This Is Not A Drill with Gavin Esler Trump's economic warfare – Are there any winners?
Sep 22, 2025
In this discussion, Adam Posen, President of the Peterson Institute for International Economics and former Bank of England member, unpacks the ramifications of Trump's economic strategies. He explores how tariffs and inflation impact global security and the shifting dynamics as allies reconsider reliance on the U.S. dollar. Posen warns that a transactional foreign policy could weaken long-term partnerships and security benefits, raising concerns about the future of economic leadership. Tune in for an enlightening look at current global economic challenges!
AI Snips
Chapters
Books
Transcript
Episode notes
Tariff Effects Are Delayed But Real
- Tariffs take time to show effects due to inventories, supplier shifts, and corporate hesitancy, but data now shows clear sectoral inflation and slower growth.
- Posen expects first-round tariff effects to peak around mid-2026 and to accelerate inflation now.
Dollar No Longer Always A Safe Haven
- The dollar now reacts differently: bad U.S. news can cause a weaker dollar and rising interest rates, unlike past safe-haven inflows.
- Posen highlights a reversal in historical dollar-interest rate correlations since April 2024.
Fed Faces Tightening Reversal
- Rising tariff-driven inflation forces the Fed into a tough trade-off between recession risks and further inflation.
- Posen predicts rate hikes within a year as the Fed reverses any premature cuts.
