Be Cool!

It’s ok to laugh at Donald Trump. When he took the stage on “Liberation Day” with his big chart listing countries subject to tariffs, the world press roared with laughter as if they were watching Stanley Kubrick’s “Dr. Strangelove.” However, no one was laughing in Brussels; everyone looked sheepish.

While the U.S. has just suspended its 20% tariffs for 90 days, reducing them to 10%, Europe is still wondering which strategy to adopt. Will it need to counterattack “with an iron fist” to “make Trump pay the maximum political price,” as the Hamburg Weekly Die Zeit suggested? Or should it “stay calm” as Trump recommended and negotiate as recently suggested by European Commission President Ursula von der Leyen and new German Chancellor Friedrich Merz, who say these trade disputes could be resolved by buying more weapons and gas from Uncle Sam, as Donald Trump demands. Europe is stalling while it waits for the final word on the American president’s objectives.

While Trump’s arguments sometimes insult one’s intelligence, several European observers nevertheless believe they can discern a proper strategy behind the president’s gestures. “If it appears disorderly, incoherent, contradictory, his mad ideas are neither devoid of reality nor a certain coherence,” writes Olivier Klein, professor at the School of Advanced Commercial Studies, in newspaper Les Echos.

First of all, those who claim the world economy has never experienced anything like this before are wrong. In 1971, Richard Nixon stunned the world by abolishing the gold standard for currency, a cornerstone of the international monetary order since World War II. At the same time, the aim was to rebalance trade flow and guarantee American supremacy by allowing it to borrow without increasing gold stocks to pay for the Vietnam War and the welfare state, most notably. The news scandalized U.S. allies because instead of targeting China as Trump is doing today, Nixon primarily targeted Germany and Japan, which became America’s competitors and on which the U.S. imposed 10% tariffs. This measure allowed for revitalizing growth, but also led to an increasing debt.

On the other hand, what people are referring to as the “Mar-a-Lago Accord” seeks to break with the unbridled globalization of the 1990s, which was accelerated by China’s accession to the World Trade Organization in 2001. Trump, who has allowed China to establish itself as the second largest power in the world, believes this is an increasingly unfavorable world order for the U.S.

Those who see only chaos and incoherence in the U.S. president should follow the advice of French Minister of the Economy, Finance and Industry Éric Lombard, who views Trump as a “real ideology at work.” Lombard invites anyone who is ready to put Trump in a straitjacket to read the essay Trump’s chief economic adviser Stephen Miran wrote after Trump won reelection, “A User’s Guide to Restructuring the Global Trading System.” As the title suggests, the Harvard-educated strategist’s goal is nothing less than to reshape the global economic order.

The trade war, along with the threat to withdraw the U.S. security umbrella from Europeans, he writes, would only be leverage to extract concessions from allied countries. A “massive bargaining weapon,” writes French philosopher Julie Girard. The main aim of this negotiation is to ease the burden of U.S. debt ($25 trillion) and boost industrial growth. According to Miran, this is because the extraordinary privilege enjoyed by the dollar as the first currency of international exchange would also have its counterpart: an inevitable overvaluation that explodes the debt and deindustrializes the country.

Like Nixon before him, Trump wants to lower the dollar to relaunch a high value-added industry and protect the status of the number one economic and military power in the world. In a period when empires are making a comeback, “If you do not have steel, you do not have a country,” as Trump once tweeted. According to a survey by the Capgemini group, this reindustrialization has already been partially anticipated by two out of three industrialists, who plan on repatriating part of their investments. We can understand why Trump has become a hero to Rust Belt workers.

Many economists, including France’s Patrick Artus, believe that tariffs and reduced levels of immigration will only add fuel to the fire when it comes to inflation. The path Trump has chosen “is simultaneously very risky, confusing and contradictory,” according to François Meunier of the Paris Polytechnic Institute. The U.S. president is also not short on enemies among his other advisers, yet he says that, if the path is narrow, there is no way to avoid these negative consequences, as was the case during his first term.

European leaders may feign surprise, but this policy was largely predictable. Trump never deviated from this school of thought. With astronomical inflation rates, not to mention the oil crisis, Nixon also came close to economic collapse in his time. However, it is believed that in the long run, it opened the door to growth and helped finance the technological revolution that followed.

At a time when Europe and the rest of the world are looking for the response to Trump, it is first and foremost important to understand the opponent’s intentions. While his character may be disconcerting, we cannot dismiss him as moron.