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PARIS – If there’s one word associated with Donald Trump’s name since his first term, it’s “disruption.” This old word has taken on new meaning with the rise of tech startups, businesses from the new economy that have shattered the rules of the old economy. A prime example is Uber, which transformed the taxi industry, first through confrontation, then through negotiation.
It’s the word that immediately comes to mind in the face of the tariff war launched by the U.S. president on Wednesday. A war against the entire world — friend or foe, rich or poor — except, notably, for Vladimir Putin’s Russia, which has mysteriously been spared.
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The essence of disruption is to kick over the anthill in order to achieve something, to transform the old world into something new. That’s what Donald Trump is attempting, in his over-the-top provocative way. Yet it comes with the obvious risk, of course, that it may backfire and have the opposite effect; instead of making America “great again,” it could weaken it like never before — and to the benefit of its rivals.
Just a negotiation ploy?
The online French journal Le Grand Continent published a piece in February that takes on significant importance after the recent events. It was written by Stephen Miran, who currently serves as the head of the White House Council of Economic Advisors.
In this piece, he praises tariffs and reminds readers that “President Trump sees tariffs as a negotiating tool to strike deals. It is easier to imagine, he adds, that after a series of punitive tariffs, trading partners like Europe and China will become more receptive to a monetary agreement in exchange for a reduction in tariffs.”
Stephen Miran envisions something akin to the 1985 “Plaza Accords” between the United States, France, Germany, the United Kingdom and Japan, which helped lower the overvalued dollar. He suggests signing the future agreements reached under pressure at… Mar-a-Lago, Donald Trump’s residence in Florida!
(And right on cue, late Thursday Trump said that he would be open to negotiating with other countries for “phenomenal” terms.)
Great again, or worse than ever?
Yet this approach has been criticized by many economists, even before it was implemented. In Le Monde, two renowned American economists had stated as early as January that a policy of tariff hikes would likely slide into a major new global trade war. “Its consequences, unfortunately, are not hard to predict: less trade and, above all, less international cooperation on the major issues of our time, such as war, poverty and climate change.”
Disruption doesn’t always work
That’s what is likely to happen. Especially since, compared to the era Donald Trump refers to the late 19th century under President William McKinley, his idol — the world has been radically transformed.
The risk today is pushing China, along with other major emerging countries, to break away and develop an alternative system disconnected from the United States. This is already happening in technology. The world won’t be better off, and America won’t be “great again.” Disruption doesn’t always work — it’s always a gamble, with potentially existential consequences for the disruptor.
