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President Donald Trump has not been unemployed since his arrival at the White House 100 days ago, on Wednesday April 30. In just over three months, he has considerably shaken the world economic order and international trade, notably by announcing the establishment of prohibitive customs duties on products from China.
Beyond the speeches “Make America Great Again”, of his will, he says, to bring in industry in the United States, to produce American by increasing in particular customs prices, is it the strategy of the burnt, unpredictable chaos? Or, on the contrary, there is a real guideline, a real serious and coherent economic policy? Charles-Henri Colombier, economist, director of the Condition and Perspective Pole of the Institute Rexecode, a specialist in the United States, analyzes Donald Trump’s economic policy.
Franceinfo: What do you think of his economic policy as Donald Trump?
Charles-Henri Colombier: After the re -election of Donald Trump, there were two possible scenarios. Either we were dealing with a large share of bluff, with electoral aims, with negotiations with the trade partners of the United States. Either we were really dealing with a strategy for transforming the great balances of the American and global economy. And after 100 days, I think we are able to answer that it is rather the second scenario that is essential. So what is this strategy? It is based on a number of diagnostic points. Mainly three. First, the trade deficit and the American public deficit, I remind you, it was more than 7% of GDP in 2024, are major problems that must be absolutely absorbed. Second, it is absolutely necessary to reindustrialize, because reindustrialisation will benefit the middle class and because the United States is too dependent on China, with a risk of confrontation which only increases. And then, last point, happy globalization, as it has been taking place since the end of the Second World War, would no longer be for the benefit of the United States and it would therefore be necessary to change the rules of the game, the rules of the commercial game, the rules of the monetary game.
So there is a guideline, unlike everything you might think when you see the feedback on the establishment of customs duties, especially?
Absolutely, behind the decisions, the behaviors, the somewhat erratic speeches of Donald Trump, there is around him a structured team which accompanies him and which has developed a doctrine, an economic doctrine, a societal doctrine. There is a real project to transform the American economy with two main levers which are the customs tariffs. The customs tariffs, I recall the most beautiful word of the dictionary according to Donald Trump himself, which would both bail out the funds of the American state, but also to reindustrialize. And then the idea that it is necessary to provoke a depreciation of the dollar which would be too expensive and which would penalize American exports.
Except that GDP fell in the first quarter in the United States, the figures fell today. Hiring has slowed down and investors are waiting with concern about Amazon and Meta’s results.
The catch is that this Trump strategy, it certainly produces short -term damage. And besides, it is assumed since Trump himself spoke of a few damages or some disturbances which would initially intervene, before a new golden potential of the American economy.
So there is no need to worry?
If, because this strategy of Trump, it has some problems, some internal contradictions. First, he promised that he was going to lower inflation. However, customs prices and the reduction of immigration, these are measures that will inevitably be inflationary.
So there will be collateral damage. There will be an increase in prices for products and Americans will be the first victims, with an increase in their mobile phones, their cars, etc.
And American households are worried. The confidence indices of these are in very sharp decline. The second problem is that the economic experience shows that putting on customs prices, it does not allow the trade balance to restore. It is a tool that also produces economic damage, at least on the world economy, if not on the American economy. And it is not enough to achieve the desired goal. And then generating a distrust of the United States and the dollar, which is still what is happening in an extremely strong way.
“We have seen for example the fall in tourist arrivals in the United States, which is quite spectacular, generates a distrust of the dollar at the very moment when the United States still has a great need for foreign capital to finance their public debt. It is at least risky.”
Charles-Henri Colombieron franceinfo
Do you think that investors can have a long-term distrust of the refuge currency that the US dollar and debt have been represented, or ultimately the solidity of the American debt and the American economy are enough?
There are recall forces, as we have seen. What made Donald Trump backtake? It was the tensions on the interest rates of the American public debt that had increased sharply. It resisted the pressure on the decline in equity indices. But on the other hand, we are not too kidding with the obligations of the American Treasury. And from this point of view, there will be recall forces. Nevertheless, the transformation project is there, it is there to last and I do not think there will be a rear machine quickly.
Except that he cannot do everything on his own. You have seen the standoff that there is between Donald Trump and between the director of the American central bank, the Fed, Jérôme Powell. Who is right?
Absolutely. I think that questioning the independence of the American central bank, which was one of the foundations of the major international financial balances, is a perilous strategy and that Wall Street hardly appreciates. Now, this is where the tactics and strategy must be distinguished.
“The strategy, it is there, it is clear, it will not change. However, Trump is a tactician and therefore back and forth, permanent uncertainty. I think that is what awaits us for the coming months.”
Charles-Henri Colombieron franceinfo
Faced with this, what should be the action of states in Europe, investors and obviously entrepreneurs? We have seen that Emmanuel Macron asked French entrepreneurs to have a kind of patriotism by stopping their investments. What do you think?
Yes. Afterwards, everyone, of course, has a discourse that can be understood from their point of view. What is certain is that the preferential option for Europeans is to bring down tensions. And so we have seen that it is the card that is played by the European Commission, trying to give wages or incentives to the American administration to reach an agreement. There are things that can be done and that are not extremely expensive. Example, get involved in purchases of American liquefied natural gas over time, which will have a positive impact on the American trade balance. It is a guarantee that is not extremely expensive and which can allow Donald Trump to claim a victory.
And therefore to have a graduated response …
Now, facing Trump, I think you must also be respected. And it is not at all improbable that quickly, we arrive at a stage. It will be necessary to climb in the aftershocks and there it will be necessary to be intelligent, not to do what Trump does, that is to say to mount the customs prices unequivocal on all the products, but to be quite targeted, for example on the products on which there are substitutions by European products which are possible, to target the exports of American services. We talk a lot about trade balance. Trump forgets a little to see that the United States is in excess of service to Europe.
So you have to tax American services more, Google, Amazon?
We are talking about tech and financial services. Obviously, it should probably be considered at a certain stage in the process.
