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The American Establishment Faces the Trump Conundrum

From the series Chronicles of the new American nationalism

The American establishment faces a truly difficult conundrum. On the one hand, it is confronted with Donald Trump, who has been gripped by show politics to the point of delirium: a recent tragic example was the president’s comments on social media about the murder of Rob Reiner and his wife, which he blamed on the director’s anti-Trump hatred. On the other hand, there is the attempt to uncover a rationale behind the policies of the Trump presidency, insofar as the measures aimed at countering American decline partially represent continuity with the lines of previous administrations, or with certain currents within them.

In recent months, this second approach has been taken by Michael Froman, president of the Council on Foreign Relations (CFR), and several Biden administration officials, including Kurt Campbell. In their view, there are some elements of continuity between the second Trump administration’s policy line and that of their predecessor.

The CFR, a bipartisan forum for establishment discussion since the 1920s, and its magazine Foreign Affairs have offered to act as a platform for this view. Froman also announced the publication of the main report of the CFR-sponsored Task Force on Economic Security, led by Gina Raimondo, Joe Biden’s former secretary of commerce, Justin Muzinich, Steven Mnuchin’s deputy at the Treasury during Trump’s first term, and James Taiclet, president and CEO of Lockheed Martin.

There is no going back

Froman, former trade representative (USTR) under Barack Obama, wrote in Foreign Affairs that the global trading system managed through the WTO is dead. The United States is acting unilaterally because, as the largest economy and consumer market in the world, it can. And China, lip service to multilateralism notwithstanding, is increasingly doing the same. The European Union and other governments, lacking power and leverage, may try to maintain the old order. But, according to the president of the CFR, even if the institutions of the old order survive the trade war, there is no going back.

In the new international system, coalitions of countries that share interests and come together to adopt high standards will form. Froman explicitly echoes the line that Campbell and Rush Doshi had pursued under the Biden administration and reaffirmed in a recent essay. They suggest that Washington’s interest will be to forge a coalition that aims at building a competitive, collective industrial base to meet the challenge posed by China’s scale.

Encouraging membership of these coalitions by offering free trade agreements appears to be off the table politically, at least for now. Threatening tariffs may work in the short term. To establish lasting support, however, coalition members need to feel that aligning themselves with the United States is in their own interests, more so than the option to hedge their bets with China or remain on the sidelines. The best option available is therefore to offer them access to America’s deep capital markets, its innovation ecosystem, and the rule of law that guarantees them. Trump has also included the American market in his deals, but with his policies, Froman writes, he has also put many of its assets under threat.

Outlines of a strategy

The CFR president clarified his position after Trump’s trip to Asia, on the margins of the ASEAN and APEC meetings.

After ten months of Trump’s grand experiment, Froman sees the contours of a trade strategy emerging, in which the administration is open to negotiating lower tariff rates to break down non-tariff barriers and advance national security priorities.

In the negotiations with Malaysia, the deal closest to a traditional trade agreement, and in the negotiations with Australia, focused on rare earths and resources needed for the defence and technology industries, Froman sees a broader design: a world in which access to the US market is coupled with participation in a coordinated architecture of economic security. To these agreements, Froman adds the attempt to secure critical minerals from Congo and the Central Asian republics (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan); agreements in Latin America with Guatemala, Argentina, Ecuador, and El Salvador; and deals in the Indo-Pacific with Japan and South Korea. He comments: We are beginning to see a concerted effort to pull countries together around a common set of high standards and secure supply chains. This is the line he had taken in his essay in Foreign Affairs, based on Campbell’s work.

Leading partners

As Froman explains, the heart of the Malaysian agreement is Article 5, which commits Kuala Lumpur to adopt equivalent restrictive measures whenever Washington imposes tariffs, quotas, or import restrictions on third countries — read China — for reasons of national security. This obligation is strengthened by controls on exports, the origin of goods, and investments, similar to the controls carried out in the United States by the Committee on Foreign Investment (CFIUS). This allows Washington to project parts of its tariff, technology, and security strategy onto a partner’s foreign policy. Similarly, the deal with Australia ties one of the richest holders of critical resources to US industrial strategy.

According to Froman, the Trump administration sees the Malaysian framework as a template. If a handful of countries accepted similar conditions, Washington could assemble a network of similar bilateral agreements to form a wall of tariffs and technology restrictions around countries of concern, including and especially China.

New geoeconomics

One thing is clear, according to Froman. In the context of its unprecedented competition with Beijing, over the past decade Washington has increasingly intervened in the economy, using tariffs, trade controls, and investments as offensive and defensive tools. Although efficiency remains the goal, economic security, or the convergence of national security and economics, is now the north star of US policy. Any administration — current or future — will be called on to determine under what circumstances the government should intervene in the market.

We are heading toward a less efficient, more expensive global economy in order to address national security interests. The environment in which policymakers operate and businesses compete will change. It is, therefore, important to understand when, how, and to what extent national security should trump economics.

The aforementioned bipartisan CFR task force, in its report US Economic Security, focused on dual-use civil-military technologies that are critical to economic security: biotechnology, artificial intelligence, and quantum communications. Thomas Donilon, vice president of BlackRock and former national security advisor to Obama, and Michèle Flournoy, cofounder (with Campbell) of the Center for a New American Security (CNAS), are two of the contributors to the project, which includes representatives from technology, finance, and consulting groups (Dell, JPMorgan, Citigroup, Bridgewater, Mundie, Ribbit, I Squared, Wiley, and McKinsey).

Froman recalls how, in the 1990s, the CFR developed the concept of geoeconomics, which guided the debate after the collapse of the USSR and accompanied the flow of American capital into China. Today, Froman offers the think tank to policymakers and business leaders as a forum for meeting and analysis in the face of a significant change in international relations. The task force recommends that each presidency build on the industrial policies of Biden and Trump.

Lotta Comunista, December 2025

THE HOUSE OF MARKETS

The stock and Treasury markets have been a real check and balance on Trump’s tariff policy. The Financial Times’ front page featured a warning given to Trump by the Treasury Borrowing Advisory Committee (TBAC). The TBAC brings together Wall Street’s most prominent financiers of US debt and meets with the Treasury Department every three months to provide recommendations on the economic situation and debt management. The Committee warned Treasury Secretary Scott Bessent that the appointment of a compliant Fed chair is not welcome among Washington’s lenders: no one wants to be hit by a shock like the one triggered in 2022 in Britain by Prime Minister Liz Truss’s unfunded tax cut plans. To avoid Trussification, Trump should listen to the TBAC, a body regulated by Congress under the Federal Advisory Committee Act (1972) and the Government Securities Act (1993). Kenneth D. Garbade, former senior vice president of the New York Fed’s research group and associate of Paul Volcker, writes in Treasury Debt Management Under the Rubric of Regular and Predictable Issuance: 1983-2012 [2015], that the TBAC’s quarterly meetings produce relatively substantial documentation of the advice provided by investors to administrations. The advisory committee of big financial groups regularly comments on the choices made by the US government.

The TBAC is currently chaired by Deirdre Dunn of Citigroup and has Mohit Mittal of PIMCO, a Californian investment manager controlled by the German company Allianz, as its vice president. Its members include Jill Funkman of JPMorgan, Anshul Sehgal of Goldman Sachs, Jason Granet of Bank of New York, Ellen Zentner of Morgan Stanley, Gagan Singh of PNC Financial Services Group, Chris Leonard of Deutsche Bank, Alex Schiller of Bridgewater, Sara Devereux of Vanguard, Kevin Gaffney of Fidelity, Gregory Peters of Prudential Global Investment Management, Joe Demetrick of MetLife, Anastasia Titarchuk of New York State Common Retirement Fund, Scott Rofey of Millennium, and Lewis Alexander of Rokos.

The list includes five of the eight largest American financial institutions and one of the eleven European financial institutions that are too big to fail, i.e., considered important for global stability by the Financial Stability Board, the commission set up by the G20 after the 2008 crisis. JPMorgan and Citigroup are also among the four banks that hold the most assets and at the same time collect 45% of the value of deposits in America, known as the Big Four. They are also the institutions most interested in and exposed to the Asian market, including China, along with MetLife, investment managers on both coasts, and the British company Rokos [American Business Stalls in China, The Wall Street Journal, March 27th, 2024]. The list is completed by public and private pension fund collectors and insurance holding companies. In the house that finances Washington’s debt, the markets of Asia and Europe meet with the centralisation of savings and capital from the American continent.

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