A year after his election victory, US President Donald Trump’s economic policies are fulfilling campaign promises but are simultaneously weaponizing uncertainty, exacerbating global economic divisions and risks, according to Adam Posen, president of the Peterson Institute for International Economics. Posen described Trump’s approach as consistent yet incoherent, leading to patchwork outcomes that are not economically beneficial. He highlighted Trump’s core agenda, which includes a 15% across-the-board tariff, targeted duties on key industries like semiconductors and autos, and trade barriers that are ‘anti-China, but less anti-China than the hawks in either the Joe Biden administration or the Republicans wanted.’ Posen emphasized that Trump’s policies are characterized by hostility to foreigners, extreme skepticism toward trade and migration, fiscal excess, and the exercise of executive power. He noted that the negative impacts of tariffs and deportations take about a year to fully emerge, as shown by models created by senior fellows at the Peterson Institute. Businesses have faced prolonged uncertainty since the April 1 tariff announcement, with companies like Toyota and Caterpillar considering separate production in China. Despite the administration’s goal of deporting one million people yearly, the economy has not cratered due to ‘underground’ adaptation, with sectors like food processing and construction showing flat output and employment. Posen warned of a ‘stagflationary combination’ ahead, including shortages, inflation, and contraction, unless deportations stop. He also highlighted the role of artificial intelligence investments as an ‘exogenous salvation,’ with tech giants self-financing rapid AI spending from retained earnings, achieving early productivity gains. However, AI alone cannot mask structural issues, as tariff-hit industries will see rising domestic prices and falling output, employment, and growth. Posen’s article in Foreign Affairs noted that firms and governments are abandoning reliance on US ‘insurance’ and are self-insuring through non-dollar assets and localized investment. He also pointed out that US allies like the UK, Japan, South Korea, and Canada are suffering the most, while China has been able to stand up against the US and face Trump down.