If you’re like me, you’ve probably sat at your computer for hours on end, reading tons of articles, watching countless interviews, and you still have one question…Does Trump have any strategy at all?
Here’s the most recent example as to why my answer is no. The Treasury Secretary hinted at a plan to unite US allies first, then confront China – that makes a lot of sense. Trump, however, has taken the approach of threatening and pissing off all the US allies – that doesn’t make a lot of sense.
Relations with China are in shambles, there is no leadership in the government, multi-country negotiations are laughable, and there are no clear goals or an end in sight. If you still think that Trump is playing 4D chess, I hope for everyone’s sake that you’re right.
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Peter Zeihan here coming to your Denver airport. And, in the aftermath of all the back and forth on tariffs, specifically with China, it’s worth asking the question, is there a strategy here? We’re all looking for our own world, desperate to find one. And by we, I mean Americans in general in the wider world.
Everything at the white House seems completely chaotic, and it may well be, but we did have the Treasury secretary. Mr. Bassett mentioned that, the specific goal was to box in China. In his words, we’ll probably strike a deal first with our allies that they’ve been good military allies and plus good economic allies. And once we have that deal in place, then we were all together.
Go and confront the Chinese. And for someone like me who plays in the world of big geopolitics, that’s really sexy and really attractive and is probably potentially a very effective way to do it. But there are a few problems. I mean, the first and most obviously, that is not how it’s happened so far. The Trump administration.
Well, actually, let’s be honest here, Donald Trump has threatened all of the allies, some with military invasion, and that’s usually not the sort of activity you want to do if you are going to then try to build a coalition. There’s also the leadership issue and the coordination issue. The Trump administration, again, Donald Trump personally gutted the upper tiers of every department, including defense and state as well as commerce.
So there simply aren’t a deep cadre of staff that can carry out multiple negotiations at the same time. It’s really just Donald Trump himself. And even if you believe that he’s the best negotiator in human history, still just one guy and he’s got other things going on. So the idea that he can build a coalition of several dozen countries and then lead them in negotiations against the power, that definitely flies in the face of what your lying eyes are seeing on a regular basis.
Third, the value of the tariffs. We’re now up to 125%, I believe, is the current number for the tariff level with China. That’s enough to freeze commerce between the two countries, with the notable exception of a few things that we can’t get from anywhere else, which will just kind of suck up the cost. Trade is basically going to collapse already, and that’s before you consider that on April 17th, Chinese shipping companies and Chinese ships are going to face an additional fee on top of everything else when they hit an American port.
There’s not a lot of room here for negotiation and putting the Chinese in a box. While I do enjoy seeing it, is not really conducive to having a meaningful negotiation relationship. And then, of course, there’s the little Intel thing. As I’ve started doing pieces on the tariff issue, I had people from the administration contacted me from time to time.
And the most enlightening 1 or 2 of them, number one, was a guy who’s deep in MAGA world who said that the morning of the tariff announcements on April 2nd, that they still haven’t started putting together. And if you remember, the tariffs that were adopted on, April 2nd, the reciprocal tariffs were nothing of the kind, rather than looking at what everybody’s tariff levels were and what non-tariff barriers such as currency manipulation might have been, all they did, all Trump did was take the trade deficit and divide it by what we export. And that was the number, no basis in fact, no basis in reality had nothing to do with trade policy whatsoever.
It was just a fabricated number. So nobody knows what it is that the Trump administration is actually after. So there is no way to position yourself for meaningful talks because you don’t know what success looks like. Canada has definitely been on the receiving end of this in the worst possible way. Trump originally said it was about fentanyl, but the U.S. sends a couple of orders of magnitude more illegal narcotics north than comes south.
And he said it was about illegal migrants. The U.S. sends more illegal migrants north and south as well, again by an order of ten. He said it was about dairy, but we don’t send them in enough dairy to even qualify for their terrace level. So now it’s about Canada becoming the 51st state, and that really doesn’t leave a lot of basis for negotiations, negotiations.
It’s not just about providing people with a method of meeting you part way, but you have to let them know what it is you actually want so they can actually think about giving it to you. And we haven’t established that relationship with anyone yet. So the more likely outcome is we just get a direct clash between Chairman XI of China and Donald Trump of the United States, and that goes on a lot of very interesting and particularly dangerous directions.
Now, again, this is all great for me. Chaos and dysfunction are my jam. But in the meantime, the world’s largest economy and really everybody else’s economy are hanging by a thread in the meantime. And we’re looking at a recessionary stagflation area environment until this is resolved one way or another, assuming it is resolved at all.
