Finding a method in Trump's madness

The four potential explanations of his approach

2025 has been a chaotic year. This was the inevitable consequence of American voters choosing to elect Donald Trump for a second time. It is tempting to approach the events of the year like a Rorschach test, in which the very exercise of finding patterns in the chaos might be revealing.

Broadly speaking, there are four ways of interpreting Trump’s actions. The first (the one adopted by his supporters) is that Mr Trump’s unpredictability is part of a master plan. It keeps his negotiating partners on the wrong foot and allows him to extract concessions, such as getting European countries to spend more on defence. A variant on this idea is the Steve Bannon notion of “flooding the zone with shit”; by constantly making announcements Mr Trump distracts attention from scandals that would otherwise fill the media.

The second interpretation is that the unpredictability stems from the influence of Mr Trump’s advisers. The suspension of the Liberation Day tariffs was triggered by Scott Bessent, the Treasury secretary, who overcame the influence of arch-protectionist Peter Navarro. The back and forth in the Ukraine peace talks results from the competing influences of Russophile Steve Witkoff and the more hawkish Marco Rubio.

A third possibility (and this is partly my view) is that Mr Trump’s actions are determined by his long-held prejudices. For example, he developed a dislike of free trade 40 years ago and has “learned nothing and forgotten nothing” over the intervening period. He takes the mercantilist approach that “exports are good and imports are bad” and misunderstands the global trading system. Around 45% of what the US imports is raw materials and components for things US companies make; imposing tariffs means pushing up the costs of domestic producers. It is not surprising that manufacturing employment in the US has declined this year. He only retreats from these policies when forced to, and returns to them whenever he can.

But I also think that there is a fourth factor: Mr Trump’s psychology. He is a natural bully who only respects other bullies (hence his deference to Putin). He demands complete loyalty (and cringe-making praise) from all those associated with him, and takes petty revenge on those who cross him. Like a toddler he likes to get his way. In “The Economic Consequences of Mr Trump”, I argued that the smashing of the international order was done for its own sake; Trump dislikes any constraints on his own actions, and international agreements inevitably lead to constraints.

Last week, I appeared on the “Disorder” podcast with Jason Pack to discuss the book (a link can be found here). Jason advocates a version of the first interpretation. He takes the view that Trump and other populists deliberately create disorder so that the public will crave strongman rule; a bit like finding a brick thrown through your window with a note advertising the services of a glazing company.

I am not sure about this argument. I can certainly see that when populists are out of power, creating chaos is an attractive strategy. In power, the chaos doesn’t seem to have helped Trump; opinion polls show he is even more unpopular with independents than he was in his first term (and unpopular overall).

One issue we discussed (and where we broadly agreed) is that Trump likes tariffs because they are a lever he can easily pull and require other countries to approach him as supplicants. As the Economist pointed out last week, this is also very lucrative for Mr Trump, bringing him a jet, a gold bar and cryptocurrency deals amid other things. In its own way, this is a variant of the toddler theory; give him something bright and shiny and he will be happy.

I would certainly agree that disorder is a feature of Trump’s rule and stems from a number of factors; a combination of ignorance, prejudices and psychology. And I would also argue that, whatever the short-term economic numbers (which remain mixed), his influence is distinctly corrosive over the long term. How often have we heard that businesses and investors loathe uncertainty? And now they face it every day. As a result, they may spend too much time lobbying Trump for favours (higher tariffs on competitors, lower tariffs on their suppliers) and less time running their own businesses.

All this is hidden for the moment by the boom in AI investment (which has enormous energy needs which Trump, who keeps cancelling renewable projects, is not helping to solve). In a way, just as some economists “sane wash” Trump’s economic proposals, the economic data are being “AI-washed”. Underneath the surface, however, the rot is setting in.