The economic uncertainty of the Trump era

In an interconnected global economy, no individual — whether a small entrepreneur, a salaried employee, or a policymaker — can remain indifferent to the political direction of the United States. Decisions taken in Washington ripple far beyond national borders, influencing trade flows, financial markets, currencies, supply chains and even employment prospects across continents. Under the politics of former and returning US President Donald Trump, this reality has become sharper, louder and more unsettling.
The central question many quietly ask is not whether the United States has global influence — that has long been established — but why the economic destiny of nearly 8.26 billion people can feel increasingly shaped by the political instincts of one leader. Is this an unavoidable feature of the current global order, or a consequence of a political style that concentrates power, uncertainty and disruption at the centre?
From a classical political economy perspective, Adam Smith argued that markets thrive on predictability, rule of law and institutional trust. JM Keynes later emphasised the importance of state responsibility in stabilising economies during uncertainty.
Trump’s political economy, however, often departs from these traditions. His approach — marked by unilateralism, economic nationalism and transactional diplomacy — has challenged the multilateral framework that governed global economic relations since the end of World War II.
Trump’s “America First” doctrine resonates domestically with voters who feel marginalised by globalisation. From a purely national lens, this appeal is neither irrational nor immoral. Dani Rodrik, in the Globalization Paradox, reminds us that nations often push back when global integration erodes domestic social contracts. In this sense, Trump’s politics articulate a real grievance. Yet, the problem arises when domestic correction transforms into global destabilisation.
Trade wars, particularly with China, illustrate this tension. Tariffs imposed under Trump were presented as tools to protect American industries. However, economic literature — from Paul Krugman’s work on trade to World Bank assessments — consistently shows that tariffs act as hidden taxes on consumers and disrupt global value chains. The result has been inflationary pressure, retaliatory trade measures and uncertainty for businesses worldwide, from Asian manufacturers to European exporters and developing economies reliant on stable trade access.
Financial markets, too, have learned to price in Trump’s unpredictability. Sudden policy announcements via social media, public confrontations with central banks and threats to withdraw from international agreements created volatility rather than confidence. As economist Hyman Minsky warned, stability itself can breed instability when institutional norms are weakened. Trump’s politics often replaced institutional continuity with personal discretion, raising systemic risk in an already fragile global financial system.
Politically, Trump’s scepticism towards alliances such as Nato and international institutions like the World Trade Organization has profound economic consequences. Institutions, as Douglass North emphasised, reduce uncertainty by providing structure to human interaction. When global institutions are undermined, transaction costs rise, trust erodes and smaller economies suffer disproportionately.
The question then emerges: is this concentration of influence deliberate or coincidental? Is it strategy or impulse? Academic assessments suggest a blend of both. Trump’s politics reflect a broader global trend — populism driven by inequality, technological disruption and cultural anxiety. From Brexit to right-wing movements in Europe, Trump is not an anomaly but a symptom. Yet symptoms, if untreated, can become diseases.
The most troubling risk lies not in disagreement, but in escalation. History repeatedly shows that economic fragmentation precedes political conflict. Charles Kindleberger’s analysis of the Great Depression highlighted how the absence of global leadership worsened economic collapse. A world divided into economic camps, protectionist blocs and hostile narratives risks drifting towards systemic confrontation. While a third world war may sound extreme, history reminds us that wars rarely begin as intentions; they emerge from miscalculations, economic stress and political arrogance.
That said, balance demands acknowledgement: Trump’s politics also force uncomfortable conversations. They expose the failures of neo-liberal globalisation to distribute gains equitably. They challenge complacent elites and stagnant institutions. Joseph Stiglitz himself has argued that globalisation was mismanaged, benefiting capital over labour. In this sense, Trump’s disruption compels reform — but disruption without responsibility is dangerous.
What the world needs today is not blind resistance to Trump nor blind loyalty to him, but sober global governance. Strong leaders must be constrained by stronger institutions. National interests must coexist with global responsibility. Economic power must be exercised with awareness that in a tightly woven world, isolation is an illusion.
Ultimately, no single man should decide the fate of billions. Yet the world allowed such concentration by failing to democratise global economic governance. Trump did not invent this imbalance; he merely exposed it. Whether his politics lead to correction or catastrophe depends not only on him, but on how the rest of the world responds — with reason, restraint and renewed commitment to cooperation.
The real danger is not Donald Trump himself. It is a world that reacts emotionally rather than intelligently to power. And history has never been kind to such worlds.

Mohammed Anwar Al Balushi The author works at UTAS