The Fire Hose of Chaos: Corruption

Photo of a bronze trump doll on stacks of 0 bills

The Trump administration has introduced a level of chaos that can only result in one thing: corruption. I’m not talking about starting a cryptocurrency or manipulating the stock market, this is deeper.

Trump’s arbitrary tariff policies are destabilizing the US economy and eroding the rule of law. The ever-changing nature of these policies makes it impossible for importers to plan for or comply with. And in a broken system, corruption is bound to seep in. And since the US relies on self-reporting tariff obligations and has very few guide rails in place, businesses will likely turn to bribery to keep their goods flowing smoothly.

This is reminiscent of 1990s Russia, or even what happened in Argentina, which aren’t the best examples to be compared to…

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.

Transcript

Hey all, Peter Zeihan coming to you from Colorado. Today we’re going to do the most recent in our Firehose of Chaos series, looking at the economic impacts on the US from corruption that is being imposed upon the system by the Trump administration. And we’re not talking about here corruption at the top, like when Donald Trump forces foreign dignitaries to stay at his hotels, or when he starts a Bitcoin program to basically scam people, or when he does pump and dump systems with the entire stock market. 

That’s a separate topic. And we’re not talking about a more traditional corruption that happens in a federal bureaucratic environment when bureaucrats basically pad things like invoices and take a cut themselves, not the Chinese style. We’re talking here about corruption that is being imposed by the Trump administration on the broader economy, where it can have a much bigger, deeper impact and really start eating away at the cultural advantages that we have of the United States, including rule of law and all has to do with the rapid, rapid, rapid changes in economic policy, most notably tariff policy. 

I’m recording this on tax day, April 15th, and we have now had 94 tariff policies in 44 days, all coming from Trump himself. This is not counting the policy suggestions that are coming from cabinet secretaries or the back and forth that’s happening within the administration is they’re trying to come to grips with whatever. The most recent thing to come out of Trump’s mouth is. 

This is just hard. Trump tariffs. And in that sort of environment, it is impossible for companies who are doing importing to really know what to do because there’s a process for collecting terrorist. I mean, think about the volume here. It’s roughly $3.8 trillion in goods imports every year. That’s over 62 million container units. And we have no none, zero staff at US ports to collate those things, to understand what the value is of the product. 

And so therefore what the terror should be, the way tariffs are collected in this country is the importer self-reports what is coming as it crosses the border and into the port of entry, and then pays the taxes electronically. And in that sort of environment, clarity is absolutely critical. And having 94 tariff policies in 44 days and knowing that much, much, much more is coming down the pipe means that no one’s really sure what to do. 

Because oftentimes we get multiple tariff policies in a single day. We’ve had two days already where we got six tariff policies within an eight hour period. And so even if you are attempting to follow the rules to the letter, you can’t because you never know what is going to come out of Trump’s mouth. These tariffs happen instantly, or maybe with a 48 hour lead in. 

And then it’s just a question of enforcement and there is no enforcement. So take for example auto tariffs on May 2nd. We’re supposed to get a new tariff that’s 25% on all auto parts. If you have a container of auto parts coming in on a truck from, say, Ontario, when that hits the border, you need to know each an individual part that is in there and then report it. 

But what if it’s something that is dual use, like say, wiring? Is it an auto part? Is an electronic part, is it a welding part? Is it something else. So the administrative cost of that goes through the roof and probably is going to be higher than the part is in the first place. The other problem, let me give you another example is what’s going to happen with electronics, over a two week period starting on April 2nd. We had tariffs going up on China. We start with 20%. We went to, I think 54%. Then we went to 80 something percent, down 104%, then 125% and finally 145%. 

So everything coming in from China had that kind of scale going up, and the importers didn’t know what to do. Now think about electronics, a specific subset over $100 billion of electronics coming from China every year. Well, what we did originally was 145% tariff. That’s why I bought my extra phones and my extra computer. 

And then about April 11th, Trump said, just kidding, they’re in abeyance. In fact, we’re not even going to charge our 10% base tariff on electronics products. So it used to be relatively simple, relatively, where every container in just had a flat 145% tariff. Now they had to do a carve out for electronics the next day. Coward, like the Commerce secretary said, this is temporary. 

Don’t get used to it. So they started putting it back on again the next day, Trump said, no, it really is off. And so they started peeling it off again. And then the next day Donald Trump said, actually, no one is going to get an exemption. We’re just going to have a different bucket for computing and electronics products. 

It’s going to be part of our semiconductor tariff. So what now? We’re going to have an additional tariff on every thing that has a computer chip in it. Well, that includes everything from backyard grills to white goods to your fridge. No one knows what the system is, so no one can choose to follow it dutifully because the rules keep changing, they’re not clear. 

And instead of being built up by the bureaucracy who puts this all into the public register where anyone can follow it, it is literally, often nothing more than a Trump tweet. So where does that leave us? Well, it’s a question of how do you administer these things? There’s two problems there, too. Number one, Donald Trump fired all those, fired all of the temporary workers in the federal system. 

Imports and exports don’t flow in the same, scale on for the same products every single day. So we have a lot of temporary workers who work in the ports to help out with the work, as it needs to be done specifically for border Patrol. Those people have either been fired or directed to other tasks, and so they’re no longer is a staff to do it. 

So, for example, on April 11th, when the software for this entire system failed, we just didn’t collect tariffs that day. Oh, there’s also the issue at the upper levels. There’s no one to interpret what Trump says. Remember that the top 1400 positions across the federal bureaucracy were basically cut when Trump cleared out everyone, including the people who are typically not fired between administrations because they have the all the organizational knowledge and technical skills, they’re all gone. 

So there isn’t a cadre of people at the top that are loyal to Trump that also have the ability to design these programs. And even if there was, you know, they’d have to do it hour by hour. Well, we have seen this before. This reminds me a lot of Argentina, where the Peronist government, through the 2000 to the 20 tens, kept changing the rules over and over and over and over and over again for personal, political or ideological reasons. 

And it became easier for everyone to just find ways to avoid them. See, the problem is, is when you make the rules impossible to follow, the only way that business people can function. Is to have a personal relationship with the people who are enforcing the rules. The way tariffs work, you self-report and then there are spot checks. We have set up the perfect system that will, for force American importers and businesses to bribe the people who do the spot checks, and that is something that will corrode out through the broader system. 

This is very Russian 1990s right now. We’re setting up the stage where we’re telling our business community that they have no choice but to violate the rules if they’re going to function, because the rules are almost designed to not be valuable. Is that even a word? Anyway, it would be nice if this all settled down in the near future, but Trump has promised us in the next few weeks we’re going to have tariffs on sector products. 

So agriculture, car parts, semiconductors, medications and so on. As with everything, there is no one in the upper echelons of his administration who knows much of anything about these economic sectors. So it’s all going to be arbitrary, it’ll all be based on the ideas that Donald Trump is having at the time, based on whatever data point he happens to find egregious. And there will not be a rules creation system. 

It’ll simply be imposed by tweet. No one will know how to follow it, and it will set us up for an erosion of rule of law throughout our corporate world. Bye.

Why There’s No Fentanyl in Easter Eggs This Year

Photo of easter eggs in a basket

US efforts against fentanyl have been ramping up. Specifically, the Trump administration has turned its focus to one specific Mexican cartel – La Familia Michoacana.

The US has increased financial sanctions on the fentanyl trade, specifically targeting the cartel’s foothold in Lázaro Cárdenas – Mexico’s largest Pacific port. This position allows La Familia Michoacan to import the precursor materials direct from China and India. In case that wasn’t enough, a bounty has been placed on the cartel’s leaders, the Olascoaga brothers.

Fentanyl will remain a problem for the US, but at least there won’t be any in your easter eggs this year…hopefully.

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.

Transcript

Hello, Peter Zeihan here. Coming to you from Colorado. Happy Easter. Let’s talk about drugs. Specifically fentanyl. Last week, the Trump administration. These are courtesy of my niece, by the way, and my sister. And they have no taste. Anyway, last week, the Trump administration upped enforcement of, basically financial sanctions against folks involved with the drug trade in Mexico, specifically a group by the name of La Familia Michoacan, which is a cartel in the southern part of the country. 

Music. Milliken state. Why does this matter? Well, Sentinel is a really difficult drug to move against because it’s a synthetic. It only takes a few seconds per dose to produce, basically do 100,000 doses in a garage and in the course of a week, as opposed to cocaine, which has a long agricultural supply chain stretching it back to South America. 

And so most of the things that the United States has done, before and during this current Trump administration has almost been pointless, because if you’re dealing with dozens, hundreds, thousands of mom and pop operators that are building this stuff, a traditional military or law enforcement approach just doesn’t work. The volumes are too small or too easy to smuggle. 

And since it’s synthetic, you basically can put it anywhere. So even if Mexico, working with the United States or on its own, was able to get rid of fentanyl production, it would just move to Oklahoma or Nevada or somewhere else. There has been a recent breakthrough with the de minimis shipping exception being closed, and that will greatly reduce the volumes of the precursor materials that make it in from India and China. 

And that will complicate the drug production, but it doesn’t solve the problem. Ultimately, it’s small scale and it’s hard to fight, of course, within every general trend there is an exception and la familia Michoacan is the exception. They are a cartel that instead of built around the smuggling of cocaine, is built a blurring the mass production of fentanyl. They are the only one of the major, narcotics trafficking groups in Mexico that has followed that business model. 

And because they control the part of Lazaro Cardenas, which is the largest Pacific port in Mexico, they have easy access to the raw materials that they need to basically produce fentanyl at an industrial pace. And they are largely immune to anything that happens with the de minimis exception or law enforcement in the United States. In many ways, they’re powerful enough to be a state within a state, and they control all of the corruption that goes along in the port as well. 

So rooting them out is going to be very, very difficult. In addition, some of the military options that the Trump administration really are inappropriate for this, not just because this is a major commercial port that would have a lot of complications and problems, but it’s on the wrong side of the country. It is on the southern coast of Mexico. 

It is nowhere near the U.S. border, so it’s just not in the sort of place that, the Trump administration or the United States in general can act. That said, the Trump administration has definitely named and shamed the brothers. Alaska Bagwell, who are in charge of the cartel, are now bumped up on the most wanted list. And I believe the new bounty is $8 million, in addition to a whole series of financial sanctions and indictments from US federal prosecutors. There is no good solution here. If there was, fentanyl wouldn’t be a problem. 

But because there’s an industrial scale production in this part of Mexico, U.S. authorities working in league with the Mexican government might actually be able to do something. It’s one thing to go door to door through every Mexican and American city looking for a drug lab. It’s quite another when, you know, the largest fentanyl labs in the world are in one specific city. 

That happens to be a port doesn’t make it easy, but it does mean that the sharp end of American power is a little bit more appropriate for this specific fight than for the rest of the drug war.

The Fire Hose of Chaos: Bye-Bye De Minimis

Cargo ship with containers

The US is plugging a loophole in the trade system called “de minimis” which allowed imported goods under $800 to bypass tariffs and traditional customs processes. This system will end on May 2, and these small packages will now face a 90% tariff and $75 minimum fee.

Many Chinese businesses will take a hit from this, but the biggest fish in the pond is the disruption of the fentanyl trade. Since shipments of drug precursors were abusing this loophole, the flows from China/India –> US –> Mexico will be disrupted. No this isn’t going to eliminate fentanyl, but it will slow things way down.

There haven’t been too many tariff policies to get excited about lately, but we’re going to slot this one down in the ‘win’ column.

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.

Transcript

Hey all. Peter Zeihan here. Coming to you from a Colorado morning. We are going to talk today about something called de minimis, which is how shippers around the world get stuff to the United States to avoid tariffs. Basically, you make it small. If the declared value of any package is below $800, you don’t have to register. You don’t have to pay customs. 

You don’t have to tell people what is in it, aside from like a one word description, which does not have to be accurate because it’s almost never checked. That ends on May 2nd. On May 2nd, the Trump administration’s tariff expand to the de minimis system. And it used to be as long as the declared value was under $800, you were in the clear. 

Now there is a minimum 30% tariff, which has to be a minimum of $25, which basically ends most a minimum shipping. And then by June 1st, that will increase to a minimum of $50, which will definitely put a bullet in its head. Turkeys. Two things come from this. Number one closes a loophole. 

I mean, there’s there’s not a lot of income here. The de minimis exception with the word minimis, I hope kind of communicates that as it most of these tariffs are just considered too small to be worth collecting. And by putting a system into place, the Trump administration is basically ending the practice, which means that most people aren’t going to ship things like that at all. 

And that’s, you know, a minor issue. I mean, if you get a lot of stuff from TMO, it’s a big issue. And and for China, this means a lot of small companies just lost their primary source of income. So it’s a problem over there more than it is over here. Over here the single biggest impact is going to be fentanyl. 

Right now what happens is, chemical plants in primarily in China but also in India produce the pre precursors and the precursor materials for fentanyl and then ship them in the US post to the United States, where they are repackaged into larger packages and then shipped down to Mexico for processing into fentanyl. And then the finished drugs are sent back. 

It’s all covered under de minimis. So basically, the Post Office has been the single biggest contributor to the drug trade in recent years. And this will pretty much kill that, which is great. Comes at an economic cost, but most of the cost is over there, if a little bit more inflation over here, which used to be a minor issue, but with the rest of the tariff war going the way it is, you know, every little bit hurts. 

This doesn’t solve fentanyl. I don’t I gotta underline that. I mean, while this stuff is currently sourced from mostly China, a little bit from India, and comes in through the post office, anyone with a chemical sector could source this, and the volume of stuff that is required is very little. Best guess is that all of the fentanyl that was produced in Mexico last year, all the pre precursor materials would be about the equivalent of under 100, drums, like oil drums. 

If you only got one deals that would be enough for everything. So it doesn’t take a huge amount of volume to get this going. And we’ll definitely be seeing things coming from other directions. It’ll probably go in a little bit more informal direction, like meth, where the pre precursors are actually synthesized at the labs. And that does increase the friction. 

That does slow the process. That does require a little bit more technical skill than what happens in fentanyl. And these are all good things. But this will drive up the cost of fentanyl, drive down the supply, at least in the midterm, and it’ll probably take 2 to 5 years before the fentanyl labs figure out good workarounds. Just keep in mind that once we’re to the other side of this, it will resemble the meth industry a lot more, with a lot more fabrication happening right here in the United States. 

Because once you get the precursors, the rest of it is really easy. You don’t even need a college chemistry experience to do this stuff and volume. And if you have college, chemistry experience, you can produce a huge amount of stuff. We’re talking hundreds of thousands of doses every week, so step in the right direction. Believe it or not, comes at a cost. 

Everything does. But for once, we have a tariff policy. This actually addressing a problem, and I’m going to take that as a win. 

Never mind. The tariff is not going to be 30% on de minimis items. It will be 90% with a minimum of a $75 charge. Everything else stands for now. 

The Fire Hose of Chaos: Don’t Expect Many Trade Deals

Photo of a bronze trump looking at a globe

The Trump administration can put out as much trade deal fluff as they want, but the reality is that the internal dysfunction and unpredictable nature of this admin will impede most deals from ever making it out of an email chain.

Trade negotiations are complex and take years to develop. Given the state of organizational paralysis, there’s just not enough people to handle most of these talks. All of that back and forth, up and down, and dragging through the mud has left a sour taste in most countries’ mouths. And with no real beta on how to successfully approach these trade deals, what’s the point in trying?

So, take those official claims that ‘progress is being made’ and ‘real trade talks are happening’ with a truckload of salt.

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.

Transcript

Hey all, Peter Zeihan here. The fire hose of chaos continues. And today we’re gonna talk about trade deals and why you really shouldn’t expect many. First of all, let’s talk about the organizational side of things. Usually it takes the United States about six months of consulting with industry and consulting with Congress just to build its general position on a trade talk. 

And then you go into talks with the other side, the fastest trade deal the United States has ever negotiated with Singapore. It took about 18 months. Most of them take the better part of a decade because there are so many pieces in motion. Even the Treasury secretary says that meaningful talks aren’t going to begin for another five weeks, and the first results aren’t going to happen with six months. 

Even that is just a grossly optimistic time frame. And what you normally do is the trade talks reach a point of stagnation down the road. Then you start throwing around the threat of tariffs. By doing it in the front end, everybody’s kind of on the wrong foot. And to be perfectly blunt, the United States isn’t ready to have these talks. 

Part of that is also organizationally, when the Trump administration came in, he came in with a much smaller Cordray than most presidents do. It’s really just the cabinet and a few senior aides. The Trump administration then proceeded to gut all of the departments of everyone in the top, several echelons, and then never staffed those positions with anyone but loyalists. 

And so there really aren’t a lot of people who even know how to negotiate in the first place, much less do a trade deal. So there’s really only four people in the US administration that are capable of holding the talks. You’ve got Jamison Greer, the US Trade Representative Office. You’ve got Howard Slotnick Commerce. You’ve got Scott percent at Treasury. 

And then, of course, the president himself. That’s four. And all of them have other things to do. Normally you would have literally hundreds of people taking care of all the technical aspects of the talks. And so when another country reaches out to the United States to do exactly what Donald Trump says he wants them to do. Open conversations on all of the topics. 

There are no people at the lower levels to carry on those conversations. It’s just the four at the top, and all of them are very, very busy doing everything they do with their normal day job. On top of several dozen trade negotiations. And so we’re hearing reports left, right and center from even larger trading partners that messages are going on responded. 

And any offer that they make is just met with silence for their part. The Trade Representative’s office says that it’s sending the things on to the president that he thinks are worth the president’s time. But everything just snarled up because the president is doing other things. That’s kind of piece one. Piece two is much more visceral because of the way Donald Trump has approached these things. 

There isn’t a lot of trust. So consider the situations of our top four trading partners outside of China. So first, Canada, Canada took a hard line position of resisting what the Trump administration did in its early days. And as a result, it got slapped with tariffs that haven’t come off. Mexico decided to bend and give the Trump administration everything it wanted. And as a result, it was slapped with tariffs. So with our top two trading partners, no one knows what the approach should be because the result is the same as for the Europeans. It’s a security issue. Trump administration came in, basically withdrew support for Ukraine. Ukraine is fighting Russia. Russia is the only reason that NATO alliance exists. 

It was created by the United States to contain the Russians. And so the Europeans quite rightly see the United States as a security threat. And anything that happens on the trade front, as a subsidiary to that. And the Trump administration doesn’t want to talk about the security situation at all unless the Europeans buy lots and lots of weapons. 

But still do everything the United States says. And so we’re getting a split in the security identity of the entire Western civilization. Because of this disconnect between the two, what the Trump administration says it wants, what it’s doing. And then throwing the tariff situation into the mix. And so the Europeans really don’t see a benefit to discussing anything with the Trump administration until such time that the NATO situation is untangled. 

And then finally, you’ve got Japan. Japan has tried to take a relatively low profile in this, and it’s mostly one of, it’s kind of a combination of betrayal and disgust that they’re feeling. 

During the first Trump administration, Shinzo Abe, the Japanese prime minister, specifically came to Washington, cut a humiliating deal specifically to get in with Donald Trump so that whatever the future of the United States would be, whatever the future of Japan would be, the hard work would be done, and they could proceed together. 

So the deal was negotiated by Trump, was signed by Trump, was enforced by Trump. And in the last month, the Trump administration has basically abrogated the deal and told the Japanese to start over. And the Japanese position is, if you want, honor your own deals, why in the world should we bend over backwards to negotiate another one with you? 

And so the official story is that everyone is reaching out to negotiate, and lots of good deals are being made. But the bottom line is, none of our trade partners really see the point in doing this, because everything is so erratic today is April 16th. Today, the Trump administration announced its 95th tariff policy in 45 days, raising the tariff rate on many Chinese products to 245%. 

As long as everything is so erratic, there is no point in having a conversation with the United States. Even if you can get someone on the phone because the rest of the world just doesn’t know yet what this administration actually wants. The goalposts are changing on a daily basis, sometimes an hourly basis until that settles. 

Trade talks. Real trade talks can’t even begin.

The Fire Hose of Chaos: Wait, The Recession Is Already Here?

Photo of man holding empty wallet

What could have happened much, much further down the road (or even avoided given the right circumstances) is now in the headlines – the US is headed into a recession. And if you wanted to send a thank you card to someone, you could send it to 1600 Pennsylvania Ave and address it to the Trump administration.

Between the unpredictable tariffs and constantly evolving regulatory shifts, this recession seems like it was part of the “plan” all along. The four big contributors are government spending remaining high, industrial construction on hold since March, manufacturing getting hit hard by tariffs, and consumer spending slowing.

Even if Trump’s reshoring efforts worked perfectly, we’d still be looking at two years of inflation and recession. And nothing in this administration has been done perfectly so expect this recession to be much deeper and longer than necessary.

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.

Transcript

Hey all, Peter Zeihan here coming to you from Iowa. Happy Easter week. Happy Easter week? Happy Easter week. Any who, a lot of you have written in to ask, whether I think we’re going to be in a recession and why? Short answer is. Yeah, yeah. First, the caveat. When the United States was making its presidential transition back in January, pretty much all of the signals for consumption activity, for industrial activity, for government activity were all green. 

I don’t mean to suggest there weren’t some complications in there are some things to kind of keep an eye on. But we were in the middle of an economic expansion. There was no reason for expect that to change. But the policies of Donald Trump have been so erratic, so consistently, ironically, that business confidence, has collapsed. And the United States is now in a situation where it is dealing with regulatory and geopolitical risk, which is something that business communities hate. 

On top of that, you have the tariffs, where in the last six weeks we’ve had 92 tariff policies, which make it impossible for anyone, business or consumer or even state and local governments to plan. So we’ve seen everything freeze up. And this is definitely going to cause a recession and a rough one and one that is completely unnecessary. 

So let’s just kind of go through the four categories of where the growth comes from. First, government. This is actually the one I’m least concerned about. Despite everything that Doge has done with firing people, it turns out that the president doesn’t have the authority to fire most federal workers. Neither does the Office of Management and Budget, and certainly Doge, which doesn’t even have a congressional mandate. 

Instead, every department in the federal government does have a federal mandate. And as congressionally mandated activities. So you can’t fire these people without congressional activity. So everything that Doge has done is pretty much already been unwound. The total budget savings and the low double digits of billions and 90% of the workers have already been rehired, doesn’t mean that they won’t be fired. 

Now, the Trump administration, in kind of round two is actually doing it the right way, going through the cabinet secretaries and getting legal structure from Congress for the reductions. And that will work. But that won’t manifest this quarter and probably not next quarter. So what that means is, even with the federal government being in chaos, the spending is still happening. 

So we’re getting none of the functionality of government, but all of the cost of government. And from an economic point of view, that is a slight negative, but not a big one. So government’s kind of a non-factor right now. Next up is industrial spending, primarily on construction of new industrial plant. Now, in calendar year 2023 and 2024, we were setting records every single month, and it all came to a screeching halt on the 1st of March of this year because of all the changes in the regulatory structure programs, and because of all the chaos with the tariff policy, no one knows what the cost structure is any longer to build in the United States. 

And so no one is building in the United States. We have already had a longer stretch of zero industrial construction, at any point, in the United States, since World War two. Now that is only about 10% of the economy, but it’s at a huge drag right now. Next up is manufacturing. Primarily the problem here are tariffs on Canada and Mexico, which are coming in and out and changing on a regular basis, just like with everything else. 

But it’s really hit things like auto spending, Your average automotive has 30,000 parts and on par, all of the parts basically go back and forth and back and forth and back and forth across borders to whichever one of the three NAFTA partners do the best. And on May 2nd, we don’t simply have tariffs on Finnish cars. 

We have it on all of those auto parts. And so we’re looking at the average cost of a vehicle going up by 12 to $20,000. If it’s made in North America. And that is going to be crushing. So with the existing tariff that we have right now that was implemented on the first week of April, that was already enough to trigger manufacturing recession and the really heavily auto committed places like Tennessee, Kentucky, Michigan, Indiana, Ohio. 

And what we’re going to see, in the 1st of May is that will spill out to the other 25 states that are big into transport technology, and that’s everybody from Washington to Texas to, South Carolina. So then we get a manufacturing, recession. That’s another 15 to 20% of GDP. And then finally there’s consumption, which is the big boy, three stories here. 

First of all, Trump says we’re going to get agricultural tariffs very, very soon. In fact, by the time you see this video might have already happened, for the bottom quintile of the American population, one third of income is spent on food. So that immediately is enough to translate into a consumption recession for the poor and especially poorer parts of the United States, such as the Deep South or some parts of the Rocky Mountains. 

Second, the wealthy, most of their consumption is tightly correlated to what’s going on with the stock market. And that’s been a shit show for the last couple of months. So all of a sudden, the people who have the highest amounts of capital are probably going to be drawing back. And third, the tariffs at the time of this recording, we have 145% tariff on, on China, which is where most of our electronics and consumer goods come from. 

So you throw that on top of what everyone would normally purchase and, you get a consumption led recession across the entire system very, very quickly. Now, the end goal here, of course, of the Trump administration’s policies are to expand the industrial footprint in the United States and get back into manufacturing in a big way. But that takes a lot of things like steel and aluminum, copper. 

And we now have tariffs on all of those things. So building out this industrial plant will be very, very expensive. And if everything goes the way that Donald Trump says it will, we won’t see the first output from these new factories within two years, which means that this transition period best case scenario, according to Trump’s words himself, is two years of inflation and recessionary activity. 

That’s assuming that he’s made the plan perfectly. He hasn’t. And that assumes that he’s right about what he’s doing. He’s not. So yes, recession probably starting off formally, statistically in the second quarter, certainly in the third, and lasting a lot longer than it would have ever needed to.

Should the US Stay in the Middle East?

Photo of a Marine on top of a HESCO barrier

Here’s a video I recorded while I was in New Zealand at the end of 2024. In this video, we cover a question that the US is still trying to answer – should the US maintain its presence in the Middle East?

The US has been involved in the Middle East for quite some time, but times are changing. The US is now energy independent, but US involvement in the region was never about energy for the US; involvement in the region was about securing energy supplies for US allies and maintaining strategic alliances against the Soviet Union.

The US has a few paths to choose between, and each option leads us to a very different geopolitical picture. Remember, this isn’t just about energy, this is about alliances, power, and strategy.

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.

Transcript

Hey, everybody. Peter Zeihan here on the Tongariro Crossing in New Zealand. The weather. So we’re not seeing much, but I figured I’d take a question from the Patreon forum. And specifically it is, I’ve always been told that the United States was involved in the Middle East for oil, but now that the US is energy independent, does that change? 

Is there a reason to stay? Great question. I’m not sure I’ve got an answer for you, but I can at least inform the debate. Keep in mind, until 1973, the United States was an oil exporter. We were an importer from roughly 1973 until roughly 2013. I mean, you can fudge those numbers a little bit, but about that. 

But the United States remained one of the world’s largest oil producers. Right up until the 1990s. And we most of the crude that we got came from the Western Hemisphere, with Canada, Mexico and Venezuela being our three largest sources. It was pretty rare for us to get more than 10 or 20% of our crude on a daily basis from the Middle East. 

Most of what we did get was typically, equator, Saudi Arabia. And in order to make sure that we had an interest in defending them, what they would do is park a supertanker off the US Gulf Coast and basically wait for an order. Because they knew that they couldn’t defend themselves if push came to shove. It is a Kuwait. 

That was absolutely true. Anyway, the point is, is that we didn’t use much of their crude. Most of the crude that, is exported from the Persian Gulf went to our allies, first in Europe and later in Northeast Asia. Keep in mind, during the Cold War, China was an ally. So the reason wasn’t so much for oil per se, but for the strategic alliance that we built to contain and beat back the Soviet Union. 

Keep in mind that the Soviet Union is a land based power that takes up a very large chunk of Eurasia, and there was no way that the United States, a maritime power, could counter it at all points of the compass at all times. We needed allies for that, and that means we needed allies that were willing to take a degree of risk. 

So you basically indirectly support countries like Britain and France and Italy and Germany and Korea and Taiwan and China and Japan, in order for them to be able to hold onto the alliance. And if for whatever reason, the United States proved unable or unwilling to do that, then these countries that were serving American strategic interests would have to have a deep conversation with themselves about whether or not the alliance is going to work for them at all, because if you don’t have oil, you’re talking about a deindustrialization process and a catastrophic drop in economic activity and standard of living 

Anyway, some version of that is what the conversation needs to be in the United States today. We don’t need the oil. That’s obvious. In fact, we’re even retooling more and more of a refining complex to specifically run the light, sweet crude that comes out of the shale fields. But the rest of the world needs middle Eastern crude. 

And so one of the things that we did after World War two is make that globalization for a security deal that brought us to more or less the current day. It is time for the United States to lead a conversation with the allies on what the next chapter of that looks like. Now, the last president in the United States who started us down the road of having that conversation was George Herbert Walker Bush. 

And if you remember the 1000 points of light in the New World order, that was the core of it to renegotiate the deal. We voted him out of office. And in every election since then, we’ve voted for someone who is actually less interested in maintaining the global order. I would actually argue that, Joe Biden was less interested in that than Donald Trump. 

So it’s kind of a wash. This last one. 

But this is a conversation we need to have, because if our decision is no, we’re not interested in the Middle East. We’re not interested in maintaining an alliance of nations to help us achieve our goals. Then we have to do it all ourselves. And then we have to decide whether we want to basically ostrich here in North America or massively expand the military complex so we can at least attempt to do it all by ourselves. 

Personally, I don’t think either of those are particularly attractive options. If you look at the long run of American history, every time we do truly, nationalist and really do ostrich down, something happens in the Eastern Hemisphere that draws us back in in a very ugly way that costs us hundreds of thousands of lives. But I’m not the only one who’s a decision maker here. 

And this is the conversation that we all need to have. 

Oh, one more thing. There’s more to maintaining a presence in the Middle East than just being Mr. Nice Guy for an alliance. For example, China today is the world’s largest oil importer, bringing in somewhere between 12 and 14 million barrels a day based on whose numbers you’re using. If the United States controls the ability of the region to send crude out, you could shut off China in a day. 

Food for thought. 

I Hope You Didn’t Want to Buy a Home

Photo of a home in the United States

Trump’s endless tariff policies will likely hit just about every corner of the American economy, but the US housing industry is poised to take a devastating blow.

Mortgage rates are higher, there’s a labor shortage, and material costs are on the rise, which all make the concept of homeownership less attainable. You would think that the aging population would help free up some of that real estate, but the boomers are aging in place, rather than downsizing or going to a retirement home.

So, if you already own a home…good for you! If you do not…I hear Van-life is all the rage right now!

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.

Transcript

Peter Zeihan here, coming to you from Florida, doing kind of an open ended series now on the effects of the tariffs on the US economic structure. And today we’re going to talk about housing. It is probably the sector that’s going to get hit hardest, with the exception of electronics imports. Both from the point of view of supply and from the point of view, of course. 

So let me just run through it real quick. First of all, if you want to buy a house, you have to get a mortgage, unless you’re incredibly lucky and mortgage rates are going up for a couple of reasons. Number one, if the Trump administration does what it says it wants to do, it’s going to increase deficit spending by roughly 1 trillion US a year, which will put pressure on the debt market hugely. 

And all those ten year Treasury bills the Treasury Department is going to have to issue, are going to add up and raise the cost of a mortgage because it’s based on the ten year Treasury. That’s number one. Number two, we were moving in this direction anyway. Most of the free capital in a system comes from a population of people aged 55 to 65, who haven’t yet retired but are preparing to. 

Their incomes are very high, their expenses are low, and the difference between those two generally gets shoved away for the future because they know when they retire, they’re going to have to basically cash out of their high velocity investments. So stocks and bonds become T-bills and cash. Well, as of January of this year, two thirds of the American baby boomers, the largest generation we have ever had, have retired. 

That liquidation has already happened. I’d argue that most of the reason we’ve seen a quadrupling in capital costs across the overall economy these last five years hasn’t been Covid. It hasn’t been Biden or Trump or the fed. It’s just been the boomers doing what you do when you retire. Well, that hits mortgage rates as well. And then we have Trump’s more specific policies, basically liquidating the migrant workforce. 

Trump says he wants to send about half of at home, roughly 5 million people. Well, the industry that migrant workers are most likely to work in after agriculture is construction. In addition, we have tariffs on steel and aluminum, which are two of the four biggest components that go into home building, the other two being copper and wood, which are also under sanctions. 

So all of the inputs that are necessary to build a house in the first place are seeing their prices go up even as finance goes up. And there’s one more angle to keep in mind if something happens to your car, if something happens to your housing, if you draw upon your insurance policy for rebuilding, you still need labor and steel and aluminum and copper and wood. 

While you might not need wood for the car, but the rest of it. And so insurance premiums are probably going up 20 to 30% just this year, specifically because of new policies out of the federal government. Finally, the boomers themselves, unlike the generations that have come before, who move into smaller units when they retire, whether it’s an apartment or assisted living or something like that, boomers are far more likely to stay in their home and age in place. 

And there’s nothing wrong with that. But what it does mean is the single largest concentration of homes that owned by the boomers is not getting freed up as part of this demographic turnover. And so if you are a millennial and especially, a member of generation Z, the quantity of housing simply isn’t there. The older generation is staying in place. 

The newer construction costs more. The home insurance that you have to get to get the mortgage costs more. And the mortgage mortgage itself costs more. You add it all up and housing is just expensive and only going to get more. So we cannot build it fast enough. And even if we could, the components that go into it are more expensive than they have ever been relative to the average income in American history. 

So if you happened to own your house, of course, this is all great news because we’re entering a higher inflationary environment, which will eat down the cost of your loan relative to your income. So if you were in a position where you have already established yourself, this is great. If you’re trying to get going. This is awful. And that is one more problem that we’re going to have with inequality down the road.

Is Trump Playing 4D Chess?

Photo of a chess board

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.

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.

Transcript

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.

Of Tariffs, Manufacturing and PSAs

Photo of man working in a manufacturing shop

The tariffs on China are now effectively 145% and penalties tied to Venezuelan oil could raise that to 170%. Trump’s tariff policies are nearing the triple digits, so the level of uncertainty filling every board room is chilling.

While the idea of moving manufacturing away from China is an attractive idea, Trump is trying to brute force his way through this obstacle. When you do that with one of the most complex and developed global trade systems, it’s not going to be a fun process. And there’s no safety net to this. With allies like Canada and Mexico under the pressure of their own set of tariffs imposed by Trump, who is going to pick up the manufacturing? Or help with the industrial buildout?

Needless to say, we’re heading down a very painful road. My piece of advice – you may want to pick up an extra phone or laptop while it’s still (somewhat) affordable.

(Well, that lasted for a bit…)

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.

Transcript

Hey all Peter Zeihan here coming to you from Florida. And while I was on my way here, the Trump administration issued a clarification of the tariffs on China that they’re actually not 125%, the 145%, because some of the tariffs that were on earlier are stuck with the ones that are here now. And that’s before you apply, the tariffs for China using, Venezuelan crude, which would take it up to 170. 

So I thought it would be useful to give a little bit of a technical update. Paired with a bit of a public service announcement. So the whole goal for what Donald Trump is trying to do here, which I broadly agree with, the goal is to bring manufacturing away from the Chinese space and into the US space. The problem is that, you don’t do that overnight, especially for more technical things. 

So when you see the Commerce secretary saying nonsense about having Americans work in factories screwing iPhones together, I mean, that’s just stupid, because that’s not how it works. The iPhone, for example, has 1100 supply chain steps, and they’re scattered across East Asia with about 90% of them either starting, ending, or being centered in China. So it’s not like you move one factory, you move 1100 plus all of the logistical and labor support that goes with it. 

And before you say the US can do this quickly, keep in mind that it took Apple 25 years to develop the iPhone and then another 20 years for it to turn into the product that it is today. Those supply chains are the end result of 40 years of breakneck industrialization and industrial development that was ultimately funded by debt driven investment funds, that it’s a combination of capturing all of the spare savings of the population over the course of the last 50 years, combined with a huge amount of currency printing. 

You’re talking about a combined industrial plant in China of roughly 40 trillion U.S. dollars equivalent. Even if the United States was to put $2 trillion of federal spending towards this project a year at the soonest, you would be expect the United States to be able to build an iPhone. It’s somewhere around 12 to 15 years from now, which means that no matter how high the tariffs get under the 45 right now, you should not expect to get meaningful American manufacturers with the next two years. 

In fact, Trump has said himself personally that we should see the first fruits of this project within two years. Two years is when we start to see the benefits. And honestly, that assumes that we have partners in this in Mexico and Canada. That is very clearly not clear right now because the Canadians and the Mexicans are under tariffs just like everybody else. 

So no one even wants to start building the industrial plant until there’s some clarity. And the announcement today that said that China is now up to 145. That is the 92nd tariff policy that we have had in this country in the just the last six weeks. And until things settle down a little bit, I don’t expect anyone to start investing hundreds of billions of dollars. 

Now what else? What we’ve been seeing in the last six years, roughly, is an evolution in the understanding of manufacturers about how reliable China is as a place to manufacture. So during Covid, everyone started diversifying away from China. They called it a China plus one strategy. And then about 18 months ago, well before Donald Trump had even won the primaries, there was a realization that China is no longer the low cost producer. 

There’s the sunk cost of the industrial plant, and that is a massive motivator. But Chinese labor now costs roughly two, two and a half times as much as Mexican labor, and it’s not as highly skilled. So we were going from a China plus one strategy to an anything but China strategy. Well, in the last six weeks, what Donald Trump has achieved has gone from an US only strategy for consumption to a US plus one strategy in the mind of all of the world’s major global manufacturing companies. 

So until we get clarity on the regulation, on what federal support might look like on the power grid, on the ability of the United States to produce the base materials like steel and aluminum, copper and wood and all the rest. No one’s putting anything here for the last two years, we have set regular records for industrial construction spending in the United States as part of the diversification away from China and the reshoring from China. 

But because we’ve had policies changing, oftentimes hour by hour, everyone is just stalled. And for the first time since Covid, and for the second time since World War two, industrial construction spending has basically gone to zero. Until we have clarity, that’s where it’s going to stay. Now, if I can take a flight across the country and we don’t get a new tariff policy by the time we land, then we can start the conversation about how we can begin the 12 to 20 year process to achieve what Donald Trump really wants, which means that your average low end iPhone is going to cost a shade under $3,000 if it’s originating in China, because while China may not be the most advanced manufacturing power, they are the assembly power. 

And so all the parts circulate around East Asia, are centered into China and then shipped from China to the United States, all of them qualifying for that 145% tariff. Which means that effective. Now, if you want electronics, you want your iPhone, you want your computer. Without that massive markup, you have to buy something where the inventory already exists. 

In the United States, because anything new coming in has that price markup. So Apple flew apparently 60 tons of product into the country a couple of days ago to get in under their wire. And that’s all that’s left. So you want to save a few thousand bucks, buy your new computer, buy your backup computer, buy your new phone, buy your backup phone. 

Now, I bought three of each.

Stopping Trump’s Tariffs with A New Trade Act

Photo of Congressional interior chamber

It’s hard to equate Trump’s tariff policies to much of anything, but the movie “Unstoppable” where Denzel Washington needs to stop a runaway train might be the best I can come up with. And just like in the movie, there is a quickly approaching curve that the train is going to fly off (the curve in this analogy is stagflation, recession, and a hindrance of US industrialization).

All standard measures of stopping this ‘train’ are gone. Both political parties are fractured, Trump has surrounded himself with loyalists, and the traditional policy influencers have been sidelined, while the judiciary doesn’t typically intervene in trade policy, Congress does have constitutional authority over tariffs. While this power was ceded to the president through the Trade Act of 1974, a new bi-partisan effort called the Trade Act of 2025 could reclaim it. This bill would require congressional approval for tariffs to remain in place beyond 60 days.

Even if this did make it to Trump’s desk, it would be sent back to the Senate and require a veto-proof majority, which isn’t going to happen any time soon. It’s probably going to take red states feeling some significant economic impacts before we can entertain the idea of slowing, much less stopping, this train.

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.

Transcript

Peter Zeihan here. Coming to you from Colorado on a bright, sunny, shiny, snowy morning. Anyway, taking a question from the Patreon crowd today, and it’s with all this terror fun and games that’s going on in Washington at the white House. Is there any institution? Is there any person? Is there anything in the United States that could make it stop and maybe unwind it? 

So we aren’t in a stagflation era environment so we don’t face down a protracted recession, and that we can actually keep the industrialization that we already have. It doesn’t look great. We’re at a time of political transition here in the United States, where both of the political parties have broken down. The Democrats basically collapsed in the last election, and it’s reasonable to think that they won’t come back. 

And the Republicans have been so subsumed in the cult of Trump that all of the business leaders and national security leaders and so on. That used to be the bedrock of the Republican Party. How are I best being called rhinos at worst, are being called Democrats or something else? Anyway, so the normal political things that could, shape a president’s behavior are gone. 

In addition, Donald Trump is a nonstandard president, and he’s made sure that there is no one in his circle who knows anything. His chief manufacturing trade adviser has never manufactured a thing in his life. His commerce secretary is craven, and there is no one in the upper echelons of any of the departments that really knows anything about their purview, because Trump fired everyone and replaced them with political lackeys. 

So he only accepts into his circle the information he wants. And one of the few bodies that actually has access to that circle are the Russians. And anything that destroys American long term economic vitality is something they’re going to be enthusiastic about. So you can expect a steady drip of that sort of misinformation going right to the top. 

As for the other levers of government, the judiciary never touches trade, or at least only obliquely. So there’s no one you can sue in order to get a court ruling that might make this better. The only body that matters, the only body that has really ever mattered when it comes to hemming in a president who’s gone off the rails is the Senate. 

And I’m not talking here about impeachment, although that is obviously, something that they’re famous, infamous for based on your politics. But, the Constitution very, very clearly lays out that interstate, intrastate and tariff policy is a congressional purview, not one of the executive branch. The executive has no native powers to regulate international trade at all. What happened is we had something called the Trade Act back in 1974 that gave the president tariff authority. 

So this is power that has been granted to the president decades ago, a half century ago. And so if Trump is going to be stopped or reined in or mollified or something, it has to come from the Senate basically initiating a repeal of that act. And that process has begun. Something called the Trade Act of 2025, which a couple of senators, one Republican and one Democrat, have co-sponsored, and it’s starting to get traction. 

If it were to pass, however, it would still then have to pass the president’s desk, and he would undoubtedly veto it. So it would have to pass by a veto proof majority. We’re nowhere near the political forces that be shifting in that sort of direction. We will have to have a more severe economic downturn than just a stock market crash like we’ve seen in the last few days. 

We’re talking about something that puts a lot of people out of work in a lot of red states. Keep in mind that Republicans have 53 of the 100 and Senate seats. You would need at least 67 senators to vote against the president for this to work. And even then, we’re just at the start of the process. Then we have to unwind a lot of stuff. 

Anyway, the person to watch is, the senator from my home state, Iowa. Chuck Grassley, he’s the senior member of the Senate now, I believe he’s like 185,000 years old, almost as old as Biden and Trump. Anyway, he’s been in the Senate for 35, 40, 60 century since the US was founded. Years. Long time. Anyway, what Chuck Grassley is known for more than anything else is he’s a rule of law fanatic. 

And while he has gone along with Donald Trump’s plans on pretty much everything, he’s done so with a wince, the whole way, because he knows that these are not conservative values. These are not good for the United States. But the party has shifted, and he feels he has to shift with it. 

But he was one of the co-sponsors for this bill that would repeal, presidential Tariff Authority, basically, if, if, if, if the bill in its current form were to become law after 60 days. You have to convince the Senate, that, the tariff is a good idea, otherwise it goes away. 

So you can use it as a negotiating ploy, but it doesn’t make it into policy. Whether that’s good or bad or indifferent is really not the point. The point is, is that the, the champion of rule on the Senate has been roused, and things are starting to move nowhere close to a resolution. But the process has started.