"The US is coming dangerously close to bankruptcy": Trump is putting himself in a toxic situation with the tariffs

Frankfurter Rundschau "The US is coming dangerously close to bankruptcy": Trump is putting himself in a toxic situation with the tariffs Fabian Hartmann • 3 hours • 3 minutes reading time Trade War 2025 Trump's tariffs are keeping the global economy on edge. Concerns of a recession are growing in the US. Economist Hans-Werner Sinn is calling for greater cohesion in Europe. Munich/Lucerne – While the global economy continues to groan under Donald Trump's tariff policy, bringing numerous countries to the brink of a trade war with the US, the US President recently caused new confusion in the tariff chaos: In the middle of last week, Trump announced that he would suspend the new tariffs for many countries for 90 days. What remains is the base tariff rate of ten percent for imports. The 25 percent on cars, steel, and aluminum also remains in effect. Concerns of a recession are also growing in the US due to Trump's tariffs. Then came Trump's next retreat: He initially exempted a number of electronic devices – including computers and smartphones – from the high tariffs. However, he imposed an additional 125 percent on imports from China. Chinese President Xi Jinping responded by imposing tariffs of the same amount on US imports. Meanwhile, uncertainty about the country's own export economy is "currently extremely high," as Reuters quoted from the April monthly report of the Federal Ministry for Economic Affairs and Energy. Economist and former Ifo head Hans-Werner Sinn is now also warning of the consequences of US tariff policy for Germany and Europe as a whole. During a lecture at the Institute for Swiss Economic Policy at the University of Lucerne, economist Sinn analyzed US tariff policy. He put forward the striking thesis that the US itself could not afford the effects of Trump's aggressive tariff policy, as the Swiss online news portal Finews reports. The reason is that the US economy is already in a significant downward spiral. Concerns about a domestic recession are also growing massively in the US, as is clearly reflected in US media coverage. Larry Fink, managing director of the investment firm Black Rock, told CNBC on Friday (April 11) that US economic growth could soon turn into a recession. Fink emphasized that suspending tariffs for 90 days will not be enough to restore confidence in the economy. Entrepreneur and hedge fund manager Ray Dalio currently sees the US economy in a similarly precarious situation. Dalio told NBC: "I think we're at a critical juncture right now and very close to a recession. And I'm concerned that if this isn't handled well, there could be something worse than a recession." Economist Sinn criticizes Trump's tariff policy – ​​"No one benefits from a tariff war" Top economist Sinn also emphasized during his appearance at the Institute for Swiss Economic Policy in Lucerne that the US is currently "dangerously close" to insolvency. This is evident, for example, in the fact that the US federal budget is currently heading towards a debt crisis and is having problems financing its own spending. Sinn cannot understand Trump's tariff policy from an economic perspective. "No one benefits from a tariff war. Trade means exchange: one delivers, the other pays. Trump thinks and acts like a lobbyist," criticizes the former president of the Ifo Institute. Sinn concludes from this formulaically that anyone who excludes international competition ultimately endangers their own economy. Top economist Sinn sees suspended debt brake as beneficial in the tariff conflict as well While the financial markets' loss of confidence in the US government began with the public humiliation of Volodymyr Zelenskyy in the White House at the end of February, it has now continued for many weeks. On the stock markets, for example, the slide continues, and according to Sinn, capital flight is "now noticeable," even among US investors. How does the top German economist assess Germany's and Europe's options for best cushioning the serious consequences of US tariff policy in the long term? During his speech in Lucerne, Sinn pointed to the recently suspended debt brake and planned investments of around €1 trillion in defense and infrastructure. While it is "difficult to spend that much money wisely," Sinn emphasized, however, in times of chaotic US administration and the serious tariff conflict, suspending the debt brake could prove advantageous.