Welcome to another edition of my mailbag, where I attempt to make sense of our increasingly chaotic world, one reader question at a time. If you have a burning question for me before I go back to full-length columns, ask it here and I’ll answer as many as I can in next week’s newsletter.
Let’s dive in (with questions lightly edited for clarity).
Is the US currently a kleptocracy?
The United States is the most structurally kleptocratic of any advanced industrial democracy, with public policy increasingly captured by monied special interests and the rules of the marketplace determined by the highest bidder. The wealthiest Americans not only can fund political campaigns but also buy favorable regulatory and legal treatment and lobby for policies that perpetuate their economic interests. This system is two-tiered alright, but it doesn’t see red and blue – only green.
President Donald Trump is a beneficiary and an accelerant of this disease, but it long predates him. Which is why Trump faced so little pushback from the business world both times he was elected. After all, a system where the connected can buy their preferred policy outcomes is a system much of the private sector is both used to and comfortable with.
Has Trump done to brand USA what Musk did to Tesla?
He’s working on it. The long-term damage to America’s reputational capital has been incalculable (though it hasn’t been as great as the >50% in value Tesla has lost since its mid-December peak). Sometimes you have a personal relationship and someone does something that can’t be unseen. That’s what has happened particularly with Canadians and Europeans of late. I think that damage is permanent. And we are not even 100 days in …
How do other nations view America in light of Trump’s aggressive tariffs, threats, and general disdain for allies?
They all see the United States as the principal driver of geopolitical uncertainty. In the near term, most countries – especially smaller, poorer ones – will look to cut trade deals with Trump relatively quickly because the alternative, direct confrontation with the world’s sole superpower, is too costly to bear. We’re seeing that already with the Japanese, the South Koreans, and many other delegations coming to Washington to try to do everything they can to secure at least functional relations with the US.
At the same time, every country recognizes the longer-term need to hedge away and “de-risk” from the United States as much and as fast as possible to reduce their exposure to Trump-driven disruption. Even those that manage to come away with deals know the president could change his mind. After spending the last decade focusing on the dangers of having too much exposure to Beijing’s opaque, arbitrary, and personalistic decision-making, policymakers, businesses, and investors all over the world now suddenly see de-risking from the US as the more urgent priority. That’s an extraordinary shift when you stop to think about it.
Granted, de-risking from the US is a tall order given America’s asymmetric power advantages and the global embeddedness of so many of the things it provides – defense, advanced technologies, finance – that are hard to substitute (read: to break free from). But many US allies see no choice but to start seriously looking for alternatives. We’re already seeing the European Union and Latin America speed up their conversations to fast-track approval of the EU-Mercosur trade deal. Trump-aligned India is likewise moving to improve its trade relations with the EU, the United Kingdom, Australia, and others. Canada is trying to engage much more closely with the Europeans. Even Vietnam, which has long harbored deep mistrust of China, signed 45 new economic cooperation agreements with Beijing days after Trump trade czar Peter Navarro rebuffed its offer to lower its tariffs on US goods to zero.
Can China capitalize on Trump’s global trade war to peel off US allies?
Xi Jinping just wrapped up a Southeast Asian charm offensive to try to do exactly that. For the first time since the Vietnam War, most Vietnamese are now more well-disposed toward China than the US. That’s not true everywhere (e.g., the Philippines is still about 80% pro-American), but the trend line is clear. China sees the moment as a historic opportunity to move economically closer to many countries and portray itself as a champion of globalization and a force for stability.
But that doesn’t necessarily mean America’s loss will be China’s gain everywhere. The Europeans don’t suddenly trust the Chinese more just because they now trust the Americans less. They still have big issues with Chinese dumping, overcapacity exports (especially in the auto industry), data surveillance, and other beggar-thy-neighbor practices that have not gone away. Europe’s de-risking will be less about tilting to China and more about strengthening its own capabilities and hedging with pretty much everybody else. Plus, as I mentioned above, while Trump has worked hard to alienate US allies, America remains the only game in town for most Western countries in many strategic sectors and critical networks. Going cold turkey is unthinkable.
If everyone thinks tariffs are a bad idea even for the American economy, why is Trump persisting? Do you see a way the US can win on this?
As much as I’d like to believe so, I just can't see any way the US comes out ahead on this. Myself and others have written extensively about why the tariffs (and the massive ongoing uncertainty surrounding US policy) are an economic lose-lose, not only for America’s trade partners but for American consumers and businesses, and not just in the short term but also in the long run. Rather than boost domestic manufacturing, they will accelerate the country’s deindustrialization. And if the administration had really intended to use the tariffs as a cudgel to forge a united front against China (as Treasury Secretary Scott Bessent and others have claimed), it wouldn’t have slapped punishing duties on friendly countries already inclined to join this alliance before asking for their help. I’m afraid there’s no “4D chess” strategy or master plan.
It’d be one thing if the Trump team were only picking this one fight. But it’s going to be much harder to convince the world not to hedge away from the United States when at the same time as they’re hitting everyone with tariffs, they’re also picking all sorts of fights on other fronts. They are directly and indirectly threatening other countries’ sovereignty and territoriality, whether it’s Greenland and Denmark, Panama, Canada, or Ukraine. They are exporting algorithms and disinformation that undermine democracies around the world. They are destroying the transatlantic alliance. They are aligning with Russia over longstanding allies at the United Nations and the G7. They are driving away foreign tourists and international students. And they’re picking fights domestically, trying to weaken checks and balances, undermine the rule of law, and erode state capacity in ways that will make the US a worse place to live, invest, and do business.
I'd love to be proven wrong, but this policy set looks hands down like the most extraordinary geopolitical own goal I’ve ever witnessed.
Is it possible that Trump is purposely upsetting the economy in an effort to lower interest rates, reduce the US government’s debt servicing costs, and shrink the federal deficit?
Nope. That’s another one of those 4D chess stories flying around, and it’s nonsense. It’s true that a tariff-and-uncertainty-induced US recession can make existing US government debt (and mortgages, car loans, credit card debt, etc.) cheaper to refinance by bringing down long-term interest rates. But if long rates decline because the real economy has deteriorated to the point where the Fed has to cut short-term rates to boost aggregate demand, the money saved on debt interest payments probably will be offset by the lower tax revenue collected and the higher unemployment benefits paid out during the recession. The overall deficit will likely be higher than if said recession hadn’t been engineered in the first place – destroying trillions in economic value and hurting millions of real Americans in the process.
And all this assumes that long rates will in fact go down when the US enters a tariff-and-uncertainty-induced recession, which financial markets are currently telling us is not guaranteed in light of growing inflation and default risks. Thus far, Trump’s stagflationary policy mix and erratic policymaking style have made the world’s safe-haven assets relatively less attractive, prompted investors to sell US bonds, and caused long rates to rise rather than fall.
Will Trump succeed in brokering a ceasefire in Ukraine like he promised on the campaign trail?
Only if he’s willing to effectively use both carrots and sticks on Russia and Ukraine alike. So far he hasn’t, deploying mostly sticks (suspending military aid and intelligence sharing) to force the Ukrainians to come to terms and principally only carrots (the promise of sanctions nonenforcement and relief, and even full normalization of relations) to get the Russians to back off their maximalist demands.
Secretary of State Marco Rubio said last week the administration is giving the talks “a matter of days” to make progress or else they’ll walk away from the peace effort altogether. The problem is that Vladimir Putin continues to be uninterested in a durable ceasefire, at least not unless the so-called “root causes” of the conflict are addressed through a permanent settlement. He started this war to change the facts on the ground and is convinced he still has what it takes to win it. What’s more, he’s betting that if he can keep slow rolling the peace talks and convince Trump that it was Kyiv’s intransigence that tanked them, Russia could plausibly get a US rapprochement while it continues to wage war against a Ukraine deprived of US assistance. I’m not a betting man, but at this point, it’s a reasonable wager for Putin to make.
What do you expect from incoming German Chancellor Friedrich Merz?
Less capacity to spend and lead than many people hope, despite having managed to pass a historic fiscal package through the Bundestag lifting the country’s “debt brake” for defense spending and creating a 500 billion euro special fund for infrastructure investments. The incoming coalition is serious but relatively unpopular and divided, facing a stronger-than-ever far-right Alternative for Germany leading the opposition in the new parliament.
This political weakness, combined with the sheer scale of the challenges it faces, will water down the government’s ambitions. Germany is undergoing a severe, decade-long economic crisis. Merz will be under considerable pressure to jumpstart growth quickly amid global trade wars and under tight budget conditions. Just a few weeks ago, he was well-disposed to take on a European leadership role. Now that talk is no longer cheap, his constraints and risk tolerance will change. And if the Germans won’t step up, who in Europe can?
Is climate action possible in a disintegrating world? Have the odds of avoiding catastrophic climate change worsened in the past three months?
I’m more optimistic here. We’ve already broken the back of the most catastrophic climate change scenarios. Economic self-interest – not ideology or idealism – is driving the clean energy revolution as technological innovation and steep learning curves have dramatically reduced the price tag of clean power technologies, making them the cheapest and most profitable option in a lot of markets regardless of politics. Deep-red Texas and Florida lead the US in solar and wind power deployment. China is set to hit its emissions peak several years ahead of schedule. Europe sees renewables as an energy security imperative. Emerging markets from India to Indonesia and Pakistan are eager to develop using cheaper and cleaner domestic energy sources than high-volatility, dirty imported fuels.
I don’t want to be glib. The planet is still heating up faster than we’d like, and the present state of geopolitics – from Trump’s “drill, baby, drill” to the G-Zero vacuum of global climate leadership – will slow the pace of decarbonization. With every fraction of a degree of warming causing bigger and more frequent disasters, lower growth, and more deaths, that’s not good news. But for every environmental regulation repealed, clean energy policy revoked, fossil fuel project approved, and international commitment abandoned, there’s another, much more structural force pulling even harder in the opposite direction. As my colleagues and I put it in Eurasia Group’s 2025 Top Risks report, the global energy transition “has reached escape velocity.”
Would you ride Moose like a jockey if given the opportunity?
I’d train him with a well-disposed toddler first. That would be must-see television. Any volunteers?
