Yves here. Satyajit Das takes on the serious task of trying to explain the unexplainable: what Trump is up to, or perhaps more accurately, what Trump thinks he is up to.
By Satyajit Das, a former banker and author of numerous technical works on derivatives and several general titles: Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives (2006 and 2010), Extreme Money: The Masters of the Universe and the Cult of Risk (2011) and A Banquet of Consequence – Reloaded (2016 and 2021). His latest book is on ecotourism –Wild Quests: Journeys into Ecotourism and the Future for Animals (2024). This is an amended version of a piece first published on 12 July 2025 in the New Indian Express print edition
Like Kremlinologists who during the cold war studied Soviet leader’s public statements, media reports, companions and body language, a similar industry is developing around the US Administration seeking to infer what will happen next! In fact, President Trump’s agenda does not require complex economic or political theorising as they revolve around three simple objectives.
The first, power. The President want to increase his own authority and control. Part of that is to force others to prostrate themselves and beg. The reciprocal tariffs are designed, in the President’s own terms to force countries to make “phenomenal offers” to buy favourable treatment. NATO Head Mark Rutte’s craven flattery including referring to Trump as “daddy” set the standard for the behaviour expected.
The second, wealth. The President associates intelligence with wealth – if you’re so smart how come you’re not rich! Many current policies are designed to enrich the President and his funders. Examples include the first family’s own media and crypto assets, Blackstone’s pending acquisition of two Panamanian ports and administration aligned firms interest in TikTok’s US interests. The parallel is 1990s Russia where a small group of oligarchs become wealthy by looting state assets as the Soviet empire disintegrated.
The third, Thomas Carlyle’s great man of history theory. President Trump sees himself as a “big man” in African leadership terms, possessing superior intellect and heroic courage, whose manifest destiny is to change America and the world. This is allied to nostalgia and a worldview firmly rooted in the 1980s.
The controversial tariffs are only one element of the strategy. Another is to reorder the international monetary system. Central to this will be restructuring US public debt. The Miran proposal would entail a forced exchange of US treasuries for long dated (100-year or perpetual), low or zero interest securities. Alternatively foreign holders of US government bonds can place them in escrow or pay a fee. Control over capital movements into and out of the US are possible.
Another element is extracting tributes and territories. The proposed minerals and energy agreement with Ukraine is a barely disguised attempt to extract payment for services provided. A similar deal with the Congo has also been negotiated. US allies must choose between increasing defence spending, benefitting US armament manufacturers who dominate supply, or paying for American protection. A demand for a stake in semi-conductor maker TSMC in return for support for Taiwan is not fanciful.
Territorial claims (over Canada, Greenland, the Panama Canal and the Gaza Riviera) alongside threats or actual military actions, such as those in Iran, in the name of national and international security seek to expand US dominion. After all, Alexander became great by conquering much of the then known world.
The strategy may not be workable as it neglects the likely response of affected parties and geo-political rivals.
Greek letters, equations and incorrect citations of academic articles cannot disguise the tariff plan’s economic shortcomings. A trade war is likely as many trading partners will not negotiate with an increasingly erratic and untrustworthy America. As the US has significant surpluses on the trade of services such as technology, other countries may place damaging tariffs or outright bans on US services exports.
In the short run, as many items imported into the US cannot be substituted the effect will be either higher prices or shortages, including of certain foods, medicines and other essential items. The belief that overseas firms will simply absorb the tariffs is wishful thinking. In 2016, prices of goods imported into the US did not rise because of the stronger dollar but the Administration has stated it now wants a weaker currency. President Trump has threatened to punish auto manufacturers if they pass on the increased cost of inputs merely transferring the cost from consumers to businesses.
In the longer run, it may be possible to replace some imports with local production but it would be at a much higher price and with reduced choice. There is little prospect of restoring jobs in low-value added industries. Re-shoring high-end manufacturing will be difficult in practice due to the lack of requisite skills. It will also not create the expected jobs as these industries are typically highly automated. Tariff revenues will end up being redirected as subsidies to many affected industries.
The real benefits of the tariffs may be to US trading partners. Reduced sales into the US will means producers are forced to cut prices as they divert stock to other markets. A long term benefit will be reduced dependence on Americans who like to buy things!
Plans to interfere with free capital flows risks the dominant role of the dollar, which is immeasurably more important than manufacturing in America’s dominant economic position.
Restructuring US debt as suggested would constitute a technical default. It would ‘Make-America-Greece-Again’. Such a proposal and concern about the negative trends in US governance and institutions will accelerate capital flight making it more difficult to finance America’s budget and trade deficit. It risks permanent damage to US capital markets. Which because of low domestic savings, predominantly recycles foreign funds. Up to 70 percent of all funds that flow through the US market are from overseas investors channelled through American banks and asset managers. A significant portion is likely to be re-routed over time.
Attempts to extract tribute and expand territories will lead to conflict and further isolate the US. If 911 is repeated, which is not beyond the realms of possibility, America will find itself alone with few allies.
The administration’s path, which ignores economics and history, is indeterminate. The planning and execution have been haphazard. But as Winston Churchill, to whom Trump has compared himself, observed: “The statesman who yields to war fever must realise that once the signal is given, he is no longer the master of policy but the slave of unforeseen.”
