Wall Street Is Panicking. But Lloyd Blankfein Isn’t Sweating It.

As the stock market gyrated from massive gains to losses yesterday, Lloyd Blankfein remained curious, wide-ranging, and above all, relaxed.

Blankfein survived the cauldron of the Global Financial Crisis and a series of lesser crises in his 36 years at Goldman Sachs, the last 12 of them as CEO.

Today, as all of us all wonder what Trump’s tariffs mean for our nation’s prosperity—and for our bank accounts—Lloyd joined me and Free Press subscribers yesterday to help make sense of this tumultuous moment. Also taking part was Dennis K. Berman, our publisher and president, who spent a decade leading business and finance coverage at The Wall Street Journal.

We had big questions for Lloyd: Has the post-World War II order come to an end? Does this create new opportunities for China? What is the best-faith argument for why the White House is doing what it’s doing? How does someone who has spent his career assessing risk make sense of this new and unsettling landscape?

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Bari Weiss: Lloyd, what are we actually witnessing right now? What is it that we’re living through?

Lloyd Blankfein: We’re seeing an effort to very rapidly and aggressively disassemble the post-World War II order—the economic system, the defense system, basically a restructuring all at once, to the astonishment of our partners. And in each of those spheres, the conversation breaks down to: Is that a good thing to do? And if it’s a good objective, how are we doing it, and over what time frame?

BW: Before we talk about the unraveling of that post-World War II, what are the fundamentals of the postwar order that, for many of us who have grown up in it, seemed as natural as gravity?

LB: After World War II, we had, conservatively, half the world’s GDP. We had a Marshall Plan to help rebuild Germany. We had economic growth. We had the dollar. But one of the reasons why our deficit is so big is because we also shoulder the disproportionate burden of defending our allies in the post-World War II era. We patrol the seaway so that Saudi oil can make its way to China. We also take a lot of responsibility for the success of the global financial system. And again, that goes two ways, because we benefit from it and we accept certain burdens related to it.

Dennis Berman: As stark as it’s been over the last few weeks, there does seem to be an overriding question that begs to be answered, namely, is the post-World War II era relevant for America in 2025?

LB: You know, the Marshall Plan has been over for 75 years. But we still had a sense of responsibility, obligation, city on a hill, defending our allies, subsidizing and paying disproportionately the share of protecting our allies. Look, our share of defense has been over 4 percent. Our European allies have been under 2 percent. And as a result, they can talk about their soft social safety networks and their free medical care. And sometimes Americans who look at that say, “Gee, you know, we could have that too if we didn’t pay so much for defense.”

Every president since Truman has been trying to get the Europeans to pay for more of their defense. So maybe we need a little bit of shock and awe. People in the administration are coming on TV and saying that it’s working according to plan. I don’t think that’s a joke. It’s just a very, very risky way of approaching it.

And the fact is, it will hurt other countries more than it hurts us. But it also hurts us. And the question of who wins seems to be based on an assumption that since it hurts the others more than it hurts us, they will succumb. But there’s another element to this: Who has the better capacity to absorb pain? I think there’s a lot of discipline in Chinese society that we may not have. And so the pressures on us may be greater, even though the pain may not be as great. So all of those things are kind of swirling around.

BW: The story the Trump administration is telling right now, with various degrees of hyperbole, is that we got a bum deal. That this post-World War II arrangement essentially had all of these parasitic countries hanging off of us while we were subsidizing them. Can you steel-man for us the argument for the postwar, Pax Americana world? What were we getting in exchange from that bargain?

LB: Take the Marshall Plan again. Why did we do the Marshall Plan? Who defeats an enemy and then pays for them to restore their prosperity? But we created trading partners and we created allies. Of course we benefited from that. Everybody’s benefited.

I think the administration would say, “It’s not just the tariffs, it’s also defense. If you don’t pay your way, we won’t defend you.” It’s put everyone in a tizzy. But guess what? The Europeans are really talking about their collective European activity now.

What do we lose when that happens? Maybe we lose some of our influence. But not totally. We’re still the most important actor. My point of view is that the objectives are sensible. They’re certainly at least sane. The question is, can we do this in a way that takes less risk? I think my answer is yes.

DB: Lloyd, the opportunity for China certainly increases as the U.S. recedes. So we need to look further than what’s happening in Europe with European goods. How much opportunity is there for China to inject both its products, but ultimately its currency and financial products, into the world so that 10, 15 years from now, Americans are transacting in renminbi?

LB: Will China make inroads? Will they take away business? Will they take away from U.S. allies? Will the world reorient in their direction a little bit more, because they start to look like the more stable partner? The answer is incrementally yes.

But let me tell you what the other side would say. Let’s do this thought experiment. Let’s say you’re an American ally and you’re disillusioned with us. You want to hedge your reliance on us. And so you do more activities with China incrementally, which seems to be happening. That’s the worry.

Here’s the thought experiment for our allies. Let’s give them a choice: It’s them or us. Would you really throw all your eggs into the Chinese basket, an authoritarian command economy? I wouldn’t do that. So I don’t think we’re going to lose. I don’t think it’s so bad that this is the end of civilization for us, and our role that we play in it. But I do think we are giving people an incentive and license to have less reliance on us.

Someone once said that countries in international relationships don’t have morals. They have interests. For decades we lived in a world where people had confidence in America. Iwo Jima, Founding Fathers, city on a hill.

BW: Some of us still care about those things.

LB: As do I. But the other side of it is: We’re better off if all we care about is getting the better deal. We’re better off having everybody fly into Washington and deal with us bilaterally, because we will overwhelm an individual country. When we deal with a block of countries, our power is less overwhelming to the rest of the world. So if you were looking for a negotiating strategy, you wouldn’t go to international trade agreements or . . .

DB: That’s what we did, though.

LB: We did that because we were big enough that our interests rested on the success of the whole world, not our country within the world. Now we seem to be withdrawing to be a very, very big, powerful country in the world.

BW: I remember a great Charles Krauthammer lecture from some years ago called “Decline Is a Choice.” I keep thinking about it these days because I feel like the first principle behind almost everything that we’re seeing from the Trump administration is not “decline is a choice” but decline is here and decline is inevitable and we need to manage it. The city on a hill? It’s a beautiful myth that’s long since gone. But on the other side, do you think that what is happening amounts to adjustments that need to be made, even if you don’t agree with their implementation?

LB: I think some of these things need to be done. I just think we shouldn’t run the risk of the chaos that would push ourselves into recession. Right now, CEOs and decision-makers don’t know where things are headed. So why would they build a plant? You could build a plant in the United States based upon the feeling that everybody else is going to be tariffed to high heaven, and then in a week from now, those tariffs won’t be here and you’ll regret having made the decision. On the flip side, it is also a risk not to invest, because things will get more expensive and inflationary.

What are the tariffs trying to accomplish? If you listen to the administration, sometimes it’s to level the playing field. Sometimes it’s about retribution for past sins and bad deals. Sometimes it’s about reciprocity and fairness. Sometimes it’s about revenue—we would like to lower taxes, and this is a source of revenue.

Personally, I would say at this point, here’s our tariff plan, and our real objective is reciprocity. We want to level the playing field. We’re going to give you a chance to surrender to us, to fly to Washington and talk to us and submit. And instead of putting them in place tomorrow, we’re going to give you six months. And I think that would accomplish a lot of these same objectives in a less risky way.

BW: Lloyd, we have a lot of questions from subscribers, so I’m going to throw them out to you. Here’s the first: How can any country trust the U.S. again?

LB: We went through the Vietnam era. We committed to Afghanistan and then pulled out. This stuff happens all the time. I mean, it’s not good. But memories are dim. People and countries have interests. I can give you other examples where we disappointed our allies and friends. And guess what? We’re still in business as a country.

BW: Here is another: What should or can average middle-class people do right now to set themselves up for success, or at least not failure, in the near future?

LB: Well, to a civilian in the market, I would say if you are old and you need money soon, you should get out of the equity market. And if you are a long-term investor, I would stay invested in the equity market. I think America still has the best economy, growing the fastest in the world.

We benefited from lower inflation and from cheaper costs of goods. A lot of us felt richer. But we also desiccated the middle class. We got rid of high-paying manufacturing jobs. Those were exported overseas. And if you want to bring some jobs back and if you want American workers to live better than Vietnamese and Mexican workers, you better make the goods that we import more expensive, otherwise they’re going to win and we’re not going to be able to have those jobs here. And I think there are national defense reasons and sociological reasons why we want our workers to live better.

DB: It feels like what Trump is doing, in a way, is telling a story of the need for self-reliance, for self-employment. In some ways, it’s sometimes a bullying perspective as well. How would you define his story, Lloyd?

LB: Hey, I don’t like that story. As I said, I like the city on a hill. I like that we have values. I’m not into this grievance thing. So I don’t like the narrative, but the narrative is clear: We’ve been penalized by the rest of the world. We live a much poorer lifestyle than we should because everyone else is living high on the hog off of our labor and our brilliance. How unfair. Let’s make that adjustment.

That’s kind of the narrative there. It’s not one that I particularly like, given our status and also, frankly, how well things are going now.

BW: One of the strongest arguments for the movement toward this new economic policy is that free trade has benefited we coastal elites, the laptop class. And it has left behind the poor and middle class, and these tariffs are part of the inevitable reckoning that was going to come from wealth inequality in this country. What’s your take on the class warfare argument?

LB: We’re a service economy now. And you don’t want to just be a service economy because we have to manufacture things. How would we be the arsenal of democracy if we don’t know how to manufacture anything anymore? You can go back and forth on this. But generally we did lose a lot of higher-paying jobs that would have been lost anyway, thanks to technology, and a lot of those jobs won’t come back. And a lot of those high-paying jobs aren’t as high paying as they used to be, because there are robots that are doing those jobs now.

DB: I want to bring this to a more personal level. One thing I always really admired about people on Wall Street was how adaptable they were. A new reality would settle on the world, and they could adapt to it. Can you just take us through your path and the way that you adapt to facts that seem to be very explosive or very novel at any one given moment?

LB: I think there’s a Darwinism about it. And the people who end up in these firms at high levels get there because they’ve adjusted. Look, we forecast everything. Who knows anything about the future? We are having a conversation about the present and we can’t even forecast what’s going on now. Who knew about the internet, for instance? Today there’s an internet and there’s a cloud.

At my firm we would get into what I would call risk management mode, where we say, “Don’t tell me what you think is going to happen. Tell me what could happen. Let’s plan on contingencies, so when we see that contingency occurring we quickly get off the mark.” That’s where the flexibility comes from in our world.

My old firm was so big, there was nothing that could go wrong anywhere in the world that didn’t affect us. And so when something big would happen, we had a plan, we had embedded in our head what we wanted to do. And we got there very quickly. And if we weren’t wired that way, we wouldn’t be sitting here talking to you and my firm wouldn’t have survived. And that’s why we’re here, because we are resilient and we don’t have firm convictions about the way the world is going to go. We respond to the way the world is.

Editor’s note: This interview has been edited for clarity. The views and opinions expressed by guests are solely those of the guests and do not necessarily reflect the views, opinions, policies, or positions of The Free Press.