The Trump Vacuum
How Brazil and South Africa have the opportunity to reshape the global order
With the madness of Trump's recent tariff announcements and unpredictable policy reversals, the need to demonstrate an alternative vision of global cooperation and leadership is more important than ever. This is what this Substack is about.
With US retreat from global cooperation, we urgently need new global leadership to tackle our greatest shared challenges. The existing economic order was failing even before Trump's return – as evidenced by COP29's minimal progress on climate action and growing inequality worldwide. But Trump's recent announcement of sweeping tariffs and then subsequent sudden retraction has sent shockwaves through the global economy, demonstrating what one might I call the "Trump paradox": even as his administration creates a vacuum in global leadership, his erratic policy moves simultaneously consume an extraordinary amount of global attention and resources. Like a powerful vortex, Trump's economic nationalism both creates a void in international cooperation while hoovering up media coverage, economic analysis, and diplomatic energy that could be directed toward solving our shared challenges.
As we look ahead to COP30 in Belém and South Africa's G20 presidency, it is Brazil, South Africa, and other ambitious nations that hold the potential to fill this vacuum and transform the existing bleak picture of economic cooperation.
And let's remember this isn't just theoretical, this is also practical and with immediate relevance. Cuts to USAID which, while not perfect in its implementation and history, provides crucial support for health, education, and humanitarian aid in the world's most vulnerable regions and will thus worsen health outcomes and exacerbate inequalities. DOGE’s blanket cuts to public institutions will weaken state capacity—instead of creating an entrepreneurial nimble state. And introduction of blanket tariffs —which are not reciprocal but punitive—will hurt global development especially in the most vulnerable areas. In other words, this isn't just hot air - it's real and requires an equally tangible economics in response.
A Fracturing Economic Model
Donald Trump's election victory reflects profound economic dissatisfaction. As I noted in my recent Foreign Affairs article, The Broken Economic Order, this election revealed a striking class-based voting realignment: for the first time in decades, the poorest Americans favored the Republican candidate while the wealthiest supported the Democrats. Working-class disenchantment stems from an economic system that, under administrations led by presidents of both parties, has concentrated wealth at the very top, enabled the growth of the financial sector at the expense of the real economy, trapped people in cycles of debt, and has deprioritized the wellbeing of millions.
Trump's proposed solutions – punitive tariffs, shrinking government, and isolationism – will likely worsen these problems. His recent wave of tariffs on nearly all imported goods will increase consumer costs, with studies estimating an additional burden of a minimum of $1,500 per person annually for American families. Meanwhile, these barriers will undermine state capacity and trigger global economic instability, as we've already witnessed with sharp market volatility and retaliatory measures from China and other trading partners. It is worth remembering that under Trump's first term his administration imposed significant tariffs on global steel and aluminum imports, implemented multiple rounds of tariffs on Chinese goods totaling over $300 billion, and withdrew from the Trans-Pacific Partnership, signaling a major break from decades of US trade policy. These moves triggered retaliatory tariffs and caused economic disruption for many American farmers and manufacturers, ultimately leading to $61 billion in emergency relief payments to cushion farmers from the blow.
This troubling turn reflects a deeper crisis in the prevailing economic model that has fueled populist movements globally. The moment demands not just critique but a coherent alternative vision.
The Promise of New Global Coalitions
The revival of US (always use US instead of America were possible) economic nationalism need not spell the end of pursuing inclusive, sustainable growth globally. In fact, this moment of flux creates space for new leadership and coalitions to emerge and strengthen.
Brazil's ambitious agenda for COP30, set to take place in Belém in the heart of the Amazon, offers one such opportunity. As Ambassador André Corrêa do Lago articulated in his recent letter as COP30 President-Designate, Brazil is calling for a global "mutirão" (collective effort) against climate change. This indigenous concept of communal action toward shared goals perfectly captures what our moment demands – cooperative effort that transcends national boundaries and narrow interests. This vision is reinforced in a powerful joint letter recently published by President Luiz Inácio Lula da Silva of Brazil, President Cyril Ramaphosa of South Africa, and Prime Minister Pedro Sánchez of Spain. The leaders emphasized that "2025 will be a pivotal year for multilateralism" with a warning that "the stakes are too high for failure." The Presidents noted that with three major global gatherings – FfD4 in Seville, COP30 in Belém, and the G20 Summit in Johannesburg – offering "a unique opportunity to chart a path toward a more just, inclusive and sustainable world." They stressed that "multilateralism, when ambitious and action-oriented, remains the most effective vehicle for addressing shared challenges" and called for these meetings to deliver real progress rather than business as usual.
South Africa's G20 presidency presents another critical platform. Under the theme of "solidarity, equality, and sustainability," South Africa is positioned to advance critical reforms to global financial structures and trade rules that can make green development pathways accessible to all countries. My recent discussions with President of South Africa Cyril Ramaphosa and his cabinet ministers in Cape Town revealed their commitment to using the G20 presidency to drive meaningful progress on green industrial strategies, public investment, and financial reform. These discussions led to my appointment as Technical Expert to South Africa's G20 Presidency and Special Representative of the President to G20 Taskforce 1 on Inclusive Economic Growth, Industrialization, Employment, and Reduced Inequality, allowing me to contribute directly to shaping this critical agenda.
These parallel leadership opportunities in 2025 represent the emergence of a new axis of leadership from nations with both climate vulnerabilities and transformative aspirations.
Lessons from Brazil's TF-CLIMA
Last year, I had the privilege of co-chairing the Group of Experts to Brazil's G20 Task Force for the Global Mobilization Against Climate Change (TF-CLIMA) with Vera Songwe, which produced our final report called "A Green and Just Planet". This work offers valuable lessons for the path ahead.
Our report emphasizes three crucial priorities: First, countries must adopt green industrial strategies aligned with their Nationally Determined Contributions (NDCs) to catalyze economy-wide transformation. Second, they must reorient financial systems to support these strategies – increasing fiscal space and ensuring development banks provide patient, long-term capital toward achieving the Paris Agreement's 1.5ºC goal. Third, they must establish global governance frameworks with justice and equity at the center to ensure all countries can participate in and benefit from the transition.
The report debunks persistent myths blocking climate action – including the false notion that climate action will slow economic growth. In fact, the evidence suggests the opposite: green industries could be worth more than $10 trillion globally by 2050, equivalent to more than 5% of global GDP. The costs of inaction, meanwhile, are staggering – even if global temperature rises are kept below 2°C, global GDP will be down 4.2% by 2050 relative to a world without climate change.
We also highlight how industrial strategy must move beyond traditional approaches focused on "picking winners" to become truly mission-oriented, aligning investments across sectors to solve complex challenges. Rather than just subsidizing specific industries, governments should orient their strategies around clear goals drawn from their NDCs, catalyzing cross-sectoral transformation. This approach proves more effective at directing growth while being less susceptible to capture by private interests. At the same time, our report calls for a fundamental revision of how we think about public-private partnerships – not just "de-risking" private capital but establishing frameworks with clear responsibilities, ensuring that public benefits are realized and that partnerships contribute to just, green transitions.
Critically, we argue that equity must be hardwired into the design of both industrial strategies and financial systems. Higher-income countries and those with greater historical emissions responsibility should shoulder more of the burden for financing the transition. And the global governance of industrial policy and finance must prioritize fairness, ensuring all countries can pursue green development pathways.
The Brazilian government has already begun implementing aspects of this vision through its own ambitious mission-oriented industrial strategy. Our TF-CLIMA report outlines three critical priorities that could form the foundation for new international coalitions: green industrial strategies to drive transformation, financial reform to enable action, and global governance that prioritizes equity. The upcoming Financing for Development Conference (FfD4) in Seville this June offers an immediate opportunity to advance this agenda, particularly on financial reform.
Connecting Climate Action and Economic Transformation
The intertwining of climate action and economic transformation must be at the heart of this new international coalition. As Ambassador Corrêa do Lago noted in his COP30 letter, "...issues considered 'problems' can emerge as important 'solutions.'" The climate crisis, often framed primarily as an environmental challenge, represents a profound opportunity to reshape economic systems that have failed to deliver prosperity broadly.
Brazil's emphasis on forests as a climate solution exemplifies this approach. Reversing deforestation and recovering lost forests can remove greenhouse gases while creating new bio-economy opportunities and supporting Indigenous communities' livelihoods. Similarly, South Africa's experience with its Just Energy Transition Investment Plan demonstrates how climate action can be aligned with addressing historical inequalities while creating quality jobs. The Tropical Forest Forever Fund (TFFF) is another example of this approach, aiming to mobilize $125 billion from governments, sovereign wealth funds, and private investors. The fund invests in high-risk portfolios with expected returns of 5.5% over 20 years, with investors receiving their guaranteed return while excess profits (estimated at $4 billion annually) are distributed among tropical forest countries to incentivize conservation. While ambitious it must ultimately show it can get countries to put money beyond symbolic donations alongside private philanthropy.
These visions faces significant headwinds from existing power structures. Fossil fuel subsidies alone cost $7 trillion globally in 2022. The financial architecture continues to deny affordable capital to many countries pursuing sustainable development. And debt crises increasingly constrain fiscal space precisely when investment in climate resilience is most needed.
One of the most pressing barriers to climate action is the mounting sovereign debt crisis facing countries across the Global South. External debt of low- and middle-income countries exceeded $29 trillion in 2023, with nearly 60% of the world's poorest nations either in or at high risk of debt distress. This financial burden drastically reduces countries' fiscal space to invest in climate action and sustainable development.
The Jubilee Commission to Address Debt and Development Crises, recently established by the Pontifical Academy of Social Sciences and Columbia University's Initiative for Policy Dialogue, of which I'm honored to serve as commissioner alongside co-chairs Professor Joseph E. Stiglitz and Martin Guzman, will develop reforms to enable countries to achieve sustainable debt levels. As 2025 marks a Jubilee Year for the Catholic Church, this work builds on the Jubilee movement that helped achieve significant debt relief 25 years ago, now addressing a crisis of even greater magnitude where debt relief is essential not just for development but for global climate action.
The Way Forward: A New Global Alliance
As we face a Trump administration retreating from multilateralism, the imperative for alternative leadership becomes even more urgent. Brazil's COP30 presidency and the complementary efforts of other ambitious nations can forge a new alliance for meaningful integrated action on climate.
The retreat of US leadership creates both risk and opportunity – the risk of nationalism and policy failure, but also space for new visions challenging the failed economic order.
As I wrote in Foreign Affairs, the current juncture "provides a chance to finally retire the failed economic model that has privileged private over public value creation and replace it with a more sustainable and equitable global economic order." This transformation requires audacious leadership willing to challenge vested interests and build new alliances across traditional divides.
South Africa's G20 presidency represents a pivotal opportunity to advance this transformation. In my capacity as Technical Expert to South Africa's G20 Presidency and Special Representative to G20 Taskforce 1, I will be working closely with South African leadership to design approaches that leverage key policy tools including procurement, state-owned enterprises, and national development banks to drive structural economic transformation while addressing climate goals. The alignment between South Africa's G20 priorities of "solidarity, equality, and sustainability" and its domestic reform agenda creates a unique moment to build momentum for a more equitable global economic order – one where all countries have the fiscal space and access to affordable finance needed to invest in climate-resilient, sustainable development.
Next week, I will be launching a manifesto outlining key steps that South Africa's G20 presidency should take, based on four foundational principles that can reshape global economic governance. This document will provide a pathway for multilateral cooperation at a critical moment when the prevailing economic system is proving increasingly unstable and inequitable. In the coming months, I will share more about this work in future Substacks.
As we face a Trump administration retreating from multilateralism, the imperative for alternative leadership becomes even more urgent. Brazil's COP30 presidency and South Africa's G20 leadership can forge a new alliance for meaningful climate action.
Further Reading
Mazzucato, M. (2025). The Broken Economic Order: How to Rewire the International System in the Age of Trump. Foreign Affairs, March/April 2025.
Mazzucato, M. (2025). Reimagining financing for the SDGs: from filling gaps to shaping finance. UN DESA Policy Brief, No. 170, Special issue. New York: UN Department of Economic and Social Affairs; UN High-level Advisory Board on Economic and Social Affairs; University College London Institute for Innovation and Public Purpose. January.
Mazzucato, M. & Kattel, R. (2025) Governments Are Not Startups. Project Syndicate. April.
Mazzucato, M., Doyle, S. & von Burgsdorff, L. (2024). Mission-oriented Industrial Strategy: Global Insights. UCL Institute for Innovation and Public Purpose, IIPP Policy Report No. 2024/09.
Mazzucato, M. & Songwe, V. et al. (2024). A Green and Just Planet: The 1.5°C Agenda for Governing Global Industrial and Financial Policies in the G20. Independent Report of the G20 TF-CLIMA Group of Experts, October 2024. UCL Institute for Innovation and Public Purpose.
Mazzucato, M. (2023). Financing the Sustainable Development Goals through mission-oriented development banks. UN DESA Policy Brief Special issue. New York: UN Department of Economic and Social Affairs; UN High-level Advisory Board on Economic and Social Affairs; University College London Institute for Innovation and Public Purpose. September.
Mazzucato, M. & Rodrik, D. (2023). Industrial Policy with Conditionalities: A Taxonomy and Sample Cases. UCL Institute for Innovation and Public Purpose, Working Paper Series (IIPP WP 2023-07).