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Trump has deployed his most disruptive weapon yet against China. Will it work? #PUPPETREGIME
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If you ask the individuals working for DOGE, if you ask Elon Musk, they're doing the right thing. They are undertaking a revolution to save the United States,” Drummond says, “If you ask any of the civil servants or the federal workers who've lost their jobs, there is a deep sense of concern, of dread that this revolutionary effort will destroy so much of what powers this country.”
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How long will President Donald Trump’s relationship with Elon Musk last? The alliance has so far defied predictions from the left (and parts of the right) that a relationship between two famously impulsive and mercurial billionaires would eventually lead to conflict. Instead, Musk is everywhere in the Trump administration—attending cabinet meetings, shaking hands with world leaders, smiling in the Oval Office. Musk’s Department of Government Efficiency, or DOGE, has embedded itself across nearly every federal agency. In many ways, the relationship is mutually beneficial: Musk has an almost limitless checkbook to bankroll Trump’s political operations, and DOGE is helping him deliver on a campaign pledge to “shatter” the deep state. Meanwhile, Musk has become the most powerful person in Washington, not named Trump. But the president also has a history of discarding allies when they are no longer valuable and many of his close advisors have become his harshest critics. So, can the Trump-Musk alliance survive for the long haul, or is it destined to go up in flames?
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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.
Ian Bremmer's Quick Take: A Quick Take to kick off your week. Marco Rubio heading to Saudi Arabia to talk with the Ukrainians. That's clearly the most important of a lot of moving parts geopolitically in the world right now. I say that because so much of what the Americans decide to do and not do with the Ukrainians is going to have massive impact on the transatlantic relationship, on NATO, on US-Europe relations, and on the nature of what has been the most important collective security arrangement in the world and is now experiencing crisis. It's very clear that the Ukrainians, as Trump says, lack the cards. And so the outcome is going to be determined largely by countries outside of Ukraine, not just the willingness and the capacity of the Ukrainians themselves to continue to fight. The United States, on the one hand, is pushing the Europeans to do a lot more. A lot more in terms of providing economic support, providing military support, and having a security backstop for a post-ceasefire environment that the Americans are not prepared to participate in.
Now, if all of that happens, and of course that's a big if, but certainly the Europeans are moving in that direction, then the interesting point is the Americans aren't going to determine the outcome. In the sense that the ultimate ceasefire terms will be driven not by the United States, who's basically saying, "We're washing our hands of it." But instead by the Europeans and the Ukrainians, in concert with Russia. And first of all, that's analogous to what's been happening in the Middle East. Everybody remembers that Trump said, "We're going to own Gaza and all the Palestinians are going to leave," and of course, that's not where we're heading. And the eventual outcome will be determined overwhelmingly by the countries that are prepared to spend the actual money and provide the security and figure out the politics. And that means the Arab States, that means Egypt and Jordan, it means Saudi Arabia and the UAE, and it means the potential for blocking by Israel.
That's the environment that we are increasingly going to be seeing on the ground in Ukraine. That the Europeans are going to be doing the driving. The Ukrainians are going to have to align with that and the blocking potentially by Russia. The big difference, of course, is that in the case of Ukraine, the United States is also very interested in doing a deal with Russia over the head of the Ukrainians and the Europeans. There's no equivalent in the Middle East at all. And here, the reason it's so important is because the ability of the Ukrainians to continue to engage in their willingness with the US and Europe together will determine in large part whether a deal between the US and Russia involves a ceasefire with Ukraine or doesn't. If Trump can say, "Hey, the reason we didn't get a deal and the reason they're still fighting is because Ukraine refuses to be a part of it," then a deal with Russia is actually much easier to get to by Trump. Because it involves just re-engagement diplomatically, investment by the US and Russia, joint projects, reopening of arms control conversations, and doesn't involve a Ukraine ceasefire.
Trump has said, "Not only does Ukraine not have cards, but Russia doesn't have cards." Of course, the reality is that if the Russians are willing to do the fighting for a longer period of time, and the Americans don't care and the Europeans can't stand up, then the Russians are the ones with the cards. That is where we are heading. And if the Americans are prepared to do a deal with the Russians irrespective of what happens on the ground in Ukraine, and that is being tested very much over the coming days, that's perhaps the most important outcome of what we see from the US-Ukrainian talks in Saudi Arabia, then the transatlantic relationship is in a lot more trouble than it is right now.
So I think those are the pieces that we're talking about here. It is very clear that the Americans see alliances and see allies as expendable, that it's not that important for the Americans to treat allies with respect. If they're smaller, if they're less powerful, you can do whatever you want. And we saw that with Elon Musk beating up on Poland and the Foreign Minister, Radek Sikorski, someone I've been actually friends with for a very long time, and I think that's not a smart way to conduct business. Poland's been a steadfast ally, they're spending upwards of 4% of their GDP on defense, heading towards 5% going forward. They've housed millions of Ukrainian refugees. They've done far more on the ground in Ukraine per capita than the Americans have on pretty much every front. And also, by the way, there are a lot of Polish Americans that vote, and some of them vote Republican. Far more important than the Ukrainian vote, for example, and that seems to matter too, but maybe not to Elon.
I think that these sorts of insults are unnecessary, and they damage American allies. But I think the Trump administration's perspective is as long as the US is the most powerful country in the world, that America alone is stronger than America with friends, and it's probably the area of greatest geopolitical disagreement that I have with this administration. But we will see how it plays out. I certainly agree that there will be a lot of wins that we will continue to see, because less powerful countries do not want to get into a big fight with the United States. But long-term, I think this is going to play out badly. And I particularly think that's true in the transatlantic relationship where permanent damage is being done irrespective of what happens after Trump. Anyway, a lot to talk about, a lot of moving pieces. We'll talk real soon, and that's it from me.
Donald Trump’s second term is having considerably more impact on the global stage than his first. Trump may have been a largely transactional president last time around, when he was more constrained at home and faced relatively more powerful counterparts abroad. But the first two months of Trump 2.0 have shattered the illusion of continuity. No American ally faces a ruder awakening than Europe, whose relationship with the United States is now fundamentally damaged.
Core partners in Asia like Japan, South Korea, India, as well as Australia worry about being hit with tariffs and will do what they can to defuse conflict, but they also know their geostrategic position vis-à-vis China means Trump can’t afford to alienate them entirely. Accordingly, their relations with Washington should remain comparatively stable over the next four years.
America’s largest trade partners, Mexico and Canada, are facing more significant trade pressures from the Trump administration, but the imbalance of power is such that they have no credible strategy to push back. Everyone understands they’ll have to accept Trump’s terms eventually; the only question is whether capitulation comes before or after a costly fight. Riding an 85% job approval, Mexican President Claudia Sheinbaum has enough domestic political space to yield to Trump’s demands to keep Mexico in his good graces, as she is already doing. By contrast, Canadian leaders have a political incentive to put up a bigger fight because Trump’s threats toward Canada’s economy and sovereignty have sharply inflamed nationalist sentiment north of the border in the run-up to the April 28 elections. However, I expect Ottawa will quietly fold shortly after the vote to ensure that ongoing relations with the US remain functional.
Most US allies have no choice but to absorb Trump’s demands and hope for a reset after he’s gone. But Europe is different. It possesses both the collective heft to resist Trump’s demands and the existential imperative to do so.
Three structural forces render the transatlantic rupture permanent.
First, the European Union has the trade competency and market size to punch back against the Trump administration’s aggressive tariff blitz. Unlike most other US trading partners who lack the economic leverage to go toe-to-toe against Washington and have little choice but to fold under pressure, Brussels’ defiance ensures a protracted trade war with no easy resolution.
Second, most Europeans view the Trump administration’s unilateral pursuit of rapprochement with Russia as a direct threat to their national security. While President Trump would still like to end the war in Ukraine as he promised on the campaign trail, he is prepared to do so on the Kremlin’s terms – and he’s even more interested in business deals with Moscow. He won’t be deterred by a collapse of the Ukraine peace talks, even though it’s Vladimir Putin who’s shown no interest in softening his maximalist demands. Nor will Trump care that the Europeans stridently oppose US normalization with their principal enemy. After all, the United States is protected by two oceans from Putin’s army, and Trump’s embrace of Euroskeptic movements reveals their shared aim: a fragmented and weakened Europe that is easier to dominate.
The president’s rhetoric – echoed by the Signal-gate private texts, Special Envoy Steve Witkoff’s recent interview with Tucker Carlson, Vice President JD Vance’s Munich speech, and so many other pieces of evidence – makes clear that the current administration sees Europeans not as allies but as “pathetic freeloaders” who shouldn’t be “bailed out” as a matter of principle. Even if Washington begrudgingly agrees to provide them with transactional security, Europeans now realize that relying on a hostile US for survival is strategic suicide.
Which brings us to the third and final driver of the definitive US-Europe break: common values … or lack thereof. From free trade and collective security to territorial integrity and the rule of law, Europe’s foundational principles are now anathema to Trump’s America. Just look at Trump’s repeated threats to annex Greenland, to say nothing of his willingness to recognize illegally annexed Ukrainian territories as Russian and support Israel’s annexation of parts of the West Bank and Gaza. For an EU built from the ashes of World War II, it's hard to compromise with a worldview in which borders are mere suggestions and might makes right.
After years of complacency, European leaders seem to have finally gotten the message that the United States under Trump is not just an unreliable friend but an actively hostile power. They understand they need to drastically increase Europe’s sovereign military, technological, and economic capabilities – not just to survive without America but also to defend their borders, economies, and democracies against it. Whether they can muster the political mettle to act on this realization, however, is Europe’s greatest test since 1945.
Recent moves – Germany’s historic debt brake reform and Brussels’ fiscal and financial maneuvers to boost defense spending – hint at urgency. Yet half measures won’t suffice. If Europeans refuse to commit troops to guarantee Ukraine’s post-ceasefire security absent an American backstop and continue to balk at seizing Russia’s frozen assets and overriding Hungary’s veto, it will confirm my view that the bloc lacks the nerve to survive in a jungle-ruled world where Trump and Putin refuse to play by any rules.
The irony is that Europe has the resources and capacity to stand up for itself, its values, and its fellow Europeans. What’s missing is the collective courage to act like it’s 1938, not 1989. For Ukraine’s sake and its own, that needs to change.
Democratic-backed Dane County Circuit Judge Susan Crawford and Republican-backed Waukesha County Circuit Judge Brad Schimel square off in their only debate until their April 1 election.
Elections are back in the United States — and so is the money. Six months after the 2024 US presidential vote, Wisconsinites will head to the polls Tuesday to decide whether liberal candidate Susan Crawford or her opponent, conservative Brad Schimel,will tip the ideological balance of the state Supreme Court. The liberals currently have a 4-3 advantage.
Why it matters. This is the first electoral test of President Donald Trump’s second term. Wisconsin is one of the few swing states in the country, so the results are a solid bellwether for how the country feels about Trump — who endorsed Schimel — and his billionaire adviser, Elon Musk.
Strong scent of Musk. Liberal and Democratic groups have tried to make this election about Musk, targeting the Tesla CEO in their ads as they seek to seize upon some voters’ anger at the current government. Meanwhile, Musk has spent over $20 million to support Schimel, even recycling voter engagement tactics he used during the 2024 campaign, like his million-dollar raffles — a judge sanctioned these lotteries on Saturday.
Do liberals have an edge? Polling has been relatively limited on this race — one has the race tied, another has Crawford edging ahead — but Democratic-aligned candidates tend to perform better in off-season elections these days. The liberal candidate won the last Wisconsin Supreme Court race in 2023 by 11 points. As for Brandon Scholz, a Wisconsin-based lobbyist who worked for GOP campaigns for over 40 years, he couldn’t pick a winner.
“You go find your favorite quarter in your draw, and flip it,” he said.