Former Ifo President Hans-Werner Sinn urgently warns of a US sovereign default with dramatic consequences for the global financial system. "Word has gotten around that the US is on its last legs," Sinn told "Focus" magazine. He concludes: "Hardly anyone wants US government bonds anymore."
Sinn argues that the state of US government finances is precarious. Large investors have largely lost confidence in US government bonds, which is increasing the pressure on the government.
According to Sinn, scenarios are already circulating in the White House that would be considered insolvency for private companies . However, an outright collapse of the national finances should be avoided at all costs. "But of course, outright insolvency is to be avoided. In my interpretation, that is precisely what the tariff threats are intended to achieve."
The economist believes that Trump's tariff threats are aimed precisely at preventing US insolvency by exerting economic pressure on trading partners.