Recommended Weekend Reads
Guides to Understanding Trump’s Trade and Foreign Policy, What the EU Must Do to Build Up Their Defense Capabilities, the US Workforce Challenge, and Why China Isn’t the Obvious Winner in Latin America
March 28 - 30, 2025
Understanding Trump's Trade and Foreign Policy
A User’s Guide to Restructuring the Global Trading System Stephen Miran/Hudson Bay Capital
Stephen Miran is one of President Donald Trump’s top economic advisors. He chairs the White house Council of Economic Advisors. He is also the author of a 41-page memo – more a blueprint - that lays out what can be achieved by what is being billed as a “Mar-A-Lago Accord” which would revise the framework for the global financial system.
Trump, Strategy, and Mercantilism School of War Podcast
Walter Russell Mead, Alexander Hamilton Professor of Strategy and Statecraft at the University of Florida's Hamilton Center and columnist for The Wall Street Journal, joins the show to talk about the role of economic issues in Trump’s strategic views. They discuss Mercantilism and physiocracy, the role of Silicon Valley, the dollar, coalitions, tariffs, China, and what President Trump thinks about all of it.
Annual Threat Assessment of the U.S. Intelligence Community Office of the Director of National Intelligence
In this year’s public annual report – the first of the new Trump Administration and under the oversight of new DNI Tulsi Gabbard- the DNI points out the following: Both state and nonstate actors pose multiple immediate threats to the Homeland and U.S. national interests. Terrorist and transnational criminal organizations are directly threatening our citizens. Cartels are largely responsible for the more than 52,000 U.S. deaths from synthetic opioids in the 12 months ending in October 2024 and helped facilitate the nearly three million illegal migrant arrivals in 2024, straining resources and putting U.S. communities at risk. A range of cyber and intelligence actors are targeting our wealth, critical infrastructure, telecom, and media. Nonstate groups are often enabled, both directly and indirectly, by state actors, such as China and India as sources of precursors and equipment for drug traffickers. State adversaries have weapons that can strike U.S. territory, or disable vital U.S. systems in space, for coercive aims or actual war. These threats reinforce each other, creating a vastly more complex and dangerous security environment. Russia, China, Iran and North Korea—individually and collectively—are challenging U.S. interests in the world by attacking or threatening others in their regions, with both asymmetric and conventional hard power tactics, and promoting alternative systems to compete with the United States, primarily in trade, finance, and security.
The EU’s Move to Build Up Its Defense Capabilities
Joint White Paper for European Defense Readiness 2030 European Commission
From the paper’s introduction: The international order is undergoing changes of a magnitude not seen since 1945. These changes are particularly profound in Europe because of its central role in the major geopolitical challenges of the last century. The political equilibrium that emerged from the end of the Second World War and then the conclusion of the Cold War has been severely disrupted. However much we may be wistful about this old era, we need to accept the reality that it is not coming back. Upholding the international rules-based order will remain of utmost importance, both in our interest and as an expression of our values. However, a new international order will be formed in the second half of this decade and beyond. Unless we shape this order – in both our region and beyond – we will be passive recipients of the outcome of this period of interstate competition with all the negative consequences that could flow from this, including the real prospect of full-scale war. History will not forgive us for inaction.
Defending Europe without the US: first estimates of what is needed A Joint Publication of Bruegel and the Kiel Institute for the World Economy
Europe could need 300,000 more troops and an annual defense spending hike of at least €250 billion in the short term to deter Russian aggression. From a macroeconomic perspective, a debt-funded increase in defense spending should boost European economic activity at a time when external demand may be undermined by the upcoming trade war (Ilzetzki, 2025; Ramey, 2011), though yields and inflation may rise. Ilzetzki (2025) argued that defense spending can also positively contribute to long-term growth via innovation, but a precise quantification of such effects is still needed.
The Case for Europe Strategic Europe
By choosing to vote against a United Nations resolution marking the third anniversary of Russia’s invasion of Ukraine, the United States seems intent on abandoning its leadership of the West after eighty years of hegemony. Europe is going through its gravest hour since the Second World War—and most Transatlanticist political leaders are starting to realize it. At best, Europe will have to defend its territory alone and take responsibility for deterrence. At worst, it will have to fend off great powers actively seeking to subvert it as they assert their respective spheres of influence. This could involve political interference, economic coercion, and open aggression, tearing Europe apart. Europe’s choice lies in between these two scenarios. Rather than predict success or failure, it is worth outlining the building blocks that make the case for a stronger Europe possible and the pitfalls this vision could run into.
Germany’s big spending splurge gives EU the jitters Politico Europe
European Union governments have expressed fears that the radical spending plans announced by Germany’s chancellor-in-waiting will end up skewing the bloc’s single market and could give the country an unfair competitive edge. A month on from an election that made Friedrich Merz almost certainly the next leader in Berlin, the upper house of parliament on Friday approved a historic change to the country's basic law to exclude defense investment above 1 percent of economic output from the nation’s strict spending rules, along with a €500 billion fund for infrastructure and green energy, clearing the final parliamentary hurdle. While Germany’s allies in Europe have broadly welcomed Berlin’s long-awaited loosening of the purse strings, there is a sense of unease about the impact it could have at a time when economies are still struggling to recover after the twin shocks of Covid and the Ukraine conflict, and with the looming threat of a trade war with the U.S.
Why Europe can’t defend itself: Political fragmentation is blocking autonomy Wolfgang Munchau/UnHerd
Imagine a world in which Western Europe was actually able to stick it to Vladimir Putin and Donald Trump simultaneously. As if. Back in the real world, there’s a remote possibility the Europeans might get their act together sufficiently to stand up to one, or the other. But not both. They will, in classic fashion, be split. Some of the eastern European countries, the Baltic States, for example, will prioritize a push-back against Russia. Others, like France, are more concerned with driving their independence from the US. Then there is a third group that wants neither. So, where does that leave Europe? What they are agreed on is the plan is to increase military spending. The EU will follow Germany’s example and partially exempt the defense budget from the fiscal rules. But the truth is, no amount of investment will wean the EU off its American dependency any time soon. It will take decades to close the immense defense technology gap. To build entire industries from scratch takes time. You need defense companies, supply chains, and know-how. Europe is far from the cutting edge of 21st century defense technology and its expertise in that sector has been diminished since the end of the Cold War.
Behind NATO’s 2 Percent: Measuring the True Scope of Alliance Defense Investments and the NATO Defense Deficit Mackenzie Eaglen & Cole Spiller/American Enterprise Institute
This working paper examines NATO’s military spending through two key lenses: how NATO allies measure defense expenditures and the strategic implications of the long-term defense deficit created by chronic underfunding. While 21 member states now meet the 2 percent of GDP benchmark, the alliance must look beyond numerical targets to assess whether these investments translate into real military capability.2 Closing NATO’s $2 trillion defense deficit requires greater transparency in accounting to allow for more complete analysis, as well as sustained increases in spending to build credible deterrence against rising threats.
The Changing US Workforce
Shifting Immigration Toward High-Skilled Workers Penn Wharton Budget Model
We evaluate two immigration policies that shift 10 percent of future low-skilled immigration toward either: (i) high-skilled immigrants (“HSI”) that otherwise maintains the current share of STEM workers within the high-skilled group, or (ii) only high-skilled STEM workers (“HSI STEM”) that increases the share of STEM relative to other high-skill workers. The number of total immigrants remains the same under both policies. Both policies grow the economy, reduce federal debt, and increase wages across all income groups: lower-skilled, higher-skilled non-STEM workers, and higher-skilled STEM workers. In fact, this policy change affords the rare opportunity of a “Pareto improvement” benefitting all groups.
Technology Adoption and the Changing Role and Background of Clerical Workers Federal Reserve Bank of Cleveland
From 1980 through 2015, the share of clerical jobs in the employed labor force declined more significantly in large and expensive cities than in smaller cities. Moreover, the remaining workers performing these occupations in large and expensive cities had, on average, higher education levels and were more likely to perform tasks usually done by managerial and professional personnel when compared to their small-city counterparts. In this Economic Commentary, we show how these patterns are related to the uneven adoption of information communication technologies (ICT) across geographies and discuss adoption’s impact on clerical jobs’ tasks and worker requirements.
Defensive Hiring and Creative Destruction Jesus Fernandez-Villaverde/Yang Yu/Francesco Zanetti/National Bureau of Economic Research
America has long struggled with a lack of productivity growth despite huge investment in research and development. Jesús Fernández-Villaverde, Yang Yu, and Francesco Zanetti find that the defensive hiring of researchers by incumbent firms with monopsony power reduces creative destruction, which in turn maintains the status quo and leads to stagnant productivity growth.
The Americas
China Won’t Be the Obvious Winner in Latin America Ryan Berg/Foreign Policy
After a mere two months in office, a narrative on the Trump administration’s policy toward LAC and great-power competition has emerged: Regional influence will accrue to China at the expense of the United States because Washington appears a “bully,” has talked of reviving the controversial Monroe Doctrine, and has occasionally adopted the rhetoric of territorial expansion. A deputy assistant secretary of state in the Biden administration accused the Trump administration of shortsightedness, leading to “an opening for China, made in America.” Even a former staffer in the first Trump administration worried that the current approach to LAC “could unwittingly facilitate the extension of Beijing’s influence.” Will the Trump administration’s more assertive approach toward LAC benefit China?
What Elections Mean for Canada and the Future of North America Center for Strategic and International Studies
On March 23, newly minted Canadian Prime Minister Mark Carney announced snap elections for April 28, kicking off a contest to determine Canada’s future at a critical juncture. The election pits the incumbent Liberal Party, which has received a second wind since January in part due to tariffs and political threats from the United States, against the Conservative Party under the leadership of “Canada First” politician Pierre Poilievre. No matter the outcome, however, the next leader of Canada will inherit a tense relationship with the United States, public pressure to deliver economic gains, and an increasingly fraught global security environment that impinges upon Canada’s sovereignty.