alike are all reporting sharp declines in confidence, largely due to record uncertainty about tariffs. Manufacturing activity is slowing, retail sales and construction spending are falling, and businesses of all kinds are paring back their investment plans as threats to the US outlook mount.
Inflation expectations are on the rise, with 60% of Americans believing Trump isn’t doing enough to bring down inflation and 68% fearing that his tariffs will lead to higher prices. Most Americans think the economy is on the wrong track and disapprove of the president’s handling of it. No wonder Trump’s net approval has taken a quick hit, his honeymoon ending faster than any other president’s save one: Trump 1.0.
It's the economic uncertainty, stupid
Businesses and investors have reason to worry.
In his first six weeks in office, Trump has made it clear that he is dead serious about building a “tariff wall” around America, not as a negotiating tool but to reshape global trade flows. The US effective tariff rate is set to rise to its highest level since the 1940s by the end of the year, raising prices for American consumers and businesses and slowing down growth. Trump has virtually closed the southern border and ramped up the pace of deportations, which will constrain the labor supply and lead to higher prices and lower growth. He has threatened to eliminate government subsidies, contracts, and grants that businesses, universities, and other organizations rely on. And he has empowered Elon Musk’s chaotic effort to purge, downsize, and capture the administrative state, threatening the delivery of critical public services, amplifying these macroeconomic shocks, and destroying US state capacity.
And yet, these first-order consequences of Trump’s policies are not the core reason why traders and boardrooms are freaking out about the outlook for the US economy. Don’t get me wrong, businesses prefer good policies to bad policies. But they can adapt to bad policies. You know what they can’t adapt to? Policies that can turn on a dime based on the president’s whims.
Maybe you agree with Trump that “trade wars are good and easy to win,” or perhaps you believe his policies will cause short-term pain but be worth it in the long run. But whatever you may think of the merits of his agenda, there’s no denying that the constant uncertainty he brings to the table is terrible for business.
Every business decision is a bet about the future. The one non-negotiable before making any investment is a bare minimum of predictability. When the rules of the game can change any day (and when they’re no longer applied impartially), the rational choice is to put off costly long-term investment plans – even if the possible payoffs are high.
That’s why the extreme policy arbitrariness, volatility, and uncertainty that characterizes Trump 2.0 – best exemplified by his on-again, off-again, on-again tariffs – is the ultimate economic dampener. Even if Trump walks back some tariffs or implements his pro-growth promises, uncertainty – by some metrics already higher than it was during the pandemic, the 2008 financial crisis, and 9/11 – will remain near all-time highs for the foreseeable future, discouraging investment, hiring, and consumption, and raising prices. Its chilling effect will compound the direct impact of the administration’s implemented tariffs, deportations, federal layoffs, and so on. As I warned in Eurasia Group’s Top Risks report, “in the long run this will risk undermining the predictability and performance of the world’s most dynamic economy, preeminent investment destination, and issuer of the global reserve currency.”
No more Trump put?
Trump seems to have no intention of backing off his plans or moderating his “move fast and break things” approach, even in the face of economic dislocation. “Markets are going to go up and they’re going to go down, but, you know what, we have to rebuild our country,” he said at the White House yesterday.
This contrasts sharply with his first term, when Trump considered the stock market a barometer of success. Back then, investors and business leaders knew they could count on the “Trump put” – the president’s tendency to curtail his most economically harmful policies when faced with financial turmoil. Now, Trump is openly saying he doesn’t care that investors believe his agenda could cause a recession and raise prices – because it might, and he’s convinced the sacrifice will be worth it for the greater good. “Will there be some pain?” he asked in February. “Maybe (and maybe not!) But we will make America great again, and it will all be worth the price that must be paid.”
So the Trump put either doesn’t exist anymore, or the threshold is significantly higher than it used to be. This makes sense when you consider the president doesn’t have to (read: can’t) run for reelection again. After being twice impeached, convicted, nearly assassinated, and taken for dead politically, the 78-year-old Trump is in a rush to cement his legacy before his “enemies” get another chance to take him down.
True, most presidents – even lame ducks – would consider avoiding a crippling economic meltdown, scoring a decent result in the midterms, and handing the reins to a same-party successor essential to a good legacy. But Trump is no ordinary president. He does not, for example, care much about the Republican Party (after all, he hasn't been a member for long). What he does care about is his own image. In that sense, he is still constrained by public opinion – or rather, his perception of it.
The key question is whether there’s anyone around him who can speak truth to power to a man who has famously little patience for being told he’s wrong. As I wrote in Eurasia Group’s Top Risks report:
Not only does the president-elect have unified government and consolidated control of the Republican Party, but he is building a more personally loyal and ideologically aligned administration than last time. His team will come into office ready to implement – rather than thwart – Trump’s agenda.
If his first 50 days are any indication, the US economy may be in for a lot more trouble until reality pierces his bubble … if it ever does. The beatings will continue until morale improves.
Inside the Grand Palais at the 2025 AI Action Summit, global leaders and innovators gathered to showcase how artificial intelligence is tackling some of the world’s most urgent challenges. The Paris Peace Forum selected 50 groundbreaking AI projects from over 770 applicants across 111 countries for their potential to drive positive change.
Among the featured projects was Disha, an AI-driven disaster response initiative from the UN Global Pulse Lab. "Our model compares satellite images before and after disasters like floods or earthquakes to identify damage and direct aid efficiently," explained Talea von Lupin.
Another initiative, Phoenix, is using AI for peacebuilding by analyzing social media discourse to detect and address polarization. "We help mediators monitor online narratives in an ethical and participatory way," said Rita Costa Cots, emphasizing the tool's role in conflict resolution.
In healthcare, Care for Rare is leveraging AI to detect rare genetic diseases in newborns, helping doctors diagnose conditions early and save lives. "We involve medical professionals in the design process, so the technology is easy to use from day one," said Jerry John Kponyo.
Meanwhile, Masakhane, an African-led initiative, is working to build AI-powered language tools for indigenous languages. "Many African farmers rely only on their native languages. AI can bridge this gap, empowering them with information and improving livelihoods," explained Tajuddeen Gwadabe.
With selected projects spanning 28 countries—including 22 from the Global South—the summit underscored the power of AI to drive sustainable and equitable progress. From environmental protection to healthcare breakthroughs, the innovations showcased in Paris demonstrate how AI can be a force for good, inclusion, and global development.