Allianz Chief Economic Advisor Mohamed El-Erian warned that while President Donald Trump‘s evolving tariff strategy may deliver immediate gains, it risks longer-term economic damage through stagflation and eroded U.S. global influence.
“America’s many structural advantages and its bigger and cyclically stronger economy give it the upper hand in most negotiations,” El-Erian wrote, citing recent success in trade disputes with Colombia. However, he cautioned that “uncertainty is a feature rather than a bug” in the current approach.
El-Erian highlighted particular risks for low-income consumers and companies still recovering from post-pandemic inflation. He argued that frequent use of tariffs could make America “a less reliable partner,” potentially reducing bilateral trade interactions.
“Trade is an intrinsically cooperative game,” El-Erian noted. “Playing it uncooperatively can benefit the more powerful party in the short term… But the longer that international trade is played as an uncooperative game, the bigger the welfare losses to everyone participating, including the U.S.”
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