Donald Trump’s first official address as 47th president of the United States was preceded by a post-election analysis full of heated discussions. There was clear symbolism of the break with the previous administration, not least in the high visibility afforded to leading figures (and not just Elon Musk) of America’s digital economy during the inauguration ceremony. Some commentators see this as the manifestation of a “new capitalism”.
They also noted that Trump’s entire political trajectory reflects both criticism and a rejection of the globalist approach that has inspired recent Democratic administrations. The new president sent out very clear messages on immigration, tariffs, domestic cultural issues, and the green agenda. All of these announcements were in line with the expectations raised during the election campaign and, in their tone and substance, were in marked contrast to the previous administration, and even to decades of partly bipartisan consensus. Describing the fundamental decisions of his predecessor (and of other previous administrations) as a “betrayal” of American values and interests, Trump set out his presidency in clear terms. He referred to numerous questions as national emergencies – notably immigration, energy, inflation, and trade – and indicated that he would make ample use of special measures and executive prerogatives.
On the economic front, the inaugural address suggests an approach focused on fighting inflation and on deregulatory stimuli for certain sectors – manufacturing and energy in particular. It remains to be seen whether the measures – thus far only hinted at – will shape up to a true, consistent industrial policy. This would no doubt also involve a series of excise duties, the extent of which has yet to be established.
In any case, the administration’s economic policy will need to consider current consumption, growth, employment, and financial performance trends – all essentially satisfactory – as well as projections for roughly the next two years. In light of the various imbalances and weaknesses, these projections present some cause for concern. On tariffs, policy-makers will need to find the right balance to avoid importing inflation. As Trump sees it, this should be achieved primarily through increased energy production from fossil fuels.
Turning to foreign policy, Trump’s speech was packed with warnings – for enemies but also, and above all, for the country’s closest long-standing partners and allies – about an America whose goal will be for its interests to prevail and its weight to be felt, in no uncertain terms, in all situations involving negotiations or conflict. His approach is to act, at all times and in all ways, from positions of strength, without too much concern for any indirect and systemic effects on the global order. This is almost a sum-zero vision – decidedly unilateralist and not isolationist – in which there was indeed no mention of alliances and international agreements. The message regarding the Panama Canal, which reiterated that control must return to US hands, could be viewed as symptomatic of a highly assertive approach to international action that even alludes (deliberately, given the references to Presidents William McKinley and Theodore Roosevelt) to an imperial past.
America’s European allies – who were hardly mentioned in the inaugural speech – are faced with a now familiar challenge. They must adopt more effective policies to negotiate with Washington during this period, and probably renegotiate various elements of the transatlantic relationship. Against this background, the business world, as well as governments, will need to adopt proactive, and not merely defensive and reactive, measures. A strong public-private partnership will be needed, especially to mobilize the resources that in essence have already been identified by the Draghi and Letta Reports.
The European Union has had a partial strategic awakening in recent years, especially regarding economic competitiveness, the defense industry, and finance. But it has not taken concrete decisions that are sufficient in scope to change transatlantic relations and provide the Union, and European members of NATO, with the right tools to pursue a foreign and security policy that might be deemed autonomous. And there is a broader change that Europe will probably have to metabolize in full. The assumption of a natural commonality of values and goals with the United States will need to be abandoned once and for all, to make way for a more balanced, but also more pragmatic, relationship.
In any case, transatlantic relations will be set in a broader framework of global equilibria and thus of the overriding centrality, for Washington, of the Indo-Pacific quadrant, in which China is naturally the leading actor. It remains to be seen what approach Trump will adopt to Beijing at the purely economic as well as regional and global security levels. On this point, the inaugural address did not provide any precise clues. This suggests that the new administration will want to leave itself some room for diplomatic maneuver to reach a pragmatic assessment of China’s intentions.