Podcast Summary: Bloomberg Talks Episode Title: Former IMF Chief Economist Maurice Obstfeld Talks Tariffs
Date: October 15, 2025
Host: Bloomberg
Guest: Maurice Obstfeld (Peterson Institute, Former IMF Chief Economist, UC Berkeley Professor)

Episode Overview

This episode features a compelling conversation with Maurice Obstfeld, renowned economist and former IMF Chief Economist, as he tackles the intensifying debate over tariffs, global trade, and the fate of the U.S. dollar. Obstfeld offers rare insight into the economic and geopolitical strains behind recent trade tensions, analyzes the rift between America’s financial sector and its real economy, and weighs in on the symbolism behind sky-high gold prices. Listeners get a nuanced, expert perspective on both the short-term impacts and long-term risks surrounding tariffs and U.S. economic hegemony.

Key Discussion Points & Insights

1. State of Global Trade and Supply Chains

Host: Raises concern about current "tensions" affecting the globe’s "supply lines," questioning whether the trade system is "broken."
Obstfeld:

• Asserts the system is "not broken yet, but it's under strain."
  • Quote (01:16):

    "It's under strain because of tariffs. It's under strain because of geopolitical tensions. It's under strain because of the trade war."

• Cites specific U.S.-China hostilities affecting a range of products ("everything from shipping to rare earth to cooking oil").

2. U.S. Economic Divide: Trade vs. Finance

Host: Points out the apparent "two Americas":

• One hit by tariff-tinged uncertainty
• Another thriving via a "financial boom" (e.g., Morgan Stanley)
  "Can we exist like this?" (01:39)

Obstfeld:

• Explores the increasing financialization of the U.S. economy
• U.S. as “the world’s banker”
• Unlike trade, "finance hasn't seen the kind of backlash"—there's instead "deregulation, stablecoins and the like."
• Sees a "real divorce between those two sectors"
  • Quote (01:53):

    "You know, the question I have is, can that go on forever?"

• Predicts trade tensions will "eventually feed into the financial sphere." (02:39)

3. Are Tariffs Impacting the Real Economy Yet?

Host: Notes that tariff supporters argue the U.S. economy remains strong—GDP is robust; inflation seems contained (though now with data gaps).
"Is it just a matter of time or are corporations adapting?" (02:46)

Obstfeld:

• Believes it’s a "matter of time" until tariffs bite
• Corporations are adapting (seeking cheaper suppliers), but:
  • No "material fall in the dollar prices that foreign countries charge"
  • "Limited increase in consumer prices" for imports
  • "Substantial revenue coming into the Treasury from tariffs," but importers bear the cost
  • "Firms have been swallowing these tariffs...while they wait for tariff policy to stabilize"
  • Now that policy is clearer, "firms are going to be adjusting by passing those cost increases on."
  • Quote (03:14):

    "How do you square that circle? Right, you square it with a hit to profitability..."

4. The Dollar's Global Standing and Geopolitical Risks

Host: References classic economic work (Irwin, Eichengreen, Mundell, Obstfeld & Rogoff), and asks about risks to the dollar’s dominance.
"I'm assuming you don't have a fear of the gloom crew on the dollar, is that correct?" (04:24)

Obstfeld:

• Cautiously worried in the "long term"
• While "very strong forces" keep the dollar dominant,
  • Other countries are "increasingly worried about...coercive, punitive actions" by the U.S.
  • Not just about trade; includes use of the dollar as a tool of foreign policy ("internal politics")—e.g., bailing out Argentina
• Main concern:
  • Other countries now "no longer trust the U.S. as a responsible steward of the global economy"
  • Will seek to "decouple and insure themselves against policy volatility" from the U.S.
  • Quote (04:52):

    "Foreign countries no longer trust the U.S. as a responsible steward of the global economy and are going to seek to decouple and insure themselves against policy volatility..."

5. Gold at $4,200: Market Fears and the Search for Safety

Host: Asks a tongue-in-cheek question about Barry Eichengreen’s view on high gold prices (over $4,200 per ounce) (06:07)

Obstfeld:

• Avoids speaking directly for Eichengreen, but states
  • "Gold is a bellwether of fear"—price escalation is "far beyond what you would expect" solely from inflation
  • Indicates movement toward "something that is perceived as safer than the dollar and not subject to extraterritorial action by the U.S."
  • Notes "increasing purchases of gold by emerging markets' central banks"—"a lot of that is China, but not all..."
  • "Escalation in bitcoin prices is a similar phenomenon."
  • Quote (06:17):

    "Gold is a bellwether of fear, and the escalation in its price is far beyond what you would expect to see coming from inflationary fears..."

Notable Quotes

• Obstfeld on the trade system: (01:16)

  "It's not broken yet, but it's under strain. It's under strain because of tariffs... and the trade war."

• On U.S. economic bifurcation: (01:53)

  "There really, really is a divorce between those two sectors... the question I have is, can that go on forever?"

• On tariff impact: (03:14)

  "Firms have been swallowing these tariffs to some extent while they wait for tariff policy to stabilize..."

• On the dollar’s future: (04:52)

  "Foreign countries no longer trust the U.S. as a responsible steward of the global economy and are going to seek to decouple..."

• On gold as a fear index: (06:17)

  "Gold is a bellwether of fear, and the escalation in its price is far beyond what you would expect to see coming from inflationary fears..."

Timestamps for Key Segments

• Strains on global trade and supply lines: 01:16–01:39
• Financialization versus “real economy” split: 01:39–02:39
• Short-term vs. long-term tariff impacts: 02:46–04:24
• U.S. dollar’s future, foreign reactions: 04:24–06:02
• High gold prices, central bank moves: 06:07–07:19

Memorable Moments

• The evocative description by Obstfeld of "two Americas"—the prosperity of finance juxtaposed with the struggles of trade-exposed sectors.
• Obstfeld's candid warnings about the slow-boiling risks of tariffs and how, eventually, "firms are going to be adjusting by passing those cost increases on."
• The clear connection Obstfeld draws between geopolitics, eroding faith in U.S. stewardship, and moves by foreign countries toward gold and bitcoin.

Overall Tone:
The conversation is cerebral, direct, and tinged with cautious skepticism about the stability of U.S.-led global economic structures. Obstfeld’s responses are rooted in deep expertise but remain vividly accessible, making plain the stakes of contemporary trade and currency policy.

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