If you have ever wondered about Donald Trump’s economic policies, ROF's Sébastien Laye explains Trumponomics to you at Policy Sphere: What it entails, how it is misunderstood, and what is Donald Trump's Endgame.
Also by Sébastien Laye: Why Does Donald Trump Bother the Élites in France and Europe So Much?Donald Trump’s economic policies, often labeled “Trumponomics,” have sparked intense debate ever since his first term and remain a polarizing topic after his Liberation Day. Beyond the usual noise in the news cycle, analysts here should only refer to Arthur Laffer and Stephen Moore’s books: the seminal “Trumponomics” and the more recent “The Trump Economic Miracle”. At their core, these policies center on tariffs, tax cuts, deregulation, and a rhetoric of restoring American industrial might. Considering trade policies alone without coherent domestic measures would be nonsensical.
To many, Trumponomics appears erratic—Critics argue it lacks coherence, while supporters see it as a bold reimagining of America’s economic role. This text seeks to clarify what Trumponomics really entails, why it confounds so many, and what Trump might ultimately aim to achieve (in my humble opinion).
What Trumponomics Entails: A Simplified Breakdown
Most journalists (due to a poor training in basic economics) misrepresent Trumponomics. At the core, it can be distilled into three interlocking components: protectionism, fiscal stimulus, and strategic bargaining. Each reflects a departure from the neoliberal consensus that has dominated U.S. policy since the late 20th century, and achieve more than meets the eye. Tariffs, for instance, are not just new levies, but very often a negotiating tool to lower protectionism worldwide or spur neighbors to solve problems (fentanyl)
Protectionism via Tariffs
The most visible element is Trump’s use of tariffs—taxes on imported goods—to shield American industries and level the trade playing field. When the US, under the neoliberal consensus established in the 1990s, welcomed new countries in the WTO and lowered its own barriers, it gave access to its huge domestic market while most countries maintain their barriers. Hence, neoliberal globalization spurred global growth at the detriment of US manufacturing workers. That is NOT TO SAY that the US did not profit it, but that only global US-corporations and billionaires enjoyed the ride: not so much regular people, except fr cheap consumer products. Tariffs, in our view, aim to make domestic production competitive again. Historical examples like 19th-century America, postwar Japan, and South Korea—nations that built industrial bases behind tariff walls—lend credence to this approach. Critic argue that tariffs increase prices and will reduce domestic consumption. But Trump also pursued policies to force the appreciation of our trading partners currencies, which very soon will compress the price impact on imports.Fiscal Stimulus through Tax Cuts and Spending
Trumponomics pairs tariffs with tax cuts, notably the 2017 reductions extended into his current term, and selective deregulation. Their broader intent is to incentivize investment in U.S. manufacturing, countering decades of offshoring. The logic is straightforward: if tariffs could make imports costlier, tax breaks act as a counter-measure here and make staying home profitable.Strategic Bargaining on the Global Stage
Beyond economics, Trump uses tariffs as a geopolitical tool, a lever to renegotiate America’s place in the world. He sees the U.S. as overburdened by its role as provider of the global reserve currency—the dollar—which props up foreign economies while hollowing out American industry. It is time for a reset, what I would call an anti Nixon shock (more on that later). Tariffs are less about immediate trade balances and more about forcing concessions—currency adjustments, manufacturing relocation, or purchases of U.S. goods—from trading partners. This hub-and-spokes vision positions America as the central negotiator, dealing with nations individually rather than through multilateral frameworks. Trump wants one-on-one discussions.Why Most People (including economists) Do Not Understand Trumponomics
The apparent simplicity of Trumponomics belies its complexity, leading to widespread misunderstanding. Three factors—conceptual, practical, and perceptual—explain this disconnect.
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What I believe is Trump’s Endgame
What, then, is Trump aiming for? While his tactics appear disjointed, a plausible endgame emerges when we stitch together economic and geopolitical threads. Here’s what I think Trump, Hassett, Bessent, Lutnick and others have in mind (or what I would advise them to pursue).
Restoring Industrial Might
At its heart, Trump seeks to reverse America’s manufacturing decline. He believes the dollar’s hegemony, while a geopolitical asset, overvalues U.S. goods, pricing them out of global markets and flooding the country with imports. But still he is appreciative of the strategic power brought by the dollar exorbitant privilege. The trick here is to lower the value of the dollar (to spur the industrial renaissance) while maintaining, or only slightly weakening, the dollar status. We are running out of time to operate this delicate reset and we will not be able to do it in 5 or 10 years because otherwise, other powers might succeed in replacing the dollar with their currencies.Rewriting the Global Order
Trump’s tariffs are a means, not an end. Varoufakis in Europe suggested a two-phase “masterplan”: first, shock foreign central banks into depreciating their currencies (easing dollar pressure), then negotiate bilaterally to lock in advantages—currency swaps, manufacturing shifts to the U.S., or forced exports like weapons. …/… We need to convince the Europeans to swap their US bonds into ultra long term or perpetual bonds and lower our costs of borrowing. They should also buy our weapons and when required, maintain factories and data centers in the US (Germans, are you listening ?). In exchange, we will provide the security and safety shield we had been providing ever since WWII (without any advantage to us): it is easy to see the chess game at play here around Ukraine: despite grandiose goals, the Europeans will not be able to build their common Army. They will soon come back to Big Brother, and this time there will be a price tag but peace and serenity will be back over the European continent in 18 months. This will be a monumental deal for the US, and Putin will accept it as long as it does not extend to former USSR countries: does he really care that Italy or the Netherlands turn into US vassals. And the European Union in all this ? I forgot to tell you that its future is bleak: Von Der Leyen and Macron, in their insane pursuit of an authoritarian European superstate, will fail.Engineering a Controlled Reset
A bolder interpretation posits Trump deliberately courts a downturn—squeezing debt-fueled excesses—before sparking a rebound via tax cuts and deregulation . Think Thatcher or Reagan: short-term pain for long-term gain. If true, this gambit aims to reset America’s economy on firmer industrial ground, even if it risks (short term) alienating voters or investors. The payoff would be a leaner, stronger U.S., less beholden to foreign creditors or Wall Street’s whims.Trumponomics channels a historical playbook—protectionism as nation-building—while addressing real grievances: the hollowing out of America’s working class amid globalization’s unequal gains. Its tariff-centric, bargain-driven approach defies neoliberal norms, which is precisely why it baffles so many. Trump’s endgame likely blends industrial renewal with a reassertion of U.S. power, aiming to reshape both domestic and global economies.
