Keynote speech from the EMVA Business conference in Rome
Part 1: Trump 2.0 and the Rise of Economic Volatility
Speaking to an international audience in Rome, Marcelo Carvalho, a seasoned economist, offered a stark and sharply-worded analysis of the global economic landscape—one now being profoundly reshaped by the return of Donald Trump to the forefront of American politics.
“It’s much, much more aggressive,” Carvalho declared, referring to Trump’s renewed assault on international trade norms. “With friends like this, who needs enemies?” he quipped, describing the tense renegotiation of trade pacts with close allies like Mexico and Canada.
He pointed to the USMCA (United States-Mexico-Canada Agreement), initially forged during Trump’s first term, as a key indicator. “Now we’re seeing Trump essentially tearing up his own deal and hitting allies harder than before.”
Volatility, according to Carvalho, is the new normal. “Under Trump 1.0, there were at least some adults in the room,” he said. “Now, the cabinet is mostly loyalists. Loyalty has replaced competence.”
That volatility has extended to monetary policy, with the Federal Reserve under mounting pressure. “Trump is already blaming Jerome Powell for not cutting rates,” Carvalho warned. “If the economy turns, he’ll say the Fed was too slow. That undermines the institution’s credibility.”
As he dryly noted, “It feels like every time Trump goes to the toilet, there’s a new social media post with a new policy.”
Part 2: The Weaponization of Tariffs and the New Trade Disorder
Carvalho then shifted focus to the economic fallout of Trump’s tariff tactics, describing a new wave of protectionism.
“Tariffs are now being used like a hammer,” he explained. “And when all you have is a hammer, everything starts to look like a nail.”
He presented data showing average U.S. tariffs reaching levels unseen since the 1930s. Despite temporary lulls, average duties have hovered around 15%, a sharp rise from the era of free trade.
“This is a policy that hits both growth and inflation simultaneously,” he said. “It’s a supply shock with no easy monetary fix.”
Carvalho urged caution, citing three reasons: the temporary nature of U.S.-China agreements, the unprecedented height of tariffs, and the deeper geopolitical rivalry at play. “It’s not just about trade. It’s about dominance.”
He warned that this new dynamic was accelerating deglobalization. “We’re seeing the end of decades of globalization and the rise of a fragmented global economy.”
Part 3: A Fragmented World and Europe’s Strategic Imperative
In his closing segment, Carvalho painted a broader picture of geopolitical reordering and its implications for Europe.
“The post-WWII U.S.-led global order is no more,” he stated bluntly. “We’re entering a fragmented world of competing spheres. Europe must respond with greater autonomy.”
He cited energy, defense, and green technology as critical sectors where Europe could find opportunity amid the chaos. “Trump’s retreat from climate commitments and ESG principles creates a clear divergence. This is Europe’s moment to lead.”
On NATO and defense, Carvalho observed, “Europe can no longer rely on the U.S. security umbrella. More guns, less butter.”
He concluded with a warning and a roadmap: “This is a structural shift. Not a blip. But with the right strategy, Europe can emerge stronger.”
Carvalho left the audience with a memorable trifecta: “Number one: accept this is permanent. Number two: find the opportunities. Number three: move quickly. The world has changed, and it won’t change back.”
The packed room at the EMVA Conference responded with sustained applause—a clear sign that Carvalho’s provocative outlook had struck a chord.
End of keynote coverage.
