The year 2025, according to Nobel Prize-winning economist Joseph E. Stiglitz, injected a uniquely toxic element into the world's ongoing 'polycrisis': the return of Donald Trump to the White House. In a stark analysis, Stiglitz contends that Trump's erratic and unlawful policies have destabilised the American economy, triggered job stagnation, and are actively dismantling the post-war era of globalisation, potentially marking the end of US hegemony.
Immediate Economic Fallout: Jobs, Fear, and Uncertainty
Stiglitz directly challenges Trump's narrative of economic success, pointing out that job creation in the US has nearly ground to a halt. He identifies the administration's aggressive immigration crackdown as a primary supply-side shock. Mass deportations by masked ICE agents have removed a critical source of labour, harming industries from agriculture to healthcare, while also instilling fear in communities of colour and reducing overall consumer demand.
Further compounding the damage are Trump's indiscriminate cuts to government spending. These contractions, Stiglitz explains, have negative multiplier effects, sowing deep uncertainty and causing both businesses and consumers to pull back on spending. The situation is exacerbated by an "incompetent, blunderbuss approach" to policy-making.
Long-Term Damage: Tariffs, Technology, and the Rule of Law
The economist warns that the long-term outlook is even bleaker. Trump's tariffs—including a shocking 50% punitive tariff on India—act as major supply-side shocks, disrupting supply chains and making long-term business planning impossible. While inflation has not spiked sharply yet, Stiglitz cautions that effects lag and price surges could still materialise.
More fundamentally, Trump is attacking the pillars of American comparative advantage: technology and higher education. By threatening to starve universities of federal funds and undermining research, he is crippling future innovation. Most alarmingly, Stiglitz accuses Trump of trampling the rule of law and replacing it with a system of 'extortionary' deal-making, where government favours are traded for corporate stakes.
The AI Bubble and the Inevitable Global Shift
Stiglitz addresses a key paradox: if the economy is so damaged, why are GDP and stock markets high? He argues the stock boom is narrow, driven by a handful of tech giants like Alphabet, Amazon, and Nvidia, and may be a bubble sustained by massive AI investments. If this bubble bursts, the wider economy will feel the pain.
The core consequence, however, is geopolitical. Stiglitz asserts that nations are no longer willing to rely on an unreliable United States. As the US share of global exports falls below 10%, countries are forging new trade arrangements. The transition away from American economic hegemony has already begun. While the short term will be difficult, the long-term global economy will reorganise itself, with new winners emerging.
The pivotal moment may be the 2026 US midterm elections. A free and fair election could check Trump's power, but a compromised one would mark a grim turning point. Regardless, Stiglitz concludes, the world faces at least two more years of economic incompetence and uncertainty under an "unhinged president's whims."
