Tuesday, May 6, 2025

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Economy professor: Trump’s tariffs rooted in “flakey” trade deficit analysis

Donald Trump's USA

Published 9 April 2025
– By Editorial Staff
Jeffrey Sachs of Columbia University.

In a wide-ranging interview with The Duran , economist Jeffrey Sachs critiques Donald Trump’s tariff policies, calling the administration’s understanding of trade deficits “completely flakey” and warning of severe economic and geopolitical consequences.

Sachs, a Columbia University professor and former UN advisor, emphasizes that tariffs will not address the root causes of US trade imbalances and instead risk fragmented trade, rising consumer costs, and global instability.

Sachs begins by rejecting the core argument for Trump’s tariffs: the claim that US trade deficits result from “unfair” foreign trade practices.

– The trade deficits have nothing to do – I will say nothing to do – with the trade policies of the rest of the world. They have no indication whatsoever that anybody is ripping off anybody, especially that the rest of the world is ripping off the United States.

He defines a trade deficit as a macroeconomic imbalance, not a trade policy failure.

– What a trade deficit means – pure and simple – is that a country is spending more than it is earning. That’s all.

Sachs dismisses the Trump administration’s diagnosis as “completely flakey”, comparing it to a shopper blaming stores for overspending.

– Trump calls that a ripoff. It’s a little strange… It’s like a person who goes on a shopping binge, runs a current account deficit against all those stores they visited, and then blames the shops for those imbalances.

– The diagnosis is completely flakey. I taught international monetary economics for 22 years at Harvard. In the second day of the undergraduate course, I explained that a current account deficit was an imbalance of spending and production, essentially – not a measure of trade policy.

The twin-deficit problem

Sachs warns that tariffs will harm US households and industries, raising prices for goods like automobiles and disrupting supply chains.

– If you say, ‘We’re not going to have trade’… that pushes workers into the labor-intensive, low-skilled sectors in this value chain. That lowers living standards.

He highlights the risks of stock market instability, referencing a $10 trillion loss in global markets during tariff disputes.

– This is losing what we call the gains from trade.

Sachs draws a direct comparison to the 1930 Smoot-Hawley Tariff Act, which exacerbated the Great Depression.

– The protectionism of 1930 in the United States was an accelerant [of the Depression].

Sachs ties trade deficits to US fiscal policy, emphasizing the “twin deficits” problem.

– We call this the twin deficits problem: You have a large budget deficit that shows up as a large trade deficit, so it’s a twin deficit. This is kind of a chronic characteristic of the US.

He critiques the weaponization of the dollar, noting that US sanctions incentivize countries to abandon the dollar.

– The weaponization of the dollar in confiscating Russian reserves, Venezuelan reserves, Iranian reserves … means that if you have some trade dispute or foreign policy dispute with the US, you’re likely to get your money confiscated.

Geopolitical risks: Taiwan as the next Ukraine

Sachs warns of broader geopolitical fallout, referencing a 2015 Council on Foreign Relations paper titled Revising U.S. Grand Strategy Toward China by Robert Blackwill and Ashley Tellis and highlights its argument for containing China’s rise.

– The argument [in the paper] is China’s rise is no longer in America’s interest. It must be stopped. A shocking idea: we must do damage to another side not because they threaten us, but because they are too big and therefore they undermine US hegemony – that’s literally the argument in the paper. Not a list of nefarious actions by China.

– The grand strategy of the United States, since it’s inception – in essence – is primacy: The United States must be number one. And so, we must prevent any challenge [to dominance] … And this is the motivation for much of what’s happening from 2015: The attempt to form, in crazy ways, new trade groups in Asia that don’t include China, the export bans on technology, the attempt to destroy companies like Huawei and ZTE and rumours and machinations of all sorts of imagined dangers.

Sachs warns that this confrontational approach risks catastrophic escalation over Taiwan, fueled by tariffs and military posturing.

– The unilateral tariffs Trump imposed – not on the world in his first term, but specifically on China – and now the very punitive tariffs on China … are deeply enmeshed in military buildups and military alliances in East Asia, in saber-rattling every day about Taiwan with the real risk that Taiwan turns itself into the next Ukraine by making the same kind of bets on US protection that Ukraine made, that ended up destroying so much of Ukraine, the same thing could happen in Taiwan.

– If it does, the war is going to be even more dangerous for the world, potentially even catastrophic, and with the instability of US economic and political leadership combined with the deep-state animus toward China, it’s pretty risky.

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Fewer people travel to the US

Donald Trump's USA

Published 23 April 2025
– By Editorial Staff
The declining numbers of tourists are thought to be due to a number of factors.

The number of travelers to the United States has declined significantly since Donald Trump took office. The decline is visible in almost all parts of the world, but mostly from countries in the Caribbean and Central America.

In March, the number of travelers to the country fell by nearly 12%, compared to the same time last year. In February, the number of travelers decreased by two percent, compared to the previous year. According to data from the International Trade Administration, there were 17 percent fewer visitors from Western Europe in March, 24 percent fewer from Central America and 26 percent fewer from the Caribbean compared to a year ago, reports the Washington Post.

When Trump took office in January, international tourism in the country had almost returned to pre-corona figures, but now the decline is at the same significant level as then. Experts believe the decline is due to Trump’s statements, including that the imposed tariffs are creating tension internationally. Some countries have also tightened travel advisories to the US.

The reaction of international travelers to avoid the US is entirely predictable, says Adam Sacks, CEO of Tourism Economics, an industry research firm:

– The combination of policy and rhetoric that has been so divisive and combative and isolationist – each successive policy and related polemics have been making the situation worse.

May affect tourism revenues

The downturn is the first significant one since the coronavirus crisis and could result in the loss of millions of dollars in tourism revenue if it persists. The U.S. Travel Association estimates that travel added $1.3 trillion to the US economy and created 15 million jobs last year.

– We attribute this to a variety of factors, including a strong dollar, long visa wait times, concerns over travel restrictions, a question of America’s welcomeness, a slowing U.S. economy and recent safety concerns, says Allison O’Connor, a spokeswoman for the organization.

In a response to a request for comment on the decline, the White House said Trump’s policies would strengthen the country’s image.

– President Trump’s agenda to make America wealthy, safe, and beautiful again benefits Americans and international visitors alike, said White House spokesperson Anna Kelly.

World Bank softens climate rhetoric to keep US backing

Donald Trump's USA

Published 21 April 2025
– By Editorial Staff
World Bank President Ajay Banga was appointed by Joe Biden and has been a vocal advocate of the 'green transition' in the past.

The World Bank has clearly toned down its previously very explicit climate profile as the Donald Trump administration evaluates its support to international organizations and aims to reduce funding for various climate programs around the world.

However, according to sources within the department, this is a purely strategic adjustment to ensure continued US support, while the actual climate policy remains largely unchanged.

The Nordic Times reported that NATO is dropping its politically correct language and has removed or revised formulations relating to gender and climate in an attempt to appease the conservative Trump administration.

And they are not alone in trying to adapt to reality and the new US administration the World Bank and its top officials have also clearly changed their rhetoric since Trump became president.

World Bank President Ajay Banga has focused in recent months on labor issues and Republican-friendly energy sources such as nuclear power and natural gas, although he still believes that climate investment does not conflict with the Bank’s core mission of fighting poverty.

Remember, we have a board which has representatives of all our shareholders and all these words and thinking go through their system, Banga said during a press conference ahead of the bank’s spring meetings in Washington.

“Do you want to scream this all loudly?”

He confirmed that 45% of the bank’s loans in 2025 will go to climate-related projects, but also emphasized a broader energy strategy than before.

– There is no reason why a country in Africa should not care about affordable, accessible electricity – and it includes gas, geothermal, hydroelectric, solar, wind and nuclear where it makes sense.

According to former employees and current sources within the World Bank, the rhetoric is a trade-off to avoid conflict with the US, whose support is crucial. The Biden administration pledged $4 billion to the bank’s poverty-fighting work, but the sum must first be approved by a Republican-controlled Congress.

– Now, do you want to scream this all loudly? Probably not in this environment, said Samir Suleymanov, former head of the World Bank’s strategic initiatives.

A spokesperson for the bank, however, argued that the agenda has been consistent:

– For two years, we’ve been working to make the Bank faster, more efficient, and focused on creating jobs.

“Sort of a relief”

Trump allies have called on the US to leave the World Bank, arguing that it favors China and diverges from US interests. An investigation into US participation in international organizations is expected in August. However, a full withdrawal is considered unlikely, as it would open the door to China buying up US shares.

Karen Mathiasen, a former US representative at the Bank, notes a sharper tone compared to Trump’s first term:

– Now everything feels very hostile and adversarial.

But others welcome the rhetorical shift. Suleymanov argues that in the past, the focus on clean energy limited other emission-reducing projects.

– It may sound funny, but there is sort of a relief that this kind of pretend thing is over. The ideological underpinning took so much space. Everybody had the feeling they were caught in the game, like this is something that they have to do, but not necessarily with a clear practical outcome in mind.

It is worth noting that the World Bank’s sister organization, the International Monetary Fund (IMF), has also recently toned down its climate rhetoric choosing instead to focus more on “trade growth and global challenges”. Here, too, it is said to be trying to maintain a good relationship with Trump and his inner circle.

US shuts down Biden’s censorship agency

Donald Trump's USA

Published 18 April 2025
– By Editorial Staff
Members of the Trump administration have long expressed concerns about how freedom of expression is being restricted and curtailed in various ways.

The United States has now officially shut down an agency that, according to Secretary of State Marco Rubio, was used by the Biden administration to systematically censor US citizens with uncomfortable views.

The Global Engagement Center (GEC) was established in 2016 within the US Department of State, with a mission to “recognize, understand, expose, and counter foreign state and non-state propaganda and disinformation”.

In December, the center was renamed Counter Foreign Information Manipulation and Interference (R/FIMI), but on Wednesday, Marco Rubio announced that it had been permanently shut down.

– Under the previous administration, this office, which cost taxpayers more than $50 million per year, spent millions of dollars to actively silence and censor the voices of Americans they were supposed to be serving, Rubio said.

– This is antithetical to the very principles we should be upholding and inconceivable it was taking place in America.

In an interview published Wednesday with conservative activist Mike Benz, Rubio explained that the GEC was initially intended as a tool to combat extremist propaganda from groups like al-Qaeda and ISIS, but that the operation later began “going after individual American voices”.

– We ended government-sponsored censorship in the United States through the State Department, he declared.

“Worst offender in US government censorship”

Rubio added that the Biden administration had supported groups that “literally tagging and labeling voices in American politics – Ben Shapiro, The Federalist, others – tagging them as foreign agents”.

The GEC had an annual budget of $61 million and employed about 120 people. In December, Republican members of Congress refused to provide continued funding for the unit.

President Donald Trump and his supporters have long accused Democrats of using government institutions to silence conservative views online. In 2023, tech billionaire Elon Musk also criticized the GEC, calling it “worst offender in US government censorship & media manipulation” and “a threat to our democracy”.

Journalist Matt Taibbi also accused the center of trying to suppress discussions on COVID-19 under the pretext of fighting “Russian personas and proxies”.

Already last year, a group of Republican members of Congress harshly criticized the GEC in a letter to then Secretary of State Antony Blinken. The letter accused the Center of bias in favor of “American progressives” and of trying to silence opinions that were “deemed politically inconvenient or disagreeable”.

Trump: Deport American criminals to El Salvador

Donald Trump's USA

Published 15 April 2025
– By Editorial Staff
Trump wants to get rid of America's worst criminals - but there are doubts about its constitutionality.

Donald Trump wants to review the possibility of deporting the country’s worst violent criminals to El Salvador – even if they are US citizens.

We also have homegrown criminals that are absolute monsters”, the President said during a press conference, stressing that the law must be reviewed.

It was during a White House meeting with El Salvador’s outspoken president, Nayib Bukele, that Trump declared that he wanted to deport not only foreign criminals to the country but also American criminals.

– We always have to obey the laws, but we also have homegrown criminals that push people into subways, that hit elderly ladies on the back of the head with a baseball bat when they’re not looking, that are absolute monsters, he explained.

– I’d like to include them in the group of people to get them out of the country, but you’ll have to be looking at the laws on that, the President continued.

During his election campaign, Donald Trump promised to use unorthodox methods and get tough on the widespread violent crime in the country but the move has nevertheless led to strong reactions and a lot of criticism.

“No provision under US law”

Many critics point out that, as a rule, US citizens cannot be deported and that there are only a few exceptions to this rule. These include people born in other countries who have been granted citizenship but lied during their application process or committed terrorist crimes or treason.

– There is no provision under US law that would allow the government to kick citizens out of the country, Erin Corcoran, an immigration law expert at the University of Notre Dame, told the AP news agency.

The civil rights organization ACLU is also highly critical and believes that deportation of American citizens would be a direct attack on the US Constitution.

Sent to mega prison

However, Trump has emphasized that his proposal will only be implemented if it is deemed compatible with the country’s laws. White House spokesperson Karoline Leavitt later explained that the move should be seen as a proposal that has been “raised but not yet decided. According to analysts, the Constitution must first be revised if deportations of US citizens are to become a reality.

The background to the president’s statement is that Nayib Bukele during a previous meeting opened up to receive American prisoners an idea that Trump praised and said he “loved”.

Already today, the United States is sending hundreds of migrants with suspected criminal links to El Salvador’s controversial mega prison, the Terrorism Confinement Center, under a contract in which the US pays the country $6 million for their detention.

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