Peter Zeihan, Author at Zeihan on Geopolitics

From the Frontlines in Ukraine to Truth Social

Ukraine solider on a armored vehicle with a split screen of Donald Trump

There’s a lot going on in Ukraine right now, so let’s do a quick update on the military and diplomatic developments.

On the military front, Ukraine’s ability to jam Russian glide bombs is improving, which has been a critical tactic for Russian success in the war so far. Ukrainian forces are targeting Russian supply routes in an attempt to bottleneck logistics. So far, these efforts seem to have stalled the Russians and opened a window for Ukrainian counterattacks.

Things on the diplomatic front are somehow fuzzier than on the frontlines. Trump’s Truth Social post (shown in the video) aligns with Russian disinformation and goes to show how Russian propaganda has been adapted to appeal to Trump personally. Trump’s inconsistent views/takes/posts make it impossible to predict his future stance on Ukraine.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey everybody Peter Zeihan here. Coming from Colorado, a lot of you been asking with good reason, for updating what’s going on in Ukraine. And, let’s split into what I know, and then just what else? What I know is what’s going on in the front, which is weird, because usually that’s the hard part. The Ukrainians ability to jam the glides systems for something called glide bomb has really gotten good.

Now, if you go back about a year, year and a half ago, one of the things I was really worried about is that the, Russians were dropping these mass sieve, in some cases over 1000 kilogram bombs, with glide kits on them. Glide kits, like what the United States has been using with our JDM system since the first Gulf War back in the early 1990s, which was giving them a range of 20, 30 miles beyond the point that they drop the weapon in the MiG, the drops, it just veers off and, you know, it’s safe.

And then you get a blast radius that sometimes it’s like a third of a mile, just absolutely demolishes any sort of fixed, fortification and stuns the hell out of the defenders. And then the Russians would come in with one of their meat assaults. And in doing this, they were able to take over the fortress city of, the Deepika, last year and were closing on per cross this year. And if they’d seized Picross and they’re just a few miles away, that would have basically broken the Ukrainian line in the Donbas. It’s the middle of a series of fortifications, and it’s a logistics hub. So if with Picross, they can go north and south up the line with up across, they have to go back a few dozen miles to get to another line, to transport things up and back and forth.

For the Ukrainians. They will try to keep this war as a war of movement because they have fewer troops and better troops, whereas the Russians are more, a stagnant fighter. And so they can engage in more points, just not as well. So if the ability of the Ukrainians to move had been inhibited, it would have been a real problem.

The jamming seems to have made the tactic that the Russians were using for the last year less and less effective. But that’s kind of piece one. Piece two is the Ukrainians have, using not necessarily new technology, just applying a little bit differently determined another, strategy for mucking up with the Russians logistics, not just going after things like fuel supplies or ammo dumps and things like that, but they look for an important intersection that the Russians have, and they take out a couple vehicles there.

And then a couple of days later, they take out a few more, and a couple days later, a few more. And eventually you get this, carcass field of vehicles that the Russians are forced to send out things like tow trucks, and then you hit the tow trucks. And so you just get this ever mounting line of vehicle debris that forces the Russians to detour ever further around.

Once they go through the fields, they might. You have to deal with the mud season that is Ukraine is so famous for in the fall and in the spring, and in the other seasons eventually gets so choked they have to use the transport options all together. These two things together have basically stalled the attack on cross and even the Russian counterattacks on Kursk and the case of a cross have even allowed the Ukrainians counter-attack a little bit.

Not saying that the danger is past, but it’s a it’s a different kind of fight now. So that’s that’s the military look at the moment, diplomatically, everything’s all over the place. Let me show you this little thing from Truth Social. That’s Donald Trump’s personal version of social media. This is what he posted last week about Zelensky.

When Zelensky said that Trump was living in a Russian disinformation bubble, which you. Yes. And it’s proven by this, document here. Everything it’s highlighted in red is something that is an oldie but goodie from Russian propaganda going back the last three years. These are the points of Russian propaganda have been hit, man. Month after month after month, after month.

The yellow ones. Those are things that were new, when Trump was reelected or elected the second time. Probably a better way to phrase that, the Russians changed the tenor of a lot of their propaganda to appeal to Trump personally. Basically, they took Trump’s lies and they made some of those integrate with their own. And these yellow parts of some of the newer propaganda.

But what really had the Russians salivating when this Truth social post comes out, or the bits I’ve circled? Because these are Trump’s words, these are not things that were plucked wholesale from Russian disinformation. Instead, they’re places where the Trump has the Trump. They’re places where Trump has taken, Russian disinformation and put it in his own words.

Whenever Trump uses quotes or all caps, that’s him channeling himself. You buy guns anyway. And so the Russians see this, and they’re just giddy because getting getting a foreign leader, any sort of foreign policymaker to use Russian disinformation is always a win. But when the foreign policy maker is using the updated stuff and put it in their own words, that that’s kind of a gold standard for espionage, basically getting the other side to do things your way for you, but them thinking it’s all their idea.

So when this came out, I was kind of like, what the hell is going on? It’s like, I know that Donald Trump has gutted the upper echelons of the Defense Department and the CIA and the FBI, and he’s appointed someone who’s a Russian agent to basically be his premier intelligence filter. But the idea that he would just be so out of it as to just wholesale garble down and then regurgitate back Russian propaganda, had me really worried.

And then on, a week later on Thursday, Donald Trump, when he was, when somebody asked him about what he said was specifically, Zelenskyy being a dictator, he says, did I do that? I don’t think I said that. He just kind of moves on. So the number one thing to remember about Trump is a track record means nothing.

Consistency means nothing. Whatever comes out of his or goes through his head comes out his mouth. There is no consistency. He changes his mind all the time. I don’t mean to say that this is a good thing, but it means that no matter what you think about what Trump is or what he says, it’ll change tomorrow. The Ukraine war to this point has been one of the most dynamic conflicts in history.

I never expected the Ukrainians to do so well. I never expected the Russians to do so bad. I never expected the Europeans, to get involved. I never expected the American hands to get involved. This war has been one surprise after another. And that’s before you consider that the technology of the conflict is evolving so quickly as we move from the industrial age into the digital age and the rise of drones, and probably in the not too distant future, AI systems courtesy of Donald Trump.

The diplomatic side of the Ukraine war is now just as dynamic. And so everybody, no matter whose side you’re on, buckle up.

It’s about to get a lot rockier and a lot weirder.

Economic Troubles for New Zealand

Photo of the skyline of Auckland, New Zealand

New Zealand has been having some issues, with a 1% economic contraction and roughly 80,000 people leaving the country. What does this mean for one of my favorite countries?

New Zealand is a service-driven economy, but its two key industries – tourism and agriculture – are facing some challenges. The weak Kiwi dollar is great for tourists, but its straining local affordability. The dairy sector may be the most efficient in the world, but a collapsing China will cause major issues for exports.

While there are some hills to climb, it’s not all bad news bears. The Kiwis have stronger demographics than other developed countries and New Zealand could be a haven for skilled workers looking to escape collapsing or struggling countries.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey everyone. Peter Zeihan here coming to you from the Queen Charlotte Walkway. That’s the king of Peru sound behind me. And today we’re going to do something that all my Kiwi followers have been screaming for for the last few weeks, which is, you know, do one on New Zealand already. So here we go. New Zealand’s in a bit of a recession right now.

Contracted about 1% in the last quarter that we’ve got data for, which doesn’t sound like much, but that’s like half as bad as what happened during, say, the subprime crisis in the first year. So, you know, it’s if this was in America, we would all be freaking out. And, so let’s look at the economics, let’s look at the demographics, and then let’s talk about the context.

So first, the economics, the, the, Kiwi economy, much like everybody else in the first world, is largely services driven. But the two more dynamic sectors in here are agriculture and tourism. Tourism participant has been driving up prices because we’re in a situation right now where the Kiwi dollar is the lowest it’s been in quite some time, which is it for me, but it means lots of people come in and consume lots of things that the locals otherwise would, housing an especially short term in rental housing.

Sorry. Not sorry. Driving up the prices for everybody else. When you have a situation like that, people get a little antsy. And, because the currency is weak, they’re getting more business, but earning less for it. It’s a little stressful, and people tend to leave. And so 80,000 Kiwis left last year, which, again, doesn’t sound like a lot, but this is a country of only 5 million people.

So you’re talking about losing basically a quarter of the percent of your population in one year? The only California’s worse than that, of course.

Anyway, that’s a lot to lose in one year for a country, primarily young and skilled people. Their destinations tend to be Australia, the United States, the United Kingdom, in that order. You go to places where there are jobs.

It’s just that simple. Okay. Anyway, tourism, obviously something that it works very well here at the wine is good, the food is good, the land is good. It’s just a beautiful place with wonderful people. But if you’re doing more and earning less for it, you can see how that can be a problem. Second big sector agriculture.

Huge, new Zealand is a primarily volcanic soil, and many of the volcanoes are still active. I hiked on two of them earlier in this trip. And it’s, positioned where the local wind currents bring it. Lots and lots and lots of moisture. In addition, it is surrounded by relatively cool water oceans. You put that together and you never have a hot summer, and you never have a cold winter.

And fertile soil, plus lots of water. Anything can grow, and I mean, anything can grow. So the New Zealanders have some of the lowest cost of production per unit for agricultural products in the world, and only have 5 million people. So they can focus on quality, they can focus on value add. And the sector that has seen explosive growth over the last 4550 years is dairy.

Once the Kiwis left being part of the Imperial network that the Brits had built and went into business for themselves, they switched almost wholesale from things like sheep to dairy because they just have a huge competitive advantage. They never need enclosures. They never need shelters in the winter or the summer, and they can just rotate the cattle around, always giving them fresh food.

Only in the last few years have they started growing corn themselves to use a silage to increase their productivity even more. But even before they had done that, New Zealand dairy was generally considered the highest in the world in terms of quality and could be produced, at the lowest cost of any dairy in the world.

In fact, they have about a 30 to a 40% price advantage over the country. That’s in second place in terms of efficiency, and that’s the United States. And we only do that with massive enclosures and sheer numbers and lots and lots of, inputs, such as silage, in order to make the cows grow quickly and produce a lot, the Kiwis don’t have to do that.

They’re starting to. Which means there are additional efficiency gains to be gained. And you should expect both tourism and agriculture, especially dairy, to continue to grow in percentage terms that are just not possible anywhere else in the world. And yet, 80,000 people left, were experiencing here the tail end, the final days of the China boom. As the Chinese demographic situation completely implodes.

And there’s a combination of political incompetence at the top of the Chinese system and globalization and trade pressures from the wider world basically break the Chinese system and dissolve the country as a functional entity. Everyone who sells to China is enjoying these last few years were basically at the top of the bubble, and then that market just goes away.

And that’s going to hurt the new Zealanders as much as it’s going to hurt anyone who sells into that market. And we will have to have an adjustment in production capacity around the world. Now, countries like New Zealand, where the efficiency is through the roof, are the ones who will come out of that in the best place.

They’ll push the higher cost producers like, say, the Brazilians and the Russians out of the market in places where they compete. And we’re going to see that in industry after industry after industry moving forward. Okay. Let’s talk about the people.

New Zealand has the highest birth rate in the rich world and the highest birth rate in the advanced developing world. Better than India, better than Mexico, better than Turkey, better than Indonesia. Is one of the very few countries in the world where the cost of living for young parents is sufficiently low, and the availability of suburban and rural land isn’t just there, it’s there, and it’s attractive to live in. That helps keep family formation robust, that helps people marry and have kids when they’re still in their 20s.

The old model that we think of the United States as having dissolved back in the 60s, in the 70s and in, say, Europe much before that, still holds here no matter where you go in New Zealand, there’s lots of families with young children, and yet 80,000 young people still left. Last year. So whenever you have a period of economic distress, people will go to places that allow them to deal with that economic distress.

New Zealand’s primary problem is that it’s small and so any of the trends that are hitting in the wider world when they do hit New Zealand, there’s not a lot of else in the system to absorb the disruption. And so people flow, Australia, because they’ve got a a deal called the Common economic policy, something like that.

Yep. I think that’s right. Anyway. And then, of course, they’re still part of the Commonwealth so they can get into Britain. And everybody, who is white is generally allowed into the United States for limited periods of time. Looking forward, you know, what we’re do to looking forward from a different viewpoint.

Okay. We’re going to finish this video from, Queen Charlotte Sound. So 80,000 Kiwis last year relocated to other countries, which is a record. And that sort of population movement in the face of economic dislocation is about what you would expect. People go to where they think their prospects will be better. Now, I may be very bullish on New Zealand long term, but it’s a small economy.

So if there is a disruption in the global system, in tourism, agriculture, they’re dependent on the global system. People will look elsewhere, at least temporarily. But we need to think about this on a much larger scale, because New Zealand country with 5 million people is, if anything, the canary in the coal mine of the disruption to come.

At the end of the day, I think the Kiwis will be fine. More than enough food for themselves, no security issues to speak of. And, because they’re so far from the East Asian landmass, they can access energy either from the Persian Gulf or from Southeast Asia, or from North America or from South America. So, you know, the lights aren’t going to go out here no matter really what happens.

Other countries are not nearly so lucky. The demographic situation in places like Germany and China is just atrocious. We’re talking about national oblivion here with, their economies ceasing to function in the way we define the term, within a decade, probably with the worst of it in China happening within five years. Germany might have a little bit more time, but only a little.

And that’s before you consider globalization. Germany and China are both export driven systems, and as the world ages, its ability to buy stuff is going to shrink. And that’s before you consider politics or trade disruptions due to changes in trade policy. So you’re going to have a lot of Chinese, a lot of Germans, a lot of people from other countries looking for greener pastures, in many cases literally.

And the people who have degrees that are useful in an industrializing environment, and, are mobile are the ones that are likely be able to take the most advantage of, especially if they’re under 50. Because just because the Germans are dying out doesn’t mean that there are no Germans under 50. And the German educational system still cranks out top talent.

It’s just that there’s not going to be much opportunity for them at home. And if you look back through history, there’s nothing about this that is unexpected. The Germans throughout history have had booms and busts triggered by changes in the geopolitical environment, the one that is most relevant to this conversation, the one that is most relevant to the United States, is what happened in the 1840s with the German civil wars at the onset of the industrial period.

There you had, over a million Germans leave Germany for American shores, increasing the country’s population, our country’s population by 7 or 8% in less than a decade, from just that one influx. And in doing so, we developed these two little things that today we call Illinois and Texas. So bringing in millions of people who know how things work and how to build things, can drastically change a culture and economy in a short period of time.

Now, the United States today has 330 million people. The sort of influx it would be necessary to jar the system. It would be pretty big. But there is going to be a very, very large supply of Germans, of Italians, of Koreans and Chinese, and the rest, to take if you can take advantage of that, you solve many of the Americans problems in terms of workforce, industry and demographics and a fairly short period of time and if we don’t, we have to figure out how to do everything without the skill sets, and that’s going to make everything more expensive.

So watch the Kiwis. In many ways, they are leading the way into something that might work in the future, and the problems that they have identified are ones that are going to be much bigger elsewhere.

And in a world of globalization and the population, the Kiwis are the ones to watch.

Educating the Workers of Tomorrow

A construction workers cuts lumber in a mask

If I was tasked with raising and educating the next generation of workers (aka what middle school teachers do daily), what would I teach my minions (okay fine, “students”) to best prepare them for the future?

In the School of Zeihan, there will be 2 major areas of focus: Spanish and skilled trades. That’s right, instead of pencil cases and books, I’ll be handing out tool belts and Rosetta Stones on the first day of class.

Spanish will be essential, as Mexico will be one of our most dominant trade partners for the next 50+ years. Extra credit for the kids that can pick up some technical Spanish to bridge the gap in bilingual technical expertise – you know, to manage the semiconductor, automotive and aerospace industries.

After their Spanish lessons, the kids will head over to shop class. We’ll be churning out electricians, construction workers, and just about every other blue-collar position to ensure we can cover the demand associated with doubling the industrial capacity in the US.

So, who wants to enroll their kids in the Colegio Zeihan?

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey, all Peter Zeihan here coming to you from an incredibly chilly Colorado. And today we’re to take a question from the Patreon page. Is like I’m a middle school teacher. What should I be teaching my kids to prepare for the future? Oh, I like this question. It’s a happy question. Okay. Number one Spanish. It’s the number two language in the United States.

It’s the number one language. And our top trading partner and the demographics of Mexico, which are significantly younger than the United States, suggests that Mexico is going to be our top trading partner and pretty much every economic sector for at least the next 50 years. Any good beyond that and technology might change, but at least for the next 50 years, integration with Mexico is the story, especially as the Chinese fail.

Second, if you want to take the next logical step in that not just Spanish, but technical Spanish, the issue is that there are lots and lots of Americans who speak Spanish, and there are lots and lots of Mexicans who speak English, but there are not a lot of people on both sides who speak the technical aspects of specific parts of the language.

So, for example, 80% of the world’s low quality semiconductors, that’s 90 nanometers and dumber. Think of the Internet of Things, your smart refrigerator, that sort of thing. 90, 80% of those come out of mainland China. And when the Chinese system breaks, we’re going to have to do one of two things. We’re going to have to basically get by without the quality of chips.

And they’re in everything. So we basically digitize large sections of the economy, or we take this legacy technology, which in many cases is 20, even 30 years old, and we rebuild it somewhere else. And in the case of the United States, it’s probably not very cost effective. We’re probably going to be focusing on the middle and the higher end components that go into things like automotive and aerospace and power management, not to mention AI and satellites and cell phones and computers.

But Mexico is rapidly, especially in northern Mexico, is rapidly moving up the value added scale in every type of manufacturing they do. And they could probably, with a little bit of help, move into low end semiconductors with just a couple of years of effort. The problem is going to be the transition period between now and then. And for that, you’re going to need a lot of people in a technical capacity in these Mexican semiconductor fabrication facilities who can basically handle the language of the technical side of the manufacturing process, and that requires some very specific language skills that just don’t exist in the bilateral relationship right now.

And you can do the same thing as Mexico. It’s more sophisticated IT and aerospace and automotive and, wiring harnesses and basically everything that puts together a modern industry. Remember that as the Chinese system goes, that’s the workshop of the World Breaks. There’s going to be a lot of stuff that has to be relocated very, very quickly. And the sooner we can start on that, the better.

And this is probably, I would argue, more of a restriction on our ability to bring Mexico up to snuff quickly than anything having to do with capital or labor, which is saying something because those are huge problems. And then the third item is much more straightforward here in the United States, in Canada and Mexico, we basically need to double the size of the industrial plant, to replace what currently comes in from China.

Well, that’s a lot of construction workers. That’s a lot of bricklayers. That’s a lot of electricians. We need skilled blue collar labor with probably electricity manipulation, being the single largest gap in the workforce. So the two biggest things that you can do, if your goal is to earn a six figure salary right out of school, technical Spanish to become an electrician, language skills and shop class are looking really good right now.

And on top of that, the politics of this are pretty good too. We’re going to double the size of the industrial plant. Pretty much all of those jobs are going to be blue collar. So we do stand at the dawn of the golden age of organized labor. And if you can be the skilled labor within the organized labor who you can punch your own ticket however you want.

All right, that’s it.

Will Trump Pump the Brakes on Greentech?

Both in the US and globally, the green energy transition has been all the rage for the past few years. With President Trump’s second term kicking off, how will it impact the green transition domestically and beyond?

For the green folks outside of the US, the impact should be minimal. Since the US doesn’t manufacture most Greentech components or provide much financial support, Trump’s influence is (mostly) contained to the US. But the story isn’t so pretty for those in the US.

The main challenges for the green transition in the US are transmission infrastructure and financing. Federal support is crucial for developing the infrastructure to get the energy from where it is generated to where it will be used. Trump could make this development and coordination process much harder. Wind and solar projects require more robust financing than a traditional fossil fuel plant, so cuts to federal incentives or subsidies could make these projects unviable.

Without federal backing, many of these green projects would stall. Private investors might try to step in, but they can’t match federal funding levels. Trump has the ability to significantly slow down the green transition, but at least that doesn’t extend beyond the US.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey, all Peter Zeihan here coming to you from Colorado today. We’re taking a question from the Patreon page. And that’s specifically what sort of impact can Donald Trump have on the green transition, both in the United States and wider abroad? Abroad, very, very little. The solar panels aren’t made here. The wind turbines are not made here. And U.S. financial support for anyone else’s transition is well below $1 billion a year.

So, you know, you know, whatever. It’s all about what would happen here and here. The the federal government has a lot of, means for changing the way the green transition works. A couple things to keep in mind. Number one, green technologies, as a rule, require a great deal more transmission infrastructure because where most people live is where it rains.

And so you can grow your own food. We don’t have a lot of desert cities. So in most cases we generate power with coal, nuclear, and natural gas relatively close to where we live. And so transmission for most power plants is well under 50 miles. But most of the places that are very sunny or very windy are not within 50 miles of where we live.

It’s in the Great Plains, it’s in the desert southwest. And so you have to build these pieces of infrastructure to generate power well away from where people are. And then you have to wire that power to somewhere else. And that often means crossing jurisdictions. And if you cross a economic or political jurisdiction, the regulatory burden becomes more robust.

And it’s up to the federal government to try to smooth that out. So if all Donald Trump does is not smooth things out, becomes a little bit more onerous to build green tech anywhere because you can’t hook it up to a source of demand, then that’s problem one. Problem two is much bigger. You see, if you’re doing a conventional, facility, whether it’s coal, natural gas or a nuke, only about one quarter of the cost of the facility is in the upfront construction.

And then linking that up to the grid, most of the rest is fuel, especially for coal and natural gas. So as a rule, it varies based on where you are and how close you are to the fuel source. As a rule, about 80% of the cost of the lifetime cost of a coal or natural gas facility is the fuel. You basically buy it and burn it as you go. And so with that sort of model, you only have to finance the initial 20% that it’s required for the construction of the facility and looking it up to the grid and everything else.

You have an income stream to defray and ultimately overpower the cost of the fuel moving forward. It’s not how green tech works. The whole point of solar and wind is that you don’t have fuel. The fuel is free. Well, that means that most of the costs, almost all the costs are upfront. Over two thirds go to the construction and linking it up to the grid.

So the degree of financing you need megawatt for megawatt is more than triple what you need for a more conventional fuel system. Now, one of the things to keep in mind in the United States is that capital costs have roughly increased by a factor of four since 2019, as the baby boomers have retired, and the money that they used to have in stocks and bonds, that fueled the sort of capital environment that we had ten years ago just no longer exists.

They’ve all been liquidated and they’ve gone into T-bills in cash, which is driven up the cost of financing for almost everything, including power plant expansion. Well, if you’ve seen the cost of capital increase by a factor of 4 or 5, and you have to finance three times as much for wind and solar as you do for core natural gas, you can see where the problem is.

This is normally where the government would step in with concessionary deals on whether it’s on taxes or directly on financing in order to help bridge that gap. And so all Donald Trump has to do is say, I’m not going to finance this stuff anymore, and a lot of it is going to go away, even if, as isn’t the case in the desert southwest or in the Great Plains, solar or wind are already cheaper on an all in cost basis over the entire life of the project.

But that’s not the number that matters. Part of the problem that I’ve always had with the green communities, they keep using this thing called levelized cost of power, which shows how over the life of a project, the cost of solar and wind has gone down and gone down and gone down. And it has. But they assume that there’s no problem with intermittency.

So like when the sun sets, solar doesn’t work anymore. If you pair a more realistic cost structure because you know you want electricity after the sun goes down. Hello. With financing the issue, then the federal presence in the financing world really is critical. And even in projects that make a huge amount of sense, not just environmentally but economically.

If you can’t get that financing right, you can’t have the project. Private industry can step in, but it’s going to be a hard sell to do financing for something on concessionary terms, for something that it’s going to take longer to pay out as compared to a colder natural gas plant. And you might get local and state governments kicking in some for political and environmental reasons.

But there’s no way that they can compete with the sheer volume that the federal government can come up with. So we should expect a lot of these projects to slow down quite a bit. Even if Donald Trump doesn’t call them out by name is something that he doesn’t like. You interrupt the financing and you simply don’t get much new construction.

Will the US and Canada Actually Merge?

Listen, I didn’t want to make this video, but too many people asked for it…so here we go. What would a potential merger of the US and Canada look like?

The US won’t be invading Canada and there won’t be a nationwide Canadian petition for US membership, but how would it happen? It’s more likely that individual Canadian provinces – like Alberta and Saskatchewan- would secede and apply for US statehood.

These two provinces are young and wealthy, meaning they’re going to have to put the rest of Canada on their backs (financially speaking). They already have strong economic ties to the US, so a merger isn’t as far-fetched for them. The rest of Canada would likely destabilize if those provinces left, due to aging demographics and financial struggles.

For the US, incorporating Canadian provinces would mean a significant reshaping of American politics. However, that doesn’t mean it would be all that difficult to add them in; it’s a much easier process adding states than amending the constitution.

Regardless, I don’t see this happening anytime soon. There’s too many financial, political, and demographic factors at play. But if it did happen, both countries’ political and economic landscapes would dramatically shift.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

All right. I didn’t want to do this video, but too many people on both sides of the border have asked so what would a merger of the United States and Canada look like? All right. Let’s start with the simple thing. The United States is not going to invade Canada. There is no serious talk about Trump. He hasn’t even really joked about it.

So let’s just put that to the side. Canada has just shy of 40 million people. So if it was to join in a single piece, it would be right up with California as our first or second most populous States. But it has a demographic picture that’s kind of a mix. And so what would be far more likely to happen?

Because the idea that a majority of Canadians are going to petition for U.S. membership is a stretch. We’ll be far more likely to happen. Is individual provinces of Canada would secede from the Canadian nation, and then apply for statehood for the United States.

The first two states to watch are the two that are youngest demographically, that are the richest in per capita terms, that export the most commodities per capita, and are already fairly culturally linked in with the United States.

And those are Alberta and Saskatchewan. And if you’re looking at a map of Canada, keep in mind that everyone lives in a thin strip along the southern border. So you’ve got British Columbia on the Pacific. You’ve got some mountains, big mountains, and then Alberta and Saskatchewan, Manitoba, the third of the prairie provinces. And then you crossed something called the Canadian Shield, which is about 1000km of very rugged terrain, heavily forested, where there’s only one road and one rail line.

Before you get to eastern Canada and in eastern Canada, you’ve got the population bloc of Ontario and Quebec, which are the bulk of the country’s population. And then fringed around them are something they call the maritime territories, which are provinces, but lightly populated. And, basically, I’m overstating this, so apologies. Heavily populated by retirees. So from from a financial point of view, there’s not a lot there.

Where the money is, is Ontario and Quebec, the two most populous provinces? British Columbia, which has a big population around Vancouver and serves as the Pacific Gateway and then Alberta, which is the energy hub. Saskatchewan is kind of a little bit of the energy hub. And then a lot of agriculture, just like Alberta. What would happen is Alberta and Saskatchewan or Alberta or Saskatchewan would leave, the Canadian nation, which is legal in Canada.

You just have to have a plebiscite that was affirmed by A90 ruling by the Canadian Supreme Court quite some time ago. With regard to tobacco separatism. Anyway, the reason that these two provinces, Saskatchewan and Alberta, would leave is largely financial. When Quebec was having all of its fits in the 70s and 80s and early 90s about secession.

The the what? The deal that was struck was that Ontario, which at the time was the richest and the most populous province, would basically pay Quebec to just stop it. So, Quebec has basically been paid for the last few decades to remain part of Canada and not have secession votes. It’s gotten more and more expensive because Quebec’s birthrate, is among the lowest of the major.

It is the lowest of the major provinces. And so the whole province has already functionally slid into obsolescence. The problem is, in Ontario. The birth rate has been very low for a long time. And if it wasn’t for the huge surges of immigration, which have had other complications.

Ontario has now aged to the point that if it wasn’t for huge surges in immigration which generate their own problems, Ontario wouldn’t be able to pay to keep, Quebec in the country anyway, but it is still aging very rapidly.

And of late, Canadians have pushed back against this open door immigration policy, which hasn’t been necessary for economic reasons. But now, culturally, it’s kind of hit a breaking point and everything has slowed significantly, which means that Ontario is now rapidly aging again. And within five years, Alberta will be the province that is expected to pay for, Quebec to remain in the country with a little bit of help from Saskatchewan.

The maritime provinces have already aged out, and if the two most populous provinces age out, there is no way that Saskatchewan and Alberta, which collectively have less than 7 million people, can pay for the rest of Canada to continue to exist unless they just become destitute. That’s the financial argument for why you might see secession in the prairie provinces.

And that’s before you consider that every individual Canadian province, trades more with the United States, and it does with the rest of Canada. And that is true for none of them more than it is for Alberta. So you’d actually solve a fair number of problems if Alberta applied and Saskatchewan applied for American, statehood. Now, the question then is what happens next?

Because these are the two richest bits of the country. And if you split British Columbia off from the rest of the country, because now the prairies have gone a different way, it basically devolves into fourth world status very quickly. It’s industry is already wildly noncompetitive, and basically what has kept B.C. afloat for the last several years is capital flight coming in, most notably from China to be processed in BC and then spread throughout the Canadian economy?

That would stop if there was no land connection. The only other business that you really have in BC is it serves as the entrepot for Asian exports coming into Canada. If you use the super port in Vancouver, repackage everything on the rail and send it east. If you can’t get through Alberta and Saskatchewan. That’s not going to work either.

So BC looks really awful in that circumstances, and the rest of Canada out east doesn’t look great too, because basically it’s a retired country that looks worse than most European demographics. So. If all of these other provinces, either in combination or independently, were to ask for statehood in the United States, we’d have to do some really hard math as to whether it would be worth it.

Picking up a half a dozen states that economically are almost destitute. Basically, you’d be adding a half a dozen mississippis. I’m not sure we would be willing to do that. And that’s before you consider the politics of it. By the way, the United States does political math. Saskatchewan and Alberta would probably be considered 1990s style Texas Republicans a little bit more libertarian, socially moderate, economically conservative.

They wouldn’t get along with today’s MAGA all that well. But the rest of Canada, especially BC and Ontario and Quebec, would be of the Elizabeth Warren branch of the Democratic Party. And getting that through Congress might be kind of interesting. Now, that said, adding states is not as complicated as amending the Constitution. You want to amend the Constitution, you need two thirds vote from both houses of Congress.

And then in three quarters of the states, legislators legislatures have to ratify it. You want to add a state, you just need a simple majority. So you just need a simple majority of Congress. You don’t ask the states at all. And then the president signs off just like a normal bill. So if if if if if if we get to that point, Canada will very quickly become a political flashpoint regardless of what politics looks like in the United States, because you’re talking about potentially adding ten provinces or ten states to the United States, a system that’s 20 senators and about the same number of representatives as California has, which I believe is around 50 right now. So a significant shift in the balance of power, that would completely re fabricate how we have our politics. Now, if that happened in a year, wow. That would be all kinds of explosive, because the United States is in the midst of a pretty deep political reorientation, by itself. But at any time that, you have that sort of disruption, you’re going to change the political math by how the country works.

And then and then you get to talk about how things like Medicare, Social Security, and Medicaid, which are the three of the four biggest line items in the U.S. budget, get re fabricated when you add so many people who are already retired. It would be a hoot. Don’t think it’s going to happen anytime soon, but if it was going to happen, that’s how it would go down.

Are Rare Earths Really That Rare?

Rare earths are back in the headlines, but is all the hype worth it? Let’s breakdown what these are and how “rare” they actually are.

Rare earths are byproducts of mining for other metals like nickel, copper, and uranium. While not rare on Earth, they are rarely found in sufficient abundance in a single location for their mining to be economically viable. The only real challenging aspect lies in the refining process, which is just dirty, time-consuming, and expensive…but not all that difficult to do.

China dominates rare earths because they have subsidized production (artificially lowering the price) and they’ve been doing it for decades. So, other countries haven’t had any incentive to turn on their refining capacity, yet. Once the Chinese overplay their hand or the system crumbles, other nations will just ramp up production.

This isn’t really something to fear, other than a few months of issues. However, the US should be more concerned with other critical supply chains like aluminum, steel, and lithium, where the US has yet to build out sufficient infrastructure.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey, all, Peter Zeihan, coming to you from a very, very chilly Colorado. Today we’re taking a question from the Patreon page that’s been popping up a lot in the news about rare earths. There’s a lot of angles to this, but basically, it seems that the Trump administration is really interested in getting some production of the stuff. And the question is, how does it work?

What do we need? Where do we go? You may recall recently Trump, falling to Russian propaganda again said that, Ukraine owes the United States $500 billion and it should pay for it with rare earths and not get a security guarantee in exchange. By the way, total USA to Ukraine at this point, according to US government sources, is less than $100 billion, of which two thirds is weapons that were just sitting in warehouses that we were going to blow off anyway.

Anyway, rare earths, unlike the name rare earths are not rare. They are produced as a byproduct of mining. When you’re doing nickel or copper or platinum? Uranium? Palladium. That’s a platinum group. Coal ash, phosphates, sometimes lead.

I said iron ore already. Aluminum. Bauxite. Anyway, there’s like 20 different, macro metals that you mined for, plus coal ash, that produce Rees as a small soda product.

And so what usually happens is you produce the primary thing that you’re after. And then with the waste from your refining process, you maybe do another run of that in order to concentrate the earths a little bit more. But then that next stage of taking that kind of slag that’s been partially refined and turn it into useful rare earth metals, is very dirty.

It’s very polluted, and it takes a lot of time. So usually what happens is you take that slag and you to ship it off to China. Because back in the 1980s and 90s, the Chinese were looking for industries that they could corner and their technology was not very good. And they settled on rare earths because it was expensive and it was dirty.

But they have a very capital flush system where they basically print currency and confiscate everybody’s bank deposits to pay for whatever development plan they want. So what they do is they you build a couple hundred vats of acid and you dissolve everything in the first bout, and then you get the remnants. You put that in a second batch, and then the remnants from that third, that remnants of the fourth that intruded.

And over the course of months, starting with tons of slag material, you might end up with an ounce of a rare earth metal. Anyway, the Chinese cornered this market because it was something that no one else was like, oh, I want to do that. And so they ended up super saturating the market because Chinese economics are about throughput rather than efficiency.

And they continue to subsidize the industry today, which is why, based on the Earth, somewhere between 50% and 95% of it comes out of China, the refined metal. And then, of course, in the last 10 or 15 years, they tried to go, downstream, into processing and building product out of those things. Be even less successful in that.

Anyway, this technology is based on the 1920s. So there’s nothing that’s difficult about this, and it doesn’t really take a lot of time to set up. It’s just that once you actually start putting your slag into the acid, it’s going to be months before you get any material. So the problem is not rare earths per se. The problem isn’t even production.

Rare earths are a byproduct of any number of industrial, mining and purification processes. The problem is building out that processing capacity. Now, how long does that take? I would argue that in Australia, Malaysia, France and the United States, most of that work has already been done. But nobody wants to turn it on because you’ve got several months where you’re not getting any product.

And the Chinese continue to super saturate the market and provide the world with below cost rare earths. So at some point, a switch is going to be flipped, and everyone’s mind when they realize either that the Chinese are overplaying their hand with their control of the processing capacity or trying to just brakes. And everyone realizes that if they still want the stuff, they’re going to have to make it themselves.

Once that happens, all of this spare refining capacity around the world will spring up. And the problem we solved in six months to a year. Until then, we are in the unfortunate position that the US government seems to be beholden to Chinese and Russian propaganda on the rareness of rare earths, and that, unfortunately, is shaping policy in a number of places.

It’s like if you want to be paranoid about things that the Chinese dominate. This isn’t where you go. You should be concerned of other types of processing, such as turning bauxite into aluminum, turning iron ore into steel, turning lithium concentrate into lithium metal because those are places we’re setting up the, replacement infrastructure. The United hasn’t really started at scale yet.

And if the Chinese break before that’s done, we will then have to build out that infrastructure in an environment when we can’t get the intermediate product. And that will generate the mother of all inflation pulses. So, you know, one miracle at a time, I’d argue that this specific problem, rare earths, is not all that much of a problem.

There’s plenty of streams coming from plenty of places. We just have to turn on a few things to solve it.

What Trump Should Take on Instead…

Newspaper photo of President Donald Trump

The last few videos have covered all the things that Trump is focusing on (and doing wrong), and many of you have asked where he SHOULD be spending his time. So, today we’re discussing the things that should be prioritized.

The US has a unique global position, its economy is strong, it has a powerful military, and it’s largely self-sufficient when it comes to energy and food. With that in mind, here are the four main opportunities I see: Europe, the UK, Southeast Asia, and Cuba.

Each of these places offers the US something it could use in the decades coming. Whether that’s a foothold in reshaping European economics and diplomacy, adding the UK into NAFTA to strengthen economic ties, securing a future of industrial capacity in Southeast Asia, or adding a low cost manufacturing partner in Cuba.

Basically, I would stop spending my time antagonizing our allies and focus on strengthening our economic and strategic partnerships.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey, all. Peter Zeihan here coming to you from Colorado. We’ve been doing a number of pieces on how Donald Trump is, manipulating the world for various outcomes. A lot of you have written in and asked me, well, what should he be working on? And I’m going to assume that you’re asking that in a constructive way.

So here we go. Remember that we are in this weird moment in history where the United States is really the only country of size that has a positive demographic structure and so still has a consumption led economy. We’ve got military reach, around the world. We have navy that’s more powerful than the next eight put together, if not all of them self-sufficient, energy, self-sufficient in food.

We’re really holding the handle of the whip on everything that matters. The question is how we want to use it. And if you look around the world, the opportunities are just robust. Right now in the Middle East, Iran has suffered a generational blowback. It’s lost its allies and Hezbollah and, Syria and the time is here to completely remake the region, really, however we would want.

We’ve got something similar going on in China as it’s facing demographic, financial, transportation and strategic collapse. Ten years from now, China won’t exist. And by the end of this century, the Han of necessity won’t exist. Talk about just a wondrous opportunity to shape things in a different way. Donald Trump instead is, picking fights with all of the allies, specifically the allies that we’re going to need to help re fabricate the future, especially our own in terms of manufacturing.

So I look for the low hanging fruit that is out there right now, of which there is an immense volume. Let’s start with Europe. Germany is in the midst of an election campaign. No matter who wins, it’s going to be a weak government with three parties. It’s going to be very difficult for to lead at home and impossible for it to lead on the European stage.

In France we have a hung parliament, and if we have elections again this year, that locks the French out of policymaking for at least six months, assuming they come up with a new government that’s actually cohesive, which is very unlikely. I mean, the France is kind of out to lunch.

Italy has a reasonably strong leader in the form of Giorgia meloni. But she too leads a coalition government, and she can only go so far. And then the Brits are gone because of Brexit. So there is no leadership in Europe. If you wanted to take control of the continent from an economic and a diplomatic point of view and reshape how it works for generations, now is the time. And instead we had JD Vance at the Munich Security Conference talking to the Europeans about how European cultural evolutions are a greater threat to the United States than either Russian nuclear weapons or Chinese predatory practices and cyber, attacks.

It was easily the most destructive speech that I could have come up with in terms of solidifying the alliance against the Russians, against the Chinese, to create a new world. And I’ve never seen so much diplomatic and political power by any country pissed away in 45 minutes. But that’s where we are. I don’t know if it’s too late to kind of pick up the pieces, but clearly keep Vance away from all of them.

That opportunity, unfortunately, may have been destroyed in a single hour. Second up, the Brits, the Brits voted themselves out of the European Union several years ago. And if you’re like me and you see the demographic changes coming that the European Union is going to have to re fabricate itself from its current state as an export union to something else, because if you don’t have enough workers, you don’t have enough taxpayers.

All of the economic models that we have right now just don’t make sense. So getting out of that before the break and starting on something new, that made a lot of sense to me, puts the Brits never got started on anything new. They’ve just kind of been in this netherworld in the seven years since, and we now have a newish government in London that is giving fresh insipidus to the term disorganized destruction.

They can’t seem to form a policy on anything. They’re completely rudderless. Well, as the world did, China fires, we’re going to need some partners to build an industrial plant that can replace what the Chinese are going to take away with them as they fall. The United Kingdom is a first world country with a highly technocratic system and phenomenal engineers.

I would love to see NAFTA expand to take in the United Kingdom. And since the Brits can’t make any decisions right now, having somebody of Trump’s, how should I say, this delicate nature impose a solution on them would be brilliant. And instead, the administration has basically just ignored the United Kingdom altogether. Third is Southeast Asia. This is home to about a billion people.

We already count Vietnam as one of our top ten trading partners, a position it’s just gained in the last few years. And it is the part of the world that is most likely to pick up pieces of the industrial plant that the Chinese can no longer operate. Also, most of the countries in Southeast Asia already have lower operating costs.

It’s a geographic feature. Most of Southeast Asia is jungle and islands and, peninsula and mountain. So it’s really hard for them to integrate in the traditional sense. And people flock to the cities because they don’t want to work in tropical agriculture. What that means is most of the, states interact by water for their trade. They have limited physical connection.

So they don’t have any of the bad blood, like what has existed historically in Europe or Northeast Asia. It’s very easy for them to make economic deals with one another. And they have also because people are crowded in the cities, there are workforce is cheaper on average than the skill points that there are compared to the global average.

So they’re very, very competitive in any number of things. And as China falls, this is the region that’s going to do the best. And so a tighter relationship between North America and Southeast Asia is really the smartest play that we could take in terms of our trade and our future security and economic relations. And Trump on China has done almost nothing so far.

And on Southeast Asia it’s been crickets. But with the Americans basically ignoring East Asia, the Chinese are doing everything they can to double down and triple down in Southeast Asia to hedge out the United States. So the opportunity is still there. We should seize it with both hands. And then fourth, and finally is something much closer to home.

And that’s Cuba. We’re in this weird little situation right now where Mexico has become so high value added that it needs a low cost manufacturing partner. And I would argue that the workforce in Cuba is roughly half the skills of the Mexicans for about one tenth of the cost. So if Cuba were to be opened up and were to join the North American trading family in some way, it would be a huge addition.

Now, obviously there are some political problems between here and there. The United States and Cuba have not gotten along ever since Castro’s rise in the early 60s. But I would argue that while I think Trump’s bare knuckle approach negotiations with the allies is perhaps not the best way to go, unleashing that kind of fire and fury on Cuba, I think would be highly entertaining.

And it could actually lead to some political shifts in Havana that we would like a great deal. It’s not just about the economic side of things there. Getting Cuba back into the American family of nations is something that would hugely boost our security and basically make it impossible for anyone from the Eastern hemisphere to punch into the Western Hemisphere, or at least are part of it.

So those are kind of my big four. I quit picking fights with the allies, especially the ones, you know, you’re going to need for economic issues and start picking fights with the countries that, are actually trying to hobble you, maybe. And in the meantime, solidify relations with the countries that are on the fringes who could really be part of a very bright future.

Trump Takes on Illegal Immigration

Trump’s immigration policies have caused quite the stir, specifically his hardline stance on illegal migration. So, how will these policies impact the US economy?

The US is in the midst of needing to double its industrial capacity, which will require a large labor force. Losing the population of 10-15 million undocumented immigrants would dig that hole even deeper. Trump isn’t approaching this from an economic or security perspective, his migration policies are being shaped by ideology.

By making the conditions for migrants worse and cutting off certain paths to legally enter the US, it will inadvertently encourage illegal border crossings and create enforcement inefficiencies. Practices like mass deportations are pulling resources from other important tasks and making future cooperation between the law and migrants less likely.

The better approach would be providing legal pathways for migrants to integrate into the economy, but Trump’s path is creating a permanent underclass.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey, everybody. Peter Zeihan here. Coming to you from a chilly Colorado. Today we’re near the most recent in Trump taking on the world. We’re talking about, Trump policies on illegal migration and where they are going to lead. First a little backdrop and, scene setting. A couple things. Keeping in mind, number one, the United States has somewhere between 10 and 15 million under documented people in the United States.

So that’s a substantial number of folks. And the United States is in the process of doubling the size of its industrial plant. As we prepare for the end of China as a meaningful participant in the trade system, that means a lot of blue collar jobs, and Ford loaded with construction jobs. So, anything that inhibits the labor force is definitely going to inhibit our ability to prepare for a post Chinese world.

So put that in the back of your mind as we go through the rest of this. There has always been a mixed view of immigration in general on illegal migration, in particular in the United States. As a rule, we go through ebbs and flows. We’re definitely at an ebb right now. And as a rule, the business community has been in favor of larger flows of migration in any form.

In order to access workforce, that has not changed. What has changed is that with the reshuffling of the American political deck, the business community is no longer in the Republican Party. Other swing voters now. And so they don’t have a say in immigration policy in the way they might have before. So as the United States goes through this transition, as we have a nativist moment and as, the Make America Great Again, movement has basically decided to take a very, very hard line on things like the border and migration.

Those are the folks that are making policy decisions at the national government. There will be an economic cost for that. The question is whether or not what Michael wants can be achieved. And in doing so, how does that reshape the world? And especially, of course, the United States, another little piece of backdrop, any policy that ignores why people are doing what they are and ascribe somebody else’s motives to them, generally doesn’t work.

This is one of the reasons why Maoist China was such a disaster. Same with Brezhnev’s, Soviet Union and Chavez’s Venezuela. People used ideology, their own ideology, to ascribe motives to other people and made policy based on that. And that’s a lot of what we’re seeing in Washington right now with the migration question. The official story is that these are a lot of illegal people who are doing a lot of bad things and a lot of crime.

There’s nothing in government statistics or private sector statistics that supports that. As a rule, migrants are less than one third as likely to commit a crime as an American citizen, largely because they know that the consequences are deportation. For the most part, well over 90%. The people who are crossing the border are coming in, searching of the American dream, a safer place to raise their children, a place where they can work and earn more money.

And above all, a place where rule of law works better than where they’re from. But by ascribing false motives, the enforcement system is really causing some problems in the short and ultimately the long term. So let’s start with the border, as was introduced under the Bush administration and really built up by size by the time we get to the Obama years, the tendency of illegals crossing north shifted.

It used to be that you tried to avoid the Border Patrol, but then people discovered things like asylum laws where you could apply for asylum and get into the court system. And after a certain amount of time, get a court case that could rule, a lot of criticism of system where people just to the system. But, you know, you’ve got, people waiting two and three years for court date.

And it turns out that the vast majority of people do show up, because they do get a relatively favorable reading. What has happened most recently is that the Trump administration has basically shut that down. They’re not even accepting applications. So if you show up to the border, you turn yourself over the border Patrol, they simply turn you around and walk you right back.

What that has done is encourage people to go back to the old system that we had before the 2000s, and basically just trying to sneak around the Border Patrol. And in doing that, Donald Trump in his first term made it very, very, very easy to cross the border undetected. You remember the border wall? Well, the border wall cuts through the middle of the Sonoran and the Chihuahuan Desert, which are the greatest natural barriers in the Western Hemisphere.

Fantastic for stopping illegal migrants from flowing. A lot of them just die on the trip. But if you build a border wall, that means you need to build 50 odd construction roads across half of that natural barrier. So all you have to do if you’re an illegal is use a ladder once to quadruple your income, and then you’re on a road.

And whether you’re working with a coyote or on your own with a dirt bike, all of a sudden it’s gotten much, much easier to cross. So I have no doubt that 20, 30 years from now, when we looked at back of this period, Donald Trump will go down in history as the greatest supporter of illegal migration in American history.

And that’s before some of these other changes. Ultimately, because most of the people crossing the border north want a better life, they are looking for avenues to cooperate with local government because living in the shadows isn’t great. If you’re an illegal in the United States and you have no chance of getting documentation, you probably only work for cash, which means you’re never going to buy a house.

You’re only going to rent. And if you pay for everything with cash, robbers tend to identify that and target you. And if you can’t go to law enforcement after you get robbed because you don’t have documentation, you may get deported, you then don’t cooperate with law enforcement, which makes it a lot easier for gangs and cartels to recruit on both sides of the border.

Or you can provide the illegals with a way to become legal. What’s going on now is that the Trump administration is taking the sharply opposite tact. And that’s going to hurt us in two ways. Number one, he really, really, really wants to have some showy, mass deportations. So he’s redirected other law enforcement to cooperate with Immigration and Customs Enforcement and the Border Patrol, taking people off of other law enforcement duties to send them against illegal migrants.

He’s been hit very hard by this. But really, there’s none of the three letter agencies that haven’t seen a direction. And that means we’re not looking at things like money laundering or child porn. And there was a really a scary moment when people were starting to be pulled off of active monitoring of terrorist groups internationally, to be put in Chicago to round up illegals.

Luckily, the Trump administration backed down from that. But we’re seeing basically a hollowing out of the law enforcement capacity at a federal level to focus on this one thing. That’s a problem. Number two, Trump wasn’t happy with the numbers. So instead of going after the criminals, which means you go after people one at a time and you have to investigate to make sure they’re a criminal and you have to do a sting operation to get them.

They started going after groups of illegals who had shown no propensity for engaging in illegal behavior. So you started just to go to where those people were. So to use the stereotypical ones that had been proven true in the last couple of weeks, they’ve been going to churches on Sunday morning when people are with their families and basically arresting Hispanics in mass.

They’ve been going to food banks for people who are having problems. They’ve been going to Home Depot where there’s day workers, any place where you’re going to get a concentration of people with a tan have basically been, been targeted by law enforcement in order to generate the numbers that are necessary to meet Trump’s quotas, which he’s handed out to everybody.

And then once those people are grabbed, Trump tries to make it a very, very showy deportation, mostly using military jets. Well, here’s the fun thing about military jets, the globe masters that they’re using because they’ve got the reach. They’re designed to move like helicopters and tanks and equipment, but not really designed to move people. So you have to put seats in them and they can’t operate nearly as efficiently as, say, as a commercial airliner.

So it costs about $6,000 a person just to fly them to the country. You’re going to dump them off. And so it’s turned out to be this incredibly expensive operation that has netted very few criminals, but has also introduced a lot of fear into the community because the most recent one, just in the last week, is law enforcement is now going to the asylum hearings for the people who have kept their nose clean and cooperated with the system from the very beginning, and arresting them before they can even go in to get their hearing.

Or then, of course, if they get their hearing and denied immediately hauling them off in chains. And this is dissuading anyone who is an illegal migrant from ever cooperating with the system. Now go back to what we need to do as a country, double the size of the industrial plant. That’s going to be concentrated in certain areas, which means these illegal migrants are going to be clustered in places where the job opportunities are.

And now if they can’t cooperate with the federal government, they’re going to live as a permanent underclass, which is going to build up crime possibilities on all sides in all of those cities, and in no particular order, those cities are Salt Lake City, Denver, Phoenix, Albuquerque, El Paso, San Antonio, Dallas, Fort Worth, Austin, Houston, New Orleans, Birmingham, Montgomery, mobile, Atlanta, Richmond, Norfolk, Charlotte, and all of the other major cities of the North Carolina cluster. These are the places where the industrial activity and construction has been concentrated. This is going to be where the Hispanic migrant community is most likely to relocate. And now these are the cities that are most likely to have a starkly increased crime wave, because there is no point in migrants now cooperating with the system.

We’re going back to the system we had before the 2000s where migrants really were an underclass. I mean, the smart play here is to provide avenues towards legal migration, even if that doesn’t lead towards citizenship, so that the people can be part of the system so they can have a bank account so they don’t get robbed, so they can participate with law enforcement, and to shut the cartels out of our communities.

But what do I know?

Trump Takes on Trade

Photo of man standing in front of trade shipping containers

There’s plenty of tools at the disposal of the US President and tariffs are one of them. When used appropriately – i.e., to get something else or discourage a certain action – tariffs can be a very effective measure. However, Trump is using them as an end, rather than a means to an end.

This has blossomed into “reciprocal tariffs”. These aim to match foreign tariffs on US goods. At first glance, this idea seems fair, but the complexity of international trade, vast product categories, and admin that would be involved make this nearly impossible.

If Trump continues down this path, it is likely that US international trade would come screeching to a stop and a severe recession would follow.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey, all. Peter Zeihan here, coming to you from Colorado. We are continuing with our, coverage of Trump’s first month in office. We’ve gone through the Middle East and China, the former Soviet Union, Europe. Today we’re going to talk about, international trade, specifically tariffs. Now, tariffs obviously are something that Trump is quite fond of. And it’s pretty clear by this point that he doesn’t necessarily see tariffs as a means to an end, but just an end in of of themselves, which is not great economic policy unless you already have your industrial plants set up.

And even then it’s wildly inefficient. But let’s focus on more of the specifics. I’ve talked at least briefly about the tariffs on America’s closest trading partners. I think it’s worth underlining what a couple of these things would do. One of the new ones is Trump says he wants to do a 100% automotive tariff on Canada.

Keep in mind that every car manufactured in the United States includes a substantial percentage of parts that come from Canada and Mexico, most of them over one third, a lot of them two thirds. And vice versa. It’s a very integrated system. So if you were to put anything more than about a 15 to 20% tariff on autos specifically, are you going to be taxing things as they go back and forth across the border?

And you’re going to cause a massive headache for American consumers, raising the price of your average vehicle by somewhere between 4 and $8000. If you do 100% tariff, we just stop making cars. Detroit collapses within a week, and Texas within a month. So, you know, not my recommendation. But I think a more interesting topic is one that’s gotten a little coverage.

The Trump implemented last week and something called reciprocal tariffs. And it sound on a surface to be pretty fair. The idea is if somebody else has a 15% tariff versus a product, that comes from the United States, then you should flip that and have a 15% tariff on anything that you take from them that is in that product category, and at least on the surface, against places like China where tariffs are high and subsidization is high, in order to force American products out of the product mix.

It seems like a great idea, right? A couple problems here. Number one doesn’t always line up that way for climactic reasons. So, for example, if Kenya has a tariff on imported coffee, we’re going to what tariff coffee we bring in from Kenya because, you know, we don’t export coffee, so we’d just be charging our people more.

That’s a pretty minor one. The bigger one, though, is administration. There are literally hundreds of thousands of product categories. And that’s before you consider intermediate product trade. And so if you want to do a reciprocal tariff, number one, you need a massive staff, at least an order of magnitude more than what we have a Customs Enforcement in the FTC, Federal Trade Commission right now just to learn all the product categories and all the tariffs for all 200 odd countries in the world.

And then you would need at least five times as many of that staff to then enforce, these tariffs at the border. Keep in mind that most international trade, even today, is not digitized fully. It might be on the container level, but each container is going to contain somewhere between dozens and thousands of products, and typically not all from the same country, because as container ships go around the world, they drop things off, they pick things up.

If there’s space in a container, you can always shove more in there. And by the time it gets to the United States, it’s a mess. And then what comes off is not all of it necessarily. Some of it gets shipped back out. And so somebody has to manually enter every single product. So it’s not so much that, reciprocal tariffs isn’t fair or is at least intellectually a good idea, but actually putting it into process basically ends trade, because it’s impossible to administrate with anything approaching the number of people we have in government right now in total.

Much less if you wanted to do anything else. Now, the fact that Trump has announced this anyway gets back to the general theme of all of this is that he’s built a completely incompetent administration that won’t tell him the truth, because the truth might not make him look great. But on this specific topic, it’s less of a designed incompetence and more a purposeful incompetence by his other staff.

Trump’s trade representative is a guy by the name of Jamison Greer, who is a smart dude who basically was raised from a pup by Robert Lighthizer. And Lighthizer was Trump’s first term trade representative. And Lighthizer has been in and out of government and at the center of American trade law going back to the 1980s into the Reagan administration.

So, I mean, this is a guy who knows everything, is everything about trade. He’s not shy about using tariffs, but it’s always when there’s a specific goal in mind in order to reshape the relationship. He just doesn’t just do tariffs or turfs anyway. Greer learned at Lighthizer he was his chief of staff, during Trump’s first term.

Definitely knows what’s going on. And definitely knows that reciprocal tariffs is a horrible idea unless you’re going to do an absolutely massive state expansion, which is definitely not in the cards. So one of two things either happened. Number one, he probably took the advice of Lighthizer because one of the things that Lighthizer learned from his four years working with Trump the first time around is you never contradict Trump.

Not in public, not in private. You just nod. You smile. You make him think that you were one of the brainless people that he has surrounded himself, that do nothing but tell him how wonderful he is, and then hopefully he gives you enough room and enough lack of attention, for you to actually go and do your real work.

And for Lighthizer, at least in part, that worked. He was able to renegotiate NAFTA and the Korean trade deal. He got a new trade deal with Japan, made a lot of progress on a trade deal with the United Kingdom. But then, we just ran out of time. And then there were the events of January 6th. So, Greer clearly knows that reciprocal tariffs are horrible.

Just beyond stupid idea. But either one. He kept his mouth shut, nodded, and smiled. Or number two. He told Trump this and, managed to do it in a way that didn’t get himself fired already. Even odds for probably the first one being the way one or whatever went.

So we’re going to see more things like this.

Because the only way that reciprocal tariffs can work is with a staff you can’t build. So either we go 1 or 2 directions at this time. Number one, reciprocal tariffs are actually implemented, in which case pretty much all international trade stops in the United States falls into a really, really ugly recession in a short period of time or, or there’s an actually an effort to implement it on a case by case basis for specific countries, absolutely wrecking trade relations with that country.

That could get interesting based on who you choose to go after. Hopefully it would not be a country like Canada. Oh my god. But if you did against India, that could actually set the stage for changing the relationship in any number of ways. But Trump coming to that conclusion would require someone to explain to him how reciprocal tariffs overall are.

Really bad idea. And I don’t think that is going to happen at all.

Trump Takes on China…or Not

Donald Trump and Xi Jinping at the G20 Summit

China is on its last legs. Its demographic picture is far past terminal. Its financial system makes Enron look responsible. Simply feeding its people is far beyond Beijing’s capacity without legions of outside assistance. And with the wider world ever-more-firmly turning against Chinese manufactured goods, there is little reason to expect an industrial recovery. If you don’t care for China, now is the time to nudge the country into history’s ash heap.

And so Donald Trump is picking trade fights with Mexico and Canada, the two countries indispensable to the United States if the goal is to create a world independent of the Chinese. In doing so, Trump is granting China that most precious of all commodities: time.

Here at Zeihan on Geopolitics, our chosen charity partner is MedShare. They provide emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it, so we can be sure that every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence.

For those who would like to donate directly to MedShare or to learn more about their efforts, you can click this link.

Hey, all. Peter Zeihan here coming to you from Colorado. We’re doing the latest in a series on what Trump is up to in the world. And today we’re going to talk about the Chinese. Now the Chinese are having a shit time. The demographic situation keeps getting worse. We’re at the point where we’re probably only a few years away from the general collapse of their labor market, and we have seen their labor costs go up by a factor of roughly 15 since the year 2000, which is, one of the 3 or 4 fastest increases in human history.

Financially, they’ve expanded their credit pool by a factor of 3500 at least since the year 2000. For point of comparison, the U.S has tripled. So we have an Enron style bubble. And basically every economic subsector they have, it’s probably a lot more than that 35 times, because they change the way they look to statistics when it comes to local government debt.

And they just cut it out of the system altogether. Stopped reporting. That probably adds another, times five. So, you know, 40 times anyway, so massively overexposed, massively leveraged. In terms of manufacturing, that means their labor costs have gone up. And so they’re not nearly as competitive as they once were. The Mexicans are now more competitive in almost every major manufacturing sector in terms of agriculture.

They’re the world’s largest importer in absolute terms, and they’re the least efficient producer in terms of the input per calorie that they get out. And almost all of those inputs are imported as well. From a security point of view, yes, they’ve got a lot of ships, but they need to be able to control global sea lanes if they’re going to protect their commerce.

And that is the job of the US Navy. So if you ever have a fight with the US, there goes their entire economic and development model. It’s just a series of bad upon bad upon bad. And at the very top, their government has become completely ossified, as chairman G has basically put the finishing touches on his cult of personality.

So it’s very difficult to get anything done in terms of policy. Not to mention that he’s pretty much blind to what’s going on because he’s shot the messenger so many times. Nobody brings him anything. You put all that together. Now is a great time to push against the Chinese and just knock them over the edge so they can fall into

The dustbin of history. So, what is going on with U.S. policy towards China is almost the opposite of what Donald Trump said he wanted to do during the election campaign. He took a very hard anti-China line, and one of the many impacts that Donald Trump had in his first term is he changed the conversation in the United States about China from potentially being a partner to definitely being a perceived threat or a foe.

But since he became president a second time, we haven’t seen really much on China. There’s been a blanket 10%, tariff on everything. And that’s about it. Instead, Donald Trump has reserved most of the fights that he’s picked for our allies and especially our close neighbors in Mexico and Canada. From the Chinese point of view, this has been not just a reprieve, but it’s allowed them to continue doing what they’re doing and shoving products into the American market.

Because ultimately, in a world without China, the United States is going to have to build out a massive amount of industrial plant in order to produce the things that we used to get from East Asia. And there is no way that that can happen unless it’s hand in glove with the Canadians and the Mexicans in the NAFTA system.

And so by picking tariff fights with the closest neighbors, what Trump has done is strongly disincentivize anyone from relo hating their operations from China to the United States. And that was in full swing calendar year 2024 and 2023 saw the greatest declines in foreign direct investment into the Chinese system that we have seen in ages. In fact, last year, total new investment in China was only $4.5 billion.

We haven’t seen a number like that since the early 90s. Companies were running to get out and getting to the North American market. But at a stroke, Trump’s tariff policy has frozen that in place, which is setting us up for a combination of factors. That is really problematic because if we haven’t built out enough industrial plant to replace the Chinese system when it crashes, we’re just not going to have stuff.

Now, the road from here to there was always going to be difficult. We’re talking about an environment that is not particularly conducive to industrial expansion, and the issue is a capital and labor. It’s largely a baby boomer story. When you retire, you liquidate your savings, you move out of stocks and bonds into cash and T-bills and the money that used to fuel economic development and credit in the broader system shrivels up.

Well, two thirds of the boomers have already retired. Two thirds of that money has already shifted over. So I’d argue that the rough tripling of capital costs we’ve seen in the last 5 or 6 years is largely demographic driven. That has very little to do with the economic cycle or policies of the Fed or Trump or Biden.

It’s just demographics. And on top of having now basically a capital shortage, that we need to somehow use what’s left to metabolize and build up this industrial plant. Trump has pledged to increase the annual budget deficit of the federal government by over $1 trillion a year. Now, you might say, well, he’s going to get some savings out of the federal government with all these mass firings.

But keep in mind that the vast majority of federal spending is Medicare, Social Security, defense, and, Medicaid. Those four together are the 7,080% of the total. If Trump does what he says he wants to do and fires a full one quarter of the federal workforce, that actually only reduces the government budget by about 2%.

So it’s a lot of sound and fury without a lot of movement. And on the backside, he’s going to add $1 trillion to deficit spending. That’s going to make everything else a lot more expensive and a lot more difficult. There’s also the labor situation. The United States, if it needs to double its industrial plant, needs a lot of blue collar workers to fill those jobs, and a lot of construction workers to build the plant in the first place.

Well, most construction workers are undocumented in some way. And so a mass deportation program not only stalls our ability to build in the first place, it shrinks the labor market overall. And at a time when we’re already at record low unemployment levels, all of this is making the Re industrialization more difficult. And now the tariff policy is forcing companies to take a pause and what they were already doing and give the United States kind of a side eye, because we now have something that we’re not used to hearing here.

Regulatory instability. And the Chinese at the moment look more stable than we do from that measure. And this is obviously a problem unless you’re a Chinese, of course, because what Donald Trump is doing right now is granting the Chinese that most valuable of geopolitical commodities time.

Photo of Donald Trump and Xi Jinping at the G20 Summit from Wikimedia Commons

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