Trump Economic Policies Create Investment Fears and Stagflation Risk Says Nobel Laureate Stiglitz

The United States has become a precarious investment destination under Donald Trump’s leadership, according to Nobel prize-winning economist Joseph Stiglitz, who warns of looming stagflation risks amid escalating policy uncertainties.

The renowned economist emphasises that Trump’s erratic approach to tariffs and apparent disregard for legal frameworks has created a troubling environment for both domestic and international investors. “The US has become a scary place to invest,” Stiglitz stated, highlighting the challenging decisions corporations now face regarding market access and manufacturing locations.

Of particular concern is Trump’s systematic dismantling of government departments without congressional approval and his dismissive attitude towards established contracts, including the trade agreement with Canada and Mexico from his first term. These actions have sent alarming signals to the global investment community.

The economic outlook appears increasingly complex, with Stiglitz predicting a dangerous combination of slow growth and rising inflation. The implementation of tariffs, coupled with anticipated retaliatory measures from trading partners, is expected to drive up prices across the board. This inflationary pressure has already influenced market expectations, with investors reducing their bets on Federal Reserve interest rate cuts.

The Federal Reserve’s growing concern about inflationary pressures may necessitate interest rate increases, further complicating the economic landscape. Treasury Secretary Scott Bessent’s suggestion to lower 10-year US Treasury yields appears counterproductive in this context, with Stiglitz arguing that such an outcome would only materialise through economic deterioration.

The Nobel laureate’s assessment paints a sobering picture of the US economic trajectory under current policies, suggesting that uncertainty and trade tensions could trigger a period of stagflation, combining the worst elements of economic stagnation and inflation.