US President Donald Trump has promised his citizens a glorious economic future. With his rigoros diving customs policy, however, he will probably achieve the opposite. The financial market investors have already made their negative judgment, now the downward revision of the growth forecasts follows. This week, the International Monetary Fund (IMF) reduced its forecast for US economic growth in 2025 by 0.9 percentage points, from 2.7 percent to 1.8 percent. According to the IMF, the United States will suffer the most from its own customs policy. In his speech on April 2, Trump had drawn a distorted picture of the state of the American economy. Contrary to Trump’s negative descriptions, the US economy has presented itself very resistant and dynamic in recent years. There is almost full employment. However, the distorted image concerned not only the current situation, but also the structures of the global economic order. Trump outlined a world in which the United States is exploited by its trading partners in many places. Trump is therefore not only on a confrontation course with reality, but also with the economic teaching. Working, specialization and the subsequent exchange of goods and services via markets are the nucleus of prosperity. Free trade means allowing the advantages of division of labor and specialization at an international level. In the second half of the 20th century there was extensive trade liberalization. Trade barriers were deliberately broken down between the countries to enable the free traffic of goods, services and workers. The “invisible hand of the market” (Adam Smith) ensured an economic efficient resource allocation and thus for the greatest possible prosperity. The idea of free trade was given a decisive thrust in the early 1990s: the political East-West relaxation, the associated victory of the market economy through the planned economy and the enormous progress in the field of information and communication technology developed together with the Commercial liberalization of a tremendous dynamic. From then on, the term “globalization”, which had hardly been used until then, made a career. Overall, globalization is a success story. Nevertheless, there are dark sides. Dependencies between the exchange and trading partners arise. When supply chains tore during the Corona crisis, the supply of important goods was in danger. The Russia Ukraine War showed dangers to security of supply. “Friendshoring”, in which the supply chains are shifted to politically and economically friendly countries, and “nearshoring”, in which production and supply chains are re-published to their own location, the potential dependence on China has played an important role. This apparently applies to both direct and indirect dependencies, because in the event of a crisis, American trading partners could hit the wrong side in the face of their China dependency. Otherwise, globalization is not always smooth. Profits are distributed unevenly. A look at the American income distribution shows that since the 1970s, the upper 20 percent of the income pyramid has benefited. In contrast, the income in the lower half has hardly come from the position. Negative side effects cushioning accelerates globalization the structural change, the winner and loser. Structural change has hit entire regions in the United States (“rust belt”). Compared to the welfare states of European embossing, the losers of structural change in the United States are hardly compensated for, but are largely left alone with their problems. This is the germ for social tensions. To remedy the negative side effects of globalization, you don’t have to abolish free trade. With regard to the distribution question, it is about designing the structural change in such a way that it is also bearable for the losers. Germany in particular has found the right answer with the social market economy. Losers of structural change do not fall into the bottom. They are socially secured and receive state offers to prepare themselves for the new labor market requirements. Instead of addressing the globalization problems in a targeted manner, the American government is on a confrontation course with traditional economic teaching. The Trump camp apparently develops an alternative apprenticeship, in which international trade generally gets out badly. The “reciprocal” tariffs, which the US President announced on April 2, were derived from the Bilateral trade deficits of the United States with every trading partner. Reduced World Sight Trumps Negative View of the Commercial balance sheet deficits is unusual, because in fact they enable the Americans to live about their relationships: They regularly consume more than they produce. There can therefore be no question of plundering through abroad. Rather, goods are given to the USA. This also applies to the US dollar and its role as the most important international transaction and reserve currency. The status as a reserve currency enables the United States to refinance themselves at cheaper conditions. The high American budget deficits and government debts are easier to manage. The United States is therefore a profiteer and not the victim of foreign beneficiaries. In March 2025, the economist Stephen Miran became the new chairman of the Council of Economic Advisers in the White House. In November 2024, Miran had written a longer analysis of the global trade order, which, like a blueprint, reads for the current procedure of the American government. A key message of the paper is that the US dollar is structurally overvalued due to its role as an international currency reserve. The too high dollar course makes production in the United States unprofitable, which ultimately led to the loss of American industrial workplaces. The US dollar must therefore be weakened in order to reverse the development and bring industry back to the United States. For global public goods to the Bittenmiran cash register, it also considers it necessary and reasonable to involve other countries in the costs for the global public goods provided by the USA, such as the military protection or the role of the dollar in the global financial system. This shows that the United States is striving for a kind of equivalence principle. There should be nothing of the United States for free. The problem is that the United States is very one-sided-or even wrong-in its favor, where the world benefits from public goods that are provided by the United States. Stephen Miran also makes it clear how it imagines an appropriate load division: First, other countries can easily accept the US tariffs without retaliation. This gives the United States in customs income to finance public goods. Second, the trading partners could open their markets and buy more American products. Third, you can increase defense spending and procurement in the United States. Fourth, you can invest in factories in America. Fifth, you could participate directly in the financing of global public goods. If Donald Trump remains true to his peculiar ideas about America’s exploitation and supposed mistakes in global trade and financial architecture, some unpleasant surprises are still to be expected. The only institution with a disciplined effect is apparently the financial markets. Dr. Jörn Quitzau Jörn Quitzau is chief economist at Swiss private bank Bergos AG. Before that, he worked at Bank Berenberg and Deutsche Bank Research, among others. He is a co-editor of the book “The Economic World is head” published in 2023. Image: private
Globalization is a success story with dark sides
