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Trump in front of a downward trending graph and economic indicators.
America is souring on Trumponomics. Trump may not care.
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.
The White House is seen from a nearby building rooftop.
Judge declares White House in defiance of court order on blocked funds
The dispute centers on a White House memo that froze federal funds until they aligned with Trump’s priorities. The Justice Department argues that the administration’s actions are lawful because the money still being blocked was allocated for clean energy projects and transportation infrastructure under Joe Biden’s Inflation Reduction Act, which was stopped under a different executive order signed on Trump’s first day in office. This, they say, is separate from the memo freezing federal funds across the board.
McConnell ordered the government to “immediately restore frozen funding.” But the judge’s statement came a day after Vice President JD Vance posted that judges shouldn't control executive power, as the White House faces a series of blocked court cases – including ending birthright citizenship, restricting access to Treasury Department systems, and nearly 40 other lawsuits against the 53 executive orders he has signed so far.
If the White House does not back down or chooses to ignore the court’s orders, it could call into question whether the judicial branch has the power to constrain the executive, undermining the founding principle of checks and balances, and putting the country on the course toward a constitutional crisis.
What Stargate means for Donald Trump, OpenAI, and Silicon Valley
In his first week back in office, Donald Trump gathered tech leaders Tuesday to announce a half-trillion-dollar project called Stargate.
Flanked by OpenAI CEO Sam Altman, Oracle chairman Larry Ellison, and SoftBank CEO Masayoshi Son, Trump announced a $500 billion private investment in artificial intelligence infrastructure that he said is “a resounding declaration of confidence in America’s potential.” SoftBank’s Son called it the “beginning of a golden age” of AI in the United States.
While Trump heralded the announcement from the White House, Stargate is a privately funded joint venture. The new entity is backed by OpenAI, SoftBank, and Oracle, but also MGX, an Abu Dhabi-based investment firm. Microsoft and chipmakers Arm and Nvidia were named “technology partners” for Stargate. The purpose: to build massive data centers across America to spur the increased demand for AI.
The flashy price tag caught plenty of attention, but Stargate also has spurred controversies about Trump’s relationship with Silicon Valley and raised questions about the value of energy-guzzling data centers in the age of AI.
Elon Musk scoffs at Stargate
Within hours of the announcement, the Stargate announcement sparked criticism from Elon Musk, who has been a major funder of Trump’s presidential campaign and adviser to him in the White House. Musk, who runs xAI, a rival firm to Altman’s OpenAI, claimed on social media that “they don’t have the money.” He went on to say that he has it on “good authority” that SoftBank has less than $10 billion secured for the project.
Altman refuted this in a response to Musk. “Wrong, as you surely know,” he wrote on X. “This is great for the country. I realize what is great for the country isn’t always what’s optimal for your companies, but in your new role I hope you’ll mostly put America first.”
Musk’s critique may have been rooted in jealousy. Stargate appears to primarily benefit one company: OpenAI. “Even if the Stargate infrastructure is made available to other AI developers, OpenAI could potentially use its ‘operational responsibility’ to tilt the playing field in its favor,” said Jack Corrigan, a senior research analyst at Georgetown’s Center for Security and Emerging Technology.
Should Trump get credit for Stargate?
The public spat between Silicon Valley’s top CEOs-turned-lobbyists was only one controversy that emerged from this announcement. News outlets reported that the Stargate deal was in the works for months before Trump took office and that an Oracle data center complex in Abilene, Texas, highlighted during the event, was already under construction as of this past summer.
“This project was started well before the Trump administration,” said Scott Bade, a geo-technology analyst at Eurasia Group. “It was really more about branding it with the White House imprimatur than Trump playing a real role.” He said Trump is happy to take credit for Stargate even if there aren’t federal dollars supporting it.
How much energy will Stargate need?
There are open questions about how to power all of this new infrastructure. AI systems require enormous amounts of energy, and the Stargate project will require an estimated 15 gigawatts across sites, according to Morgan Stanley. It’s unclear what the energy mix will be, but the first site in Abilene will rely on natural gas.
While the Biden administration pushed for clean energy sources — even backing the use of nuclear energy — Trump has signaled his openness to relying on fossil fuels for data centers. Perhaps the most likely outcome is there’s no cop on the beat pushing data center developers and AI companies toward renewable and clean energy sources, pushing us closer toward an energy crisis at a time when Goldman Sachs estimates AI will drive data center power demand 160% by 2030.
“Building data centers for AI without considering their environmental impact to nearby communities could cause massive shortages of various finite resources, especially in Texas where the first Oracle data centers are being built,” said Gadjo Sevilla, senior analyst at eMarketer.
The DeepSeek question
Stargate is built on the assumption that to train and run powerful AI models developers need access to powerful chips running in high-tech data centers that can support them.
But the recent emergence of DeepSeek, a Chinese AI startup claiming it’s developed a top large language model without access to top Nvidia chips or extensive data center infrastructure, has raised questions about the importance of such a massive scale in developing and deploying AI.
If DeepSeek is telling the truth about its breakthrough, that could throw Stargate’s entire premise out the door and reset the AI market entirely. Suddenly, AI demand for data centers could fall through the floor.
President Donald Trump speaks to reporters aboard Air Force One before arriving at Joint Base Andrews, Maryland, on Jan. 27, 2025.
White House pushes pause on all federal funding
Why is this happening? The Trump administration wants the government to stop funding prior administrations’ programs – which the memo accuses of advancing “Marxist equity, transgenderism, and green new deal social engineering” – so that it can harness those resources for its own priorities and executive orders. It calls for agencies to complete a “comprehensive analysis” to align their programs with Donald Trump’s recent executive orders on energy, immigration, and DEI. It also calls for a Trump administration official to be appointed to ensure federal funding “conforms to Administration priorities.”
The directive’s scope appears sweeping, potentially affecting nearly all federal agencies, with a temporary pause in place until they submit program information by Feb. 10. Meanwhile, a vast network of federal funding recipients – including those relying on disaster relief, education grants, transportation funding, NGO support, and foreign aid – face uncertainty about maintaining their operations during the freeze.
Opinion: The yellow brick road to a Golden Age
A week into the second Trump administration, the conviction held by many that the world was more prepared for Donald Trump in the US presidency has quickly faded. This weekend’s flare-up between Trump and Colombian President Gustavo Petro over tariff threats for deportation flights further strained any remaining optimism. In its place is a stark reality: Trump is back with a bang.
Trump launched an opening salvo – a campaign not of military might but of the pen. Dozens of executive orders and presidential actions have papered the field, overwhelming and scrambling forecasts of a much hoped-for manageable Trump 2.0.
Within his record-breaking number of executive actions, Trump has begun to lay out a roadmap for the “Golden Age” of America he intends to deliver.
Setting the stage
Trump held the (virtual) spotlight late last week at the World Economic Forum’s annual sessions in Davos, Switzerland, an emerald city showcasing the world’s who’s who. With the global community eager to hear him contextualize his plans, Trump featured a highlight reel of his young administration’s greatest hits including negotiating the ceasefire in Israel-Gaza, saying, “We have accomplished more in less than four days … than other administrations have accomplished in four years. And we are just getting started.”
Many of the headlines relating to these early accomplishments have been devoted to the set of Trump executive orders with clear and specific implications. The decision, for instance, to pardon or commute sentences for certain offenses relating to Jan. 6, 2021, sent ripples through the domestic political environment. As did his order to instruct the attorney general not to take action to enforce the so-called TikTok ban for 75 days. A move by a federal judge in Washington state to place a nationwide temporary restraining order on Trump’s Day 1 “Birthright Citizenship” executive order previews the court challenges ahead for the president’s targeted initiatives.
A Trump 2.0 blueprint
Yet, there is a second set of presidential actions with broader impact that deserve deeper scrutiny. In these, Trump and his team have been more open-ended, memorializing their ambitions across trade and economic policy, national security, and foreign policy for the months and years ahead.
On trade, there was initial relief abroad when Trump did not impose blanket tariffs on Day 1. Instead, he issued a wide-ranging action laying out an “America First Trade Policy,” which includes an instruction to the Department of Commerce, Treasury, and United States Trade Representative to undertake a host of investigations and reviews to address unfair and unbalanced trade. This includes the creation of an External Revenue Service to collect tariffs, duties, and other foreign trade-related revenues. Paraphrasing former vice-presidential candidate Tim Walz during the 2024 campaign – you don’t create a new governmental organization if you don’t plan on collecting the tariffs. Alluding to these plans in his Davos remarks, Trump suggested that if firms do not make their product in America – which is their “prerogative” – they will have to pay some tariff.
In addition to the spat with Colombia, Trump has threatened to impose 25% tariffs on imports from Canada and Mexico on Feb. 1. Trump’s near-term focus on his northern and southern borders is almost certainly to apply pressure for concessions on immigration but also ahead of forthcoming renegotiations of the USMCA agreement. And while Europe may escape the first round unscathed, it would do well to pay attention. If Trump can impose tariffs on US allies close to home, he can easily do the same across the Atlantic, where he will be looking for leverage on US LNG sales, European automotive manufacturing, NATO defense spending, and his emerging dream of bringing Greenland into the US fold.
On foreign policy, Trump has set for himselfan aspiration agenda. Gone are the days of isolationism, now replaced by eyes that roam from Canada to the Panama Canal and the “Gulf of America.” In his inaugural address, Trump suggested that the US is a nation “more ambitious than any other.” In a directive to the Secretary of State, Trump codifies this expansionist vision: “From this day forward, the foreign policy of the United States shall champion core American interests and always put America and American citizens first.” To that end, the administration placed an immediate 90-day hold on all new US foreign development assistance pending review and consistency with US foreign policy. A consequential development for US relationships and soft power worldwide.
As the conversations across Europe and the world shift from an election post-mortem to looking forward, the focus has narrowed to an essential question: What kind of America are we in for, and where do we go from here? With a flurry of activity since taking office, Trump has cast aside (misguided) expectations of restraint. His government will be busy on many fronts laying a path toward a golden age.
Lindsay Newman is a geopolitical risk expert and columnist for GZERO.
US President Joe Biden looks on after he delivered his farewell address to the nation from the Oval Office of the White House in Washington, DC, on Jan. 15, 2025.
Biden’s farewell speech sounds alarm
Biden emphasized the importance of democratic engagement and continued progress on issues like climate change, warning against powerful interests seeking to reverse environmental initiatives.
Rather than highlighting his own achievements, the speech called for a series of ethical reforms for government officials, including term limits and ethics reform for the Supreme Court, banning congressional stock trading, and a constitutional amendment clarifying that presidents are not immune from crimes committed while in office.
Biden ended his final speech in office by emphasizing the importance of American democratic institutions, noting that while imperfect, “they’ve maintained our democracy for nearly 250 years, longer than any other nation in history that’s ever tried such a bold experiment.”
President-elect Donald Trump speaks during a meeting with House Republicans at the Hyatt Regency hotel in Washington, DC, on Nov. 13, 2024.
Opinion: A Trumpian storm is brewing
For months on the campaign trail and in a crescendo last week at a press conference at Mar-a-Lago, Trump has made promises to American voters. On foreign policy, this list includes everything from ending the war in Ukraine within six months of taking office and imposing “all hell” if the Israeli hostages are not released before Inauguration Day (with a ceasefire deal coming into view) to his more recent discussions about taking control of the Panama Canal.
In anticipation of Trump’s return, the world has been packing their go-bags and considering how best to prepare. The Trump administration the world has been preparing for, however, may not be the one it gets. It is becoming increasingly clear how distinctly different Trump’s current worldview is than what came before him – including what he envisioned during his first term.
Differing tactics
Unlike the administration of Joe Biden, which leaned heavily on consensus building, non-binding partnerships like the Quadrilateral Security Dialogue and negotiations ad infinitum, Trump’s tactics have always been different. The businessman-president trades in grievances. He looks for the points of disparity and deploys (largely economic) tools like tariffs and sanctions to bring his “adversaries” closer to his preferred position – and to advance what he sees as America’s best interests. During his first term, for instance, Trump walked back a threat to impose tariffs on Mexico’s goods only after its government agreed to a deal stemming the flow of migrants along the southwestern border.
From his post-election personnel decisions, policy proposals, and posts on Truth Social, it seems clear Trump will continue to deploy these tactics in his second term. But what is also emerging is a Trump foreign policy agenda that’s radically different from Trump 1.0. Then “America First” focused on immigration, bringing jobs and manufacturing home, with a significant focus on reorienting global supply chains. With the exception of the January 2020 assassination of Qasem Soleimani, Trump largely avoided telegraphed security operations.
An aspirational agenda
Now, Trump has seemingly set his sights on a much more ambitious set of priorities. In 2025, Trump is speaking of the dawn of “the golden age of America.” Making America Great Again looks less like an isolationist story and more like a no-stone-uncovered one. As Trump scans the horizon looking for the angles, he has put his neighborhood, Europe, and the world on notice that almost nowhere will go unconsidered.
To the North, Trump’s December announcement that he would impose 25% tariffs on Canada set off a chain reaction that ultimately led to an already-fragile Prime Minister Justin Trudeau’s resignation. Trump’s repeated barbs about Canada becoming the 51st US state and musings about removing the “artificial line” separating the two countries have continued to destabilize the political landscape. Canadian officials are reportedly drawing up their own list of American products to tariff should Trump make a move. To the South, Mexico has also been forced to respond to Trump's tariff and border vows. After he suggested renaming the Gulf of Mexico to the Gulf of America, President Claudia Sheinbaum went tit-for-tat with Trump proposing to call the US, America Mexicana.
Across the Atlantic Ocean, headline-grabbing claims about acquiring Greenland initially generated chuckles in Europe. His threat to tariff Denmark at a very high level to open the door for negotiations over Greenland is Trump 1.0. His articulated vision of needing Greenland for national security purposes (and ultimately access to the Arctic’s resources) while refusing to rule out the use of military coercion are hallmarks of the emerging new Trump foreign policy.
In Trump 2.0, anywhere is up for grabs (a real estate deal), and economic tools of national security will be backed up by more traditional force posturing. The lesson of the moment appears to be that the best countries can hope for is to stay out of Trump’s crosshairs. America’s EU allies, for their part, have responded by taking Trump’s ideas increasingly seriously. German Chancellor Olaf Scholz and France’s Foreign Minister Jean-Noël Barrot issued reminders of the inviolability of European borders, but European capitals are rattled.
In his news conference last week, Trump speculated that “since we won the election the whole perception of the whole world is different.” It is not just the case that the US and its voters may see themselves differently since Trump’s reelection, but the world has somehow been changed by it.
Still, according to Trump, “big problems remain that need to be settled.” The president-elect has spent the post-election period throwing up dozens of foreign policy trial balloons to clarify how he would like to see these problems settled. As the clock winds down to his inauguration, Trump’s more grandiose foreign policy vision may soon move many targets into the eye of the storm.
Lindsay Newman is a geopolitical risk expert and columnist for GZERO.
A Georgian reflects on the life of Jimmy Carter
We Georgians have always had mixed feelings about Jimmy Carter, who died today, Dec. 29, 2024, at age 100.
I was 12 when he was elected president, and I remember many people I knew, even some who liked him and voted for him, felt he’d been a mediocre Georgia governor who’d won the White House by accident. They dismissed him as simply the charming everyman America needed to purge the nation of the cynicism and disgust that flowed from the war in Vietnam and the Watergate scandal. Many Georgians felt he was in over his head.
As president, he had his accomplishments, none bigger than brokering peace between Israel and Egypt. But to many, he never seemed forceful enough for the job. In 1979 came the famous “malaise speech” in which he told Americans facing high inflation, high unemployment, and an energy crisis (I remember waiting in line 45 minutes with my mother to buy gasoline) that they should turn inward and reconsider their values.
The long hostage crisis in Iran made Carter seem small and lost. In 1980, Ronald Reagan easily defeated him, making Carter the first president to lose a bid for re-election since Depression-era Herbert Hoover in 1932.
But ask a Georgian today, or any day, what they think of Jimmy Carter now, and you’ll hear some variant of: “A disappointing president, but a truly good man.”
That’s because, after his stinging defeat, Carter spent decades helping to build homes for people who couldn’t afford them, building the Carter Center as a global philanthropic organization of note, and offering his services wherever they might be accepted. These were his greatest achievements.
Jimmy Carter wasn’t a political performer. He farmed peanuts. He served in war. He and his late wife Rosalynn supported one another through 77 years of marriage. For decades, he taught Sunday school every Sunday. He made peace.
Rest in Peace, Jimmy.Willis Sparks is a senior writer for GZERO Daily — and a native Georgian.