Jeffrey Sachs is an American economist and professor at Columbia University, known for his work on global poverty, sustainable development, and economic policy. He first gained prominence in the 1980s for advising countries like Bolivia and Poland on economic reforms, often promoting rapid market liberalisation. Later, he became a leading advocate for the UN’s Millennium Development Goals and Sustainable Development Goals. Sachs has advised multiple UN Secretaries-General and has been a vocal critic of U.S. foreign policy, particularly in relation to military interventions and economic sanctions.
The following is a summary of the points he made at the Antalya Diplomacy Forum while answering questions from the panel and the public:
Running a trade deficit is like maxing out your credit card while shopping, then accusing the shopkeepers of ripping you off. It is not about being cheated, it is about spending more than you earn. That is what a trade deficit reflects: the gap between consumption and production. I cover this on the second day of my international economics course. Trump never made it to the second day.But all that's happening is the United States is outspending its national income. And you can look at the national income chart. You can add up consumption and investment and government spending, and you could subtract off gross national product, and lo and behold, what will that equal? Not approximately, exactly. That will equal the current account deficit, which is the comprehensive measure of how much you spend on goods and services versus how much you sell in goods and services.
The United States runs a current account deficit because it spends more than it produces. The government overspends by around $2 trillion a year, making transfers to citizens and businesses without collecting enough tax to cover the cost. This is politically driven. Members of Congress rely on campaign funding from wealthy donors who oppose taxation, so the system chooses to spend without taxing. As a result, national spending exceeds income, and that overspending becomes the trade deficit.And for that, Donald Trump blames the world. Okay, I fail him for this, if he were my student. He's not my student. He's my president. It's a little weirder because when he did this, in two days, the world lost $10 trillion of market capitalisation. By the way, where did it go? Did it get transferred from here to here? No. It got destroyed. Why destroyed? Because trade, something also the President of the United States doesn't understand, is mutually beneficial. So if you stop trade, everybody loses. It's not that one side wins, the other side loses.
Donald Trump, coming from a real estate background, sees trade as a zero-sum game where one side wins and the other loses. He does not grasp that global trade is built on mutual benefit through a division of labour. When he made his announcement, $10 trillion was wiped out worldwide. It was not a case of the United States gaining while others lost. Everyone lost, because he disrupted the very structure of global economic cooperation.
Even the wealthy donors who helped Trump into office began to question his actions. Hedge fund managers and Elon Musk, who backed his campaign and acted as a kind of prime minister in influence, all said this does not make sense. Then the markets reacted the same way. It was not just a $10 trillion loss. As it was pointed out, interest rates started to rise because investors began dumping U.S. Treasury debt, which was supposed to be the safest asset in the world.
It is not quite true that Trump reversed his policies. He kept a 10 percent tariff in place, and even raised it for China. This was driven by a deep, neurotic hostility toward China within the U.S. political system. The United States resents China for being large and successful. It sees China as a rival and a threat. That is why these tariffs remain. But this policy is bound to backfire. In a trade war between the United States and China, China wins. Only about 12 percent of China’s exports go to the United States, so it can manage without the U.S. market. It is simply a foolish strategy.
There is no deeper explanation. It simply makes no sense. And that leads to a final point. How can something so irrational happen? The answer is that the United States is now under one-person rule.
The political system is collapsing. What Trump issued was an emergency decree, just like everything else he does. Go to whitehouse.gov and look through the executive orders. There are dozens of them. Each one begins the same way: "With the powers vested in me as President of the United States, I hereby declare..." followed by a list of nonsense. He behaves like a king. But those powers are not vested in the President. They are vested in Congress.
Article I, Section 8 of the Constitution makes it clear that all duties and legislation originate with Congress, specifically in the House of Representatives. But since 1945, after World War II, the United States increasingly took on the character of a military state. As a result, legislation became riddled with the language of emergency, emergency, emergency.
Trump does not need to prove anything is an emergency. He only has to declare it as one. That is how the trade deficit suddenly became an emergency. On that claim alone, he exercises one-person rule. Even his own aides are often unaware of what he is doing.
The market regained about four trillion dollars when Trump reversed his tariffs. Anyone who knew just five minutes in advance made billions. This is far from a clean government. It would be no surprise if certain people had advance knowledge, especially members of the U.S. Congress.
The specific tariffs Trump announced last week, which triggered a financial bloodbath, are unlikely to return. After 90 days, those numbers will probably disappear, buried in the endless churn of political distraction. The idea behind them was so absurd it defies belief. In basic terms, trade balance means earning and spending in proportion. If you earn and spend equally, your account is balanced. Most people have surpluses and deficits with different parties. For example, I run a surplus with my university, which pays me, and a deficit with the grocery store and shoe shop, where I spend. That is how normal economies work.
Trump, however, believes each bilateral relationship must be perfectly balanced. So in his logic, I should work part-time for the grocery and shoe stores, trading essays for shoes, trying to equalise every transaction. It is insane. That is not how market economies function. Yet when Trump saw that Lesotho sold more to the U.S. than it bought, he declared they were cheating. That was his literal claim. He then ordered a tax on their imports to correct the imbalance. This led to a formula so poorly conceived that it would fail a first-year economics class. Staff at the U.S. Trade Representative office likely cobbled it together overnight under pressure.
The result was a country-by-country tariff list based on bilateral trade gaps, an approach so amateurish that it made the United States resemble a parody of serious governance. This is Mickey Mouse thinking, and we are in a state of madness. In fact, I apologise to Mickey Mouse. He would not behave like this. The tariffs may be paused for now, but what comes next is anyone’s guess. The danger is in trying to rationalise any of this, as if there were a coherent theory behind it. There is not.
Sixty countries immediately responded, offering to "rebalance" trade with the U.S. Trump bragged about this in crude terms, saying in a public speech that they were “coming to kiss my ass.” That is the level of political discourse. This cannot be treated as normal. We have not spent two centuries refining the idea of comparative advantage since David Ricardo, or eighty years building the global trade system since World War II, just to watch it unravel.
The U.S. helped create the World Trade Organization thirty-one years ago. Now it acts like a rogue state, not just on trade but also in foreign policy, such as its approach to Gaza. The rest of the world must hold the line. It must stay rational, work through the United Nations and global institutions, and refuse to follow the United States into a spiral of chaos. Because if we start normalising madness, we will find there is no exit.
The current flawed policy stems from a deeper geostrategic rivalry between the United States and China. China has the human capital, world-class infrastructure, and growing technological capability to become a superpower. The United States, as the incumbent hegemon, sees this rise as a threat. History shows that tensions often arise between established powers and emerging ones. It does not have to lead to conflict, but it often does.
Twenty years ago, China made up just 8 percent of global manufacturing. Today it accounts for over 30 percent. In that time, the United States, the European Union, and Japan have all lost ground. Trade maps from two decades ago show the United States as the dominant global trading partner. Today, those same maps show China in that role.
A rational response would involve structural reforms, investment in infrastructure, and improving the skills of the workforce. These are politically difficult and take time. Instead, many governments opt for quick fixes, shaped by populism and nationalism. They blame others and oversimplify the problem. That is why we see trade wars and tariffs rather than serious reform.
In most developed countries, real structural transformation has been neglected. In its place, monetary policy has been stretched to do most of the work. But that is not enough. The core issue is loss of competitiveness. The right path would be to invest, reform, and rebuild. The easier path is to blame the outside world and raise tariffs. That is what we are seeing now.
Protectionism forces a country to focus inward, weakening its ability to support others. Cutting funds to USAID is already costing lives. In the past, the United States would respond to disasters like Myanmar's recent earthquake by sending hundreds of rescue workers. This time, it sent only three administrators and no rescuers at all.
Domestically, the effects are equally damaging. Federal employees laid off from the nuclear program were urgently needed again for national security. But they had already been locked out of their federal email accounts, making it impossible to bring them back quickly.
Institutions like the Earth Institute at Columbia, which work on sustainable development, rely on international cooperation. They deal with climate change, health, agriculture, energy, and more. Protectionism harms all of this. It severs relationships between countries, undermines joint efforts, and makes it harder to solve global problems. Without collaboration, no country can effectively tackle the challenges we all face.
In recent U.S. elections, the swing states have mostly been in the Midwest. States like Michigan, Ohio, Pennsylvania, and Wisconsin have seen major declines in manufacturing jobs over the last 40 years. This was not mainly because of trade, but because of automation. I grew up in Detroit, where we used to visit car factories on school trips. Back then, people worked the assembly lines. Today, it is almost all robots. Those jobs did not move abroad. They disappeared because machines took over.
Trump offered a false explanation. He blamed China, Mexico, even Lesotho. It is a simple story meant to provide a scapegoat, not a solution. As the finance minister rightly said, trade helps the overall economy, but it can hurt specific sectors. The answer is not to stop trade, but to bring everyone along. That means investing in struggling regions, reskilling workers, and building public infrastructure and education. This is where the United States failed for four decades.
Inequality widened. Skilled workers earned more. Less-skilled workers saw living standards fall. The income gap grew, and so did the life expectancy gap, now over ten years in some areas. The political system did nothing. Both major parties were financed by wealthy donors and focused on tax cuts rather than fixing social conditions. That is how Trump emerged, offering a fake diagnosis and a fake cure. Blame others. Launch a trade war.
The irony is that his tariffs will hurt the very workers he claims to defend. Car factories rely on imported parts. The tariffs raise costs, making U.S. products less competitive. The United States cannot compete with China in electric vehicles. It has already handed China control of that market for the next 20 years. Europe made the same mistake by delaying the shift to electric, clinging to combustion engines. But the world needs electric vehicles. The climate crisis makes that urgent.
What is really needed is long-term investment and planning. China did that. Its success did not come from luck. In 2014, it launched Made in China 2025, a plan to lead in ten strategic sectors. In most of them, China has already reached the top. In 2017, it rolled out a national artificial intelligence strategy. That was not spontaneous progress. It was the result of foresight. Deep Seek is one product of that thinking. Every country should do this. Every government should think ahead.
That is not what the United States is doing. The most serious issue we face is climate change, yet it is rarely discussed. The damage is not in the future. It is already here. Twenty-one of the past twenty-two months have been hotter than 1.5 degrees Celsius. That is not due to El Niño. It is the new normal. The goal of the Paris Agreement has already been broken. And the rate of warming is accelerating. It is now between 0.3 and 0.4 degrees per decade. We are headed for two degrees of warming, and possibly more.
The effects are everywhere. Los Angeles burned. Korea just had major forest fires. My wife and I travel constantly. Everywhere we go, there is a crisis. Droughts, floods, heat waves, pest infestations, wildfires. Sea levels are going to rise by several metres. This will be disastrous for places like Istanbul and every coastal city. The damage is already built into the system.
Trump’s answer to this was to sign an order to bring back coal. He pulled out of the Paris Agreement. This is not just short-sighted. It is deliberate destruction. The rest of the world must refuse to follow. We cannot treat this kind of thinking as normal. Because if we do, there will be no way out.
In trade theory, there is a legitimate national security rationale. A country may choose to procure certain goods domestically to maintain an armaments industry. That is very different from slapping tariffs on 150 countries without any clear logic. The sensible approach would be targeted local procurement, which is not even part of trade policy. So national security is not a valid excuse for what Trump is doing.
There is also a broader point. We do not need an arms race, and we do not need another war. Diplomacy is far cheaper than military conflict. That is why we are at the Antalya Diplomacy Forum, not the Antalya Military Forum. If Trump truly wanted to cut spending and reduce the budget deficit, he could start by closing many of the nearly 800 U.S. military bases spread across 80 countries. This global footprint is excessive. And in many places, American bases create more problems than they solve. Wherever there is an American base, there is usually a headache.
