Ken Griffin Warns Trade War’s "Nonsensical" Path Risks U.S. Economic Brand

Ken Griffin, the billionaire CEO of Citadel, has delivered a scathing assessment of the Trump-era trade war’s lingering impact, calling it a “nonsensical place” that undermines U.S. global economic credibility and destabilizes markets. In recent remarks at the Semafor World Economy Summit and UBS conference, Griffin argued that punitive tariffs and erratic trade policies have eroded trust in the U.S. as a reliable trading partner, with lasting consequences for capital flows, corporate investment, and fiscal stability.

The Cost of Eroded Credibility

Griffin’s analysis centers on the trade war’s toll on U.S. economic “brand equity”—a reputation built on financial, military, and cultural dominance. He warns that tariff-driven market dislocations, such as the spike in 10-year Treasury yields to 4.8% in early 2025 (the largest jump since 2001), signal systemic instability.

The trade war’s immediate consequences are stark: U.S. container bookings from China fell by 60% in March 2025, while companies like Hapag-Lloyd canceled 30% of shipments.

These trends align with S&P Global’s April 2025 survey, which reported stagnation in U.S. manufacturing and weakening services exports—a double blow to growth.

Crony Capitalism and Investment Uncertainty

Griffin further criticized how tariff policies have incentivized cronyism, with government-business ties distorting fair competition. The unpredictability of trade measures—such as the temporary suspension of Mexico/Canada tariffs—has left multinational firms hesitant to commit long-term capital. Sectors requiring multi-decade planning, like manufacturing, face particular risks.

The data underscores his concerns:
- U.S. private sector investment growth slowed to 1.2% in 2024, down from 3.5% in 2019.
- The Federal Reserve’s 2025 survey shows 40% of manufacturers delayed capital spending due to trade policy uncertainty.

De-Escalation: A Pyrrhic Victory?

While Treasury Secretary Scott Bessent has acknowledged that 145% tariffs on Chinese goods are unsustainable, Griffin argues even halving them would leave rates far above pre-Trump levels (historically averaging 3-5%). This suggests not a strategic win but an admission of policy failure.

A Glimmer of Hope—And a Lingering Cloud

Griffin did note one rare point of optimism: President Trump’s endorsement of Fed Chair Powell, which he called a “glimmer of hope” for policy coherence. Yet this is overshadowed by broader instability. The administration’s mixed signals—from cost-cutting at the Department of Government Efficiency (DOGE) to anti-Harvard rhetoric—highlight a lack of unified strategy.

Conclusion: The High Stakes of Brand Repair

Griffin’s warnings are a clarion call: the U.S. economic brand, once a pillar of global stability, is at risk. With trans-Pacific trade volumes down 60%, Treasury yields spiking, and corporate investment faltering, the costs are clear. Even if tariffs are reduced, the damage to trust and credibility may take decades to reverse.

Investors must weigh two realities:
1. Near-term volatility: The S&P Global Manufacturing Index’s April 2025 reading of 49.5 (below 50 indicates contraction) signals weak demand.
2. Long-term risks: A 30% drop in cross-border investment flows since 2020 reflects eroded confidence.

The path forward demands coherence, not confrontation. As Griffin starkly put it, “When you tarnish that brand, it can be a lifetime to repair the damage.” For markets, that means watching not just tariff numbers, but the far harder-to-quantify erosion of global trust.