U.S. Politics Archives - Zeihan on Geopolitics

Stopping Trump’s Tariffs with A New Trade Act

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.

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.

The Death of US-China Trade + LIVE Q&A Starts Soon

An AI generated image of connex boxes with American and Chinese flags on them

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This is a bonus video that Peter recorded this AM!

Trump and Xi got into a pissing contest with their tariffs and you guessed it, everybody lost…

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.

Peter Zeihan here it is April 9th. Yesterday, the Trump administration added another 50% to the tariff on China, which brings the official total to 104. And we’re probably only days away from a secondary sanction being placed on China for its trade with Venezuela, which will bring it to 129%. Also overnight, the Chinese raised their retaliation on tariffs to, for imports from the United States from 34% to 84%.

So the largest bilateral economic relationship in human history is, for all intents and purposes, over now. And the decoupling is going to proceed with massive pace on the American side. This is highly inflation here because there just isn’t enough industrial base elsewhere on the planet. Even if we had good trade relations with everyone else to replace the manufacturing capacity that is in China.

And if we’re going to build it here, we need all of the raw materials steel, aluminum, lithium, cobalt, all of it that China is the primary processor of. And all of those now does cost twice as much. So we’re looking at a minimum 10% inflation for the remainder of the year. And hyperinflation is something we need to start considering as a possibility.

We’re also looking at a recession, because the increase in costs for the basic things that allow your life to function is now beyond the point that the lower third of the American population can afford without significant external support. And the federal government is already in a massive debt situation that Donald Trump has promised to make worse, with additional spending and tax cuts on the Chinese side, they just lost their largest customer, their largest source of capital, their largest source of technology.

And, the implicit support of a country that provides the military security, that allows their shipments to move. We now need to start considering what happens when the US military is tasked to economic issues, which will disrupt Chinese shipping to the rest of the world. And that very quickly leads not just to a recession and a social breakdown in China, but something potentially far worse that could technically include things like military conflict, and is a disassociation of the Chinese system and everything goes with it.

It is a very quickly evolving and degrading situation. We have to cult of personality on both sides of the Pacific, who basically ignore what few advisors they have left. It is now a battle of egos, with the rest of us caught in the middle, and it will not end well. There is no one who can mediate here. This is no one who can talk either side down.

This is going to go until something breaks. And what is going to break is the current economic expansion in the United States. We are firmly in recession territory now, and probably the Chinese system as a whole. And there’s no way that those two things don’t happen without a cavalcade of additional issues. Now, at very we’re having our question time here on Patreon for subscribers.

If you haven’t signed in already, I suggest you do it because we’re starting at 10 a.m. mountain. Noon eastern. And for those of you who are not in Patreon, we’re sending this video out to everyone. So you have some idea of what’s coming down the pipe. We’re going to be answering questions for a good long time.

I’m going to do my best to be ready for everything you’ve got. Sign up. Links are at the end of this video. See you soon.

The Tariffs Stalk at Midnight + LIVE Q&A Starts Soon!

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Well, the fat lady ain’t singing yet. Late yesterday, more updates on Trump’s tariffs were released. The gist is that North American trade is taking a huge hit, auto manufacturing and its ancillaries will face severe disruptions, and steel and aluminum costs will soar. Again, we’re just seeing the tip of the iceberg, so we may all want to keep those tariff notifications on for a while.

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, it’s early in the morning, April 3rd. I set my phone to ping me, when the tariff policy changed. And that was an error. With changes overnight, we’re now on our 86th tariff policy in the last month. Today, I just wanted to talk very briefly about what’s going on with the Canadians and the Mexicans, which are at the heart of the US trading system.

And basically there isn’t an manufacturing supply chain that we have that isn’t reliant upon steps in both countries. According to the newest changes. Effective immediately, we have a 25% tariff on all automobiles, on top of a 25% tariff on all trade coming from Canada and Mexico, on top of a 25% tariff on imported aluminum and steel, on top of a 10%, tariff on imported energy.

So the baseline rate for Canada, Mexico is technically only 25% for our number one. And our number two largest trading partners. But then we have these additional, tariffs, that really hit integration issues. So just running through the battery real quick. Energy, most of the crude that comes from Alberta is refined and used in the United States.

Basically, we’re the only refineries in the world that can process this stuff. In most cases, if the Canadians were to build an alternative piece of infrastructure, which would cost $30 billion minimum and take at least five years, all that would get them to do is tidewater. And then they have to build a refinery, helps them build a refinery somewhere else.

So this is, energy that basically just became more expensive, and is really going to push U.S refineries to change the way they refine it, especially with the distillation column. So they can use lighter, sweeter crude. I’d argue that was probably a good idea anyway, but now there’s a very strong financial impetus to do it. And in the meantime, we’re gonna have a significantly more expensive gasoline and diesel, particularly in the Midwest and particularly in agricultural regions.

That’s one number two, automotive, at the moment, the automotive tariff only applies to finished vehicles with a partial discount if there are parts in that vehicle that are, made in the United States. So if you have a car that’s assembled Mexico, but three quarters of the parts come from the United States, you get a 75% exemption from the tariff.

Of course, most vehicles, made in North America are very heavily integrated. Whether it’s the Detroit area with Ontario or Texas, with Mexico. So this has an immediate impact to the tune of about. It’s going to average based on type, somewhere between 2 and $12,000, a vehicle with the 12,000 being more appropriate for cars that are imported from Europe. Within 30 days, this tariff will expand to cover not just finished vehicles but all car parts. And when that happens, it will absolutely shatter the manufacturing supply chains of, the United States, Mexico and Canada, which we’ve spent the last 30 years building to make it the most efficient car industry in the world, because most of these parts cross the border four and five times.

And so doing this will basically break the entire system, because this is on top of the 25% tariff that now exists for Mexico and Canada. So 50% charge every time something crosses, even for a cheap car, that will add at least $10,000 per vehicle, and will absolutely make the United States completely dependent on imported vehicles from places with lower tariffs.

Assuming nothing else changes, something else is certainly going to change. Like I said, this is the 86th tariff policy. And then finally steel and aluminum. The Chinese are collapsing right on schedule. Their demographic disaster is well past. The point of no return has been for years. They probably have no more than eight years left. And we need to double the size of the industrial plant, assuming we do that in league with Mexico and Canada.

If we’re not going to do it in league with them, we’re probably talking more about a tripling in. That is a lot of steel and a lot of aluminum that we’re going to need. And now that, is more expensive, keep in mind that Canada was our number one supplier of aluminum. And now that costs 50% more and none other than the president of Alcoa, not a Canadian company has said that this is one of the most economically devastating things that could ever happen to his industry, as well as construction in general is worse in manufacturing in a broader sense.

So, yeah. Last video I gave to you guys last night suggested a recession, for about a year and inflation about 6%. This new stuff that happened overnight suggests it’s going to be significantly worse. And I would be asked if this was the end of it, because Trump hasn’t even started announcing things like sectoral tariffs on things like semiconductors or medications.

We know that there’s $1 million tariff minimum that’s going to come on all port visits by Chinese vessels. That’s just around the corner. We’ve got the car tariffs, car part tariffs that kick in in a month. We are just getting started on this dislocation..

Trump’s Tariffs: Reciprocal Edition + Live Q&A

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Trump has announced his first big batch of tariffs (that’s right, what’s happened until this point is fairly small compared to the new stuff). Here’s a snapshot of where this one round will take us…

Note: Without more clarity from the administration on how tariffs will be administered, we’re left to do a bit of quick back-of-the-envelope math.

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.

Peter Zeihan here coming to you from a hotel room because I’m traveling. It’s tariff day at the white House, so lots of news, but honestly, not the level of detail we need yet. So we know there’s more information that will be coming up from the white House in the next day or week or so. But where we are right now is that Donald Trump has listed what he calls reciprocal tariffs.

About how 50 countries, he indicates that more will be coming. And there is no information at the moment on sectoral tariffs. So specifically on agriculture or semiconductors or anything like that. So working with what we now know, the ones for the Western hemisphere aren’t too bad. Most of them are about 10%. That is enough to drive up the cost of integrated supply chain systems, but probably not enough to get most people to move production.

So that just turns out to a flat cost on everything that comes in as part of America’s existing trade deals with Chile, with Colombia, with Central America, with Mexico and with Canada. This is an inflation issue rather than a re industrialized or a movement issue at this point. I also need to underline that this is not the end of the story.

And we also, on top of that, have a 25% tariff on all automotive products, unless they were built in the United States from American parts. So if, for example, if Ford was to bring in parts from Mexico and then do value out of the United States and ship them to Canada for final assembly, most of that would still be taxed twice, probably more like 11 times, because every time you cross the border, you get that tax again.So we’re now looking at combined with this new 10% tariff, probably increasing the average cost of a vehicle really depends upon the vehicle. But somewhere between 4 and $14,000 based on where you’re getting it from. The second big chunk is when you’re looking at Europe. I don’t want to say they got off easy, but they only have a 20% tariff.

That, again, is not enough to rewire supply chains. It’s just enough to crimp the trade relationship and raise the cost of products. Keep in mind that we don’t get a huge amount of stuff from Europe. That is not what I would call, you know, finished value added stuff. So it’s not that back and forth stuff like we have in NAFTA, where even a low tariff number can have a real crushing impact, it’s more finished products or luxury products or cultural products that are coming up.

They just get 20% more expensive. Third, and my biggest concern is Southeast Asia. I really all of East Asia, the biggest numbers that he allotted for countries that were in like pipsqueak like

Cambodia is like 45% anyway. Japan, Korea, Taiwan, all the Southeast Asian countries, almost all of them, they’re pretty big numbers, 25% and up.

And this is a real problem moving forward. Not only is the United States really technologically intertwined with the Northeast Asian countries, Japan, Korea and Taiwan, and that makes everything with the semiconductor supply chain really problematic because those like with NAFTA products are going back and forth and back and forth and back and forth all the time. And the United States provides the most value added parts of that product.

This blows that up from the inside and really incentivizes other countries to fill that gaps if they’re technologically able. And that will really help out Japan, Switzerland and Korea and Taiwan over the long run. Assuming there’s not another step, there will be another step. I don’t want to play that, but what I’m really worried about is Southeast Asia, because in a world where China breaks, Southeast Asia is the part that’s going to play the most constructive role hand-in-hand with NAFTA, I might add, for picking up the pieces and building whatever is next.

And now there’s basically a 25 or more percent tariff on almost everyone who was involved in Southeast Asia in case of Vietnam specifically, which is the country that’s probably going to do the best out of this and be America’s strongest partner in the area. It’s now a 46% tariff. That’s enough to wreck the relationship overall. So all the progress that we have made in the last ten years and moving away from China, these new tariffs just punch in the gut and we’re going to have to start over.

And that is going to be incredibly expensive. And then finally there’s China itself. 34% is the starting number that appears that that is on top of the 20% that Trump already did in the last two months. And that’s before you consider the additional price on agricultural products or automotive products or what are being called secondary tariffs from, Venezuela.

So at a minimum, we’re now looking at, see, 3454 or 6474. We’re looking at 79 and then modified by product. So if it’s car parts for example, 79 becomes 104. That blows up the single largest bilateral economic relationship on the planet that is not within NAFTA. And then of course, we’ve got a couple of grenades in the room of NAFTA as well.

Anyway, talking about all of this put together, we are easily looking at a recession that is going to last a year. If everything that Trump hopes comes to pass, and this leads to an absolutely massive explosion of investment in the North American sentiment, let me rephrase it. In the American system, that’s a 12 to 20 year process.

So a 12 to 20 year process with much more expensive goods and eventually a part system that has to divorce itself from everybody else that could get really bad really fast. Again, about the only saving grace here is that, within the Western Hemisphere, the base tariff is only 10%, which will mean everything is more expensive, but it probably won’t break down.

So recession for about a year, much higher inflation that we needed it to be, will probably break 6% this year in a conservative basis. And never forget that this is phase one. And Trump has made it very clear that more, much more is coming down the pipe.

Why I’m Okay with Some of the Secondary Tariffs + You Mess with the Don, You Get the Tariffs

Why I’m Okay with Some of the Secondary Tariffs

On March 25, President Trump announced a new 25% tariff on purchases of Venezuelan crude. There’s a lot going on with this one, so let’s cover the micro and macro.

According to how the framers wrote the constitution, authority over tariffs—like much of trade—sat with Congress. Second, Venezuelan crude typically hits the US to be processed by our specialized refineries. So, this tariff is just raising costs for US refiners instead of directly hurting Venezuela. Unless of course you ignore all that and simply apply the tariff wherever you want.

Regardless of how many holes can be poked in these moves, the broader reality is that globalization is ending, and the US will need some new economic tools to face that change. As clumsy and unstructured as it is, at least the US gets to put some new tools through the ringer before they have to take the big stage.

You Mess with the Don, You Get the Tariffs

Well, it finally happened. Word got back to President Trump that Putin and the Russians were making a fool of him in their negotiations and peace talks, so the obvious next step is to throw some more tariffs at them…

This would be accomplished with 25-50% secondary tariffs placed on the US exports of countries who still buy Russian crude – primarily China. Total up all of the tariffs coming down on China after April 2nd, and they could be looking at over 100% tariffs. So, those Chinese electronics and other imports risk becoming a lot more expensive in the near future. There’s no quick replacement for China’s supply chains either, which means high prices and tariff-driven inflation will be hitting consumers hard for a while.

The worst part of all this tariff minutiae is that it won’t change how the Russians interface with the world. It just ups the pressure on Russia’s key suppliers, like China, Iran, and North Korea. As I said in my secondary tariff video the other day, at least we’re going to see if secondary tariffs can be an effective tool for us in the coming deglobalized world.

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. Peter Zeihan here. Coming from Colorado. We’re going to a quick one today about something that happened on the 25th of March. Specifically, Donald Trump announced in a bit of a surprise to everyone on his team that there’s yet another tariff coming. This one specifically is a 25% tariff on anyone who purchases Venezuelan crude oil. The idea is that Venezuela is a horrible place, led by a horrible team that is doing horrible things to its people in the United States, thinks horribly of it, and therefore no one should deal with it.

Three things here. Working from least to most important. First, this is blatantly illegal. The Constitution is very clear that the authority for tariffs is, lies with Congress, not with the presidency. Whenever the president wakes up with a hair up his ass. That obviously does not matter to this administration at all, as we have seen over and over and over again, and especially since the American Senate has basically abdicated all responsibility for policymaking and just defer to Trump on everything.

Legally, this is obviously an issue. And moving forward, it could be an interesting series of topics in domestic politics, but I really don’t see anyone calling the president on it. So, you know, bygones. Second most Venezuelan crude ends up in the United States. So this is technically a tariff on us. Venezuelan crude is super heavy, and it’s super, contaminated with things like sulfur and mercury and there are very, very, very few refineries in the world that can process it unaided.

And almost all of them are in the United States. Actually, I would argue all of them are in the United States. However, Venezuelan, the United States don’t get along. So what happens is Venezuela produces the crude, they export it to a broker, and then that broker sells it to U.S. refineries. And so even though Venezuela and the United States have really not gotten along now since 1998, it’s been that long.

We’re still the end destination for most of their stuff, and everyone just agrees to participate in a little bit of, paperwork, in order to make relationship still functional. Now, a little bit does go to China, and even less and it more regularly does go to India. But really, it’s all here. Now, the brokers who do this, those are primarily Chinese.

So there could be an interesting, legal approach here to go after the brokers as to the United States. But, you know, ultimately, the people who are paying the tariffs or the people who are importing the stuff, or at least that’s theoretically going to work. Donald Trump is really not concerned with the details. So it feels like it’s just going to be a flat tariff on all things China of another 25%, which I believe brings us to almost 100% at this point.

It’s been a moving target keeping track of that. That’s a lot. Anyway, far more importantly is, Trump’s right. Globalization is gone. It’s not coming back. And the series of tools that were developed to regulate the American economy and its interface with the rest of the system from 1945 until 2015, the at a minimum, need an update, much less things like saying that tariffs are the purview of Congress, which is enshrined in the Constitution.

That certainly needs an update to. And so while I can make fun of the specifics of what is really a clownish attempt at economic policy, I have to admit that if we’re going to develop new tools, I would rather have them battle tested under an incompetent administration, in a short period of time than done the right way, using legalism and acts of Congress under a more capable president.

So I’m actually okay with this. We’re moving into a world where it’s less based on rule of law and more based on whatever you define. Your national interest in the moment happens to be. So Venezuela clearly is a country that indirectly, indirectly has worked against American national interests for a couple of decades. And, basically hit him with a baseball bat in the shins is going to cause them a lot of problems.

And the Chinese are not our friends. And so if you want to put an arbitrary tariff on them and just see what happens, you know, this is as good of a time as any to try this out. It’s all about experimentation. We need to develop a fundamentally new toolkit. And while Trump is obsessed with tariffs, tariffs will be at least one of the tools in that kit. So at least for the moment.

Hey, everybody. Peter Zeihan here coming to you from a sloppy Colorado. It’s the 31st of March and the news is over the weekend, Donald Trump gave an interview when he talked about how angry he was with Russian President Vladimir Putin. The term pissed off was used a couple of times. The issue is that the Russians have absolutely no intention of agreeing to a meaningful cease fire, much less a long term peace agreement.

And they’ve been deliberately going out of their way to humiliate the American delegations and all of the peace talks, because they can’t go back to Donald Trump with nothing. And they’ve actually been upping the ante trying to embarrass Trump himself. And apparently it finally sunk in, that there is not going to be a deal that the Russians would possibly ever agree to.

And, Trump is starting to get angry now. You guys know my feelings on how the Russians negotiate. You know, my feelings on why the Russians do what we do and we’ll put links to why there will never be a ceasefire. At the end of this video. But the key issue, of course, is how Trump feels.

Trump deliberately chose his national security team like he did most of his team, to not be competent, simply to be loyal and so just getting basic information about what’s going on in the talks back to the top is a simplistic issue because nobody’s communicating anything that they don’t think their boss is going to want to hear.

Well, apparently it has gotten back to him that he’s being made a fool of, and it’s not going over well now. I might not think very much about Donald Trump’s negotiating tools and his negotiating record. However, he is the US president. He is the most powerful person in the world, and that gives him an array of options to implement, even if imperfectly.

And the one he has decided to settle on, at least at the moment, is something called secondary tariffs, which is something he just made up last week when talking about Venezuela. We’ll link to that one as well. The idea is that anyone who purchases crude from the country in question Venezuela last week, Russia this week faces a 25 to 50% tariff on anything that comes into the United States.

Now, this hasn’t been implemented yet versus Venezuela. So we don’t exactly know how it would work, but it would be potentially crushing. Now, the Russians themselves wouldn’t care. They’re not the ones paying the tariff. And even if they were, this war from there is about long term national security needs. They feel until they can get Ukraine completely into their territories, plus Estonia, Latvia, Lithuania, Finland, parts of Romania and Poland and Moldova.

That they won’t stop. They can’t stop. They’ve already paid the price of a major war. And if they stop now, that was paid that price without actually getting the strategic benefit of having a more secure, able external frontier. Now, until Trump came along, there is no way that the United States was going to send by and let this happen, because it would mean basically 100 million people, roughly half of which are allies, being on the wrong side of a new Iron Curtain.

But Donald Trump had a different view of things until apparently Sunday. So now the question is what happens next? The Russians won’t do anything different. In fact, the Russian view going back to the beginning of the war is that even if the Europeans had stopped taking all Russian exports and energy cold turkey, the Russians would have still done this.

It’s that important to them. So something coming out of the Trump administration now really isn’t going to change their math. However, the Russians are not in this war alone. Iran is providing drones. North Korea is providing troops and artillery. And the Chinese are providing basically all the technical stuff that the Russians need to build everything that they can build.

So secondary sanctions on Russian crude would apply to China primarily. Well, secondary sanctions from Venezuela would partially apply to China. So we are in a position here where we might have a 50 to 75% tariff on China just because of secondary sanctions. That’s on top of the 20% that Donald Trump has already put on. That’s on top of whatever number he’s going to make up when it comes to Tariff Day, which is April 2nd, which is just two days from now.

So it’s entirely possible, but by the end of this week, the Chinese will have over 100% tariff, maybe even a lot more than 100% tariff on anything that they sell under the United States. And that is going to change a lot. I don’t want to say what the end result will be, because there’s a lot of other tariffs that are supposed to hit on the second, and it’s I know where they are relative one versus the other.

What I can tell you, if it does get that high versus China, anything that you use that you plug it into the wall, it’s going to get very, very expensive almost overnight.

And because there are no alternative supply chains anywhere in the world to the manufacture and assembly of electronics, this is something that’s going to stick for years. It took 40 years to build out electronics processing and manufacturing in the China centric system that we know now. If we did a breakneck process here in the United States, just the United States, that’s easily another 15 years.

If we include everybody within NAFTA in character, we could probably shave that down to seven. But it is a big step. And in the meantime we still need stuff. So we’re going to get a very, very breakneck lesson in two things here. Number one the impact of tariffs on inflation on a very grand scale from just this one country.

And number two, we’re going to find out if secondary tariffs are an interesting idea that is destined for the dustbin of history or something more. And while the stakes are high, I got to say I’m looking forward to figuring out if this works or not because we are definitely moving into a globalized world. Trump is absolutely right on that, which means we will need different tools and more tools than we’ve been using these last 80 years of globalized trade.

Secondary tariffs are potentially one of them, and we’re going to find out really soon if it works at all, or if it just screws us all over.

Signalgate. It’s Worse Than You Think.

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Signalgate. Well…Shit.

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 Colorado. We have to talk about this whole signal gate thing. Oh, my God, so many, so many, so many things going wrong. Signal gate is this little scandal that has popped up in Washington because a number of top Trump administration national security officials had a chat on a third party unsecured platform about tactical military operations involving the strike on Yemen in mid-March, I think was the 12th and 13th of March.

Anyway, reason we know about this is a reporter from the Atlantic was accidentally keyed on the conversation and basically had the whole thing. So we’re going to talk a little bit about classifications then, and secrecy issues and operational security. And then we’re going to talk about more of the implications of this and what it actually means for us as a country.

And it’s not a happy story. So, from my brief and limited experience in the government, both in the State Department and the Defense Department, it’s drilled into you as an intern, operational security, the things you don’t talk about, the things you do talk about, where you talk about them with, who you talk about them. And the key thing is that every topic has its own set of rules.

So if you have a certain level of security clearance, that doesn’t mean you can just go into the archives and read everything. There has to be a certain need to know. And if there’s a conversation on a certain topic that is sensitive, those conversations can only happen on specific locations or on specific platforms, none of which involve third party software.

Which is very vulnerable to hacking. More on that in a minute. Anyway, so the fact that this conversation happened at all is bad. The idea that it happened with the people who were involved is worse, because one of those people was in Russia at the time using his personal phone, and one of those people was the Treasury secretary, who had no business being on a communication about tactical military operations at a place like Yemen.

And then, of course, this was tactical military operations. What pushes you way above the, you know, the classic classification of top secret and is the ultimate of the need to know. Now, anyone who is a rival to the United States, or honestly just curious, is going to be targeting our Treasury secretary, because he apparently is involved in these conversations that have nothing to do with the Treasury Department, and there nothing in his background, and there’s no one in his circle that suggests he has any experience in operational security.

So we just identified our top finance individual as being a leaker and intelligence target for intelligence operations for the rest of his term. That is a disaster in of of itself. But now let’s talk about the actual format here. Signals a third party app for communications. No third party apps are allowed anywhere in the State Department or the Defense Department or the intelligence agencies specifically because it’s illegal.

It’s a bad idea to be communicating outside of government channels. When you’re talking about information that should be classified, part of it is illegal, because the little simple thing of the Freedom of Information Act, so that decades from now, we know how things happen on the inside. Part of it is to help future administrations see inside the decision making process for the current administration.

All that information will be lost, but most importantly, it’s because it’s fucking hackable. And specifically with signal. The week that this went down, the Defense Department warned everyone in the defense Department that the Russians were actively circumventing the security measures on signal. So Pete Hegseth, who was the defense secretary, is the one who set this up. And he should have known better at every possible level.

And every person who was involved in the chat should have known that everything about this at every level was not just a bad idea in poor statecraft, but illegal as well, for all the right reasons. That all of that is part one. second issue is the general mismanagement of information in the public sphere of the Trump administration at this point. Now, when this story broke, the smart play, the national security conscious play would have been to contact the reporter and make sure that information got wiped. Instead, they did what they always do, and they went on the attack saying that, nothing was shared.

That was a war plan or classified information. And it is the fault of the reporter who doesn’t even have a security clearance, that this information was out at all. In fact, it got so bad that Tulsi Gabbard, who is the director of national Intelligence, even went to Congress and testified that this is no big deal. Now, I have an opinion.

Most of the intelligence community in the defense community are of the opinion that Tulsi Gabbard is a Russian agent that is actively working against American interests, right at the very top. Little professional tip, Miss Gabbard. If you don’t want people to think you’re a Russian agent, quit acting like a Russian agent. So, for example, lying to Congress about the use of the platform at the use of security, about the use of commercial information, and then actually what was in the conversation in the first place, because within hours of her doing that nonsense, the reporters like, well, if you don’t think this is classified information, I guess I can release it.

And he did. And holy shit, it talked about specific assets, specific attack vector, specific times and locations. This is as high as it gets in terms of operational security needs. Which brings us to the third question why? Why is the Trump national security team so moronic? Two things going on here. First, Trump himself. When most leaders spend time out of power, they reflect on what went wrong and they build a team that fills in the gaps of what they don’t have.

And they put together legislation so that when they get back into power, they can actually make their vision reality and make it last beyond their term. Trump didn’t do that. Trump fired everyone from his circle, inner and outer, who knew anything about anything. Because people who know things share what they know. And that means that Trump can’t be the smartest person in the room.

He instead surrounded himself with loyalists, people who, you know, the recruiting process, competence didn’t make the list for anything that he wanted. So we have a DNI who works for a foreign power. We have a defense secretary that is a former TV host, and it shows. The second issue is when you’re first asked, when you get into the white House, is to pardon the people who protested and rioted on January 6th, complete with those who had attacked law enforcement personnel.

Anyone who knows anything about national security won’t work for you because they’re like, fuck that noise. So the pool of people that Trump could draw from self-selected out, leaving only the people who would be personal, loyal, loyal, and really didn’t know anything about the process. Trump then went on to gut the upper echelons of every single department, not just the undersecretaries and the deputy secretaries, but everyone down as far as he possibly could fire.

Removing all the knowledge base of everyone throughout the entire federal government and then replacing them with lackeys. And so we have people like this who literally have no idea how to keep information secure, who are making policy on behalf of all of us. And so, of course, it is all going horribly wrong. And that’s before you even start talking about the specifics of what those policies are.

Half A Million Immigrants Get the Boot + Auto Tariffs and the Art of Routine Vehicle Maintenance

Half A Million Immigrants Get the Boot

The Trump administration has decided to rescind legal status for over half a million immigrants from Venezuela, Nicaragua, and Haiti. If you’ve listened to any of my videos, you’ll know there are some glaring holes in this decision.

First, the labor impact. The US is already facing a labor crunch, and the problem will only be exacerbated as we shift away from manufacturing in China. These immigrants had already been vetted and were ready to contribute to the workforce…there goes that.

There are legal and social consequences as well. Since these immigrants were fully integrated in the US system, stripping them of their legal status forces them into the cash economy and makes them targets for crime and exploitation. This also signals to future migrants that following legal pathways is futile, leading to more illegal crossings.

It’s just another notch in the undermining of trust by the Trump administration.

Auto Tariffs and the Art of Routine Vehicle Maintenance

The Trump administration announced a 25% tariff on imported cars and car parts. While this tariff isn’t as severe as the others expected on April 2, it will still increase the cost of vehicles in the US by $2-3k on average.

There are some NAFTA exemptions for this tariff, but any vehicle containing 50% imported parts will still face a 12.5% tariff. This will impact all the manufacturers across the industry a bit differently, with the European manufacturers feeling the most heat.

Prices start to get spooky when you begin stacking tariffs. Between the 25% tariff on steel and aluminum and the reciprocal tariffs coming soon, I would keep driving your vehicle for as long as you can.

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, Peter Zeihan here. Coming to you from a hotel room. I don’t have a lot of time today, so packing up while I do this. Okay, so, the issue is, I see today is the 25th of March, and yesterday, the Trump administration rescinded legal, status for about 530,000 immigrants, specifically from Venezuela and Nicaragua, some from Haiti.

Two big problems here. The first is that we are in a labor crunch. We have record low unemployment in poorly and a half a million people who are participating in the labor force. The kind of problem, you see, these were not your normal people who cross the border. These are people who got legal ization from the Biden administration not just to come here, but for them to come here.

They had to register with authorities, have an interview with Department of Immigration, have a financial sponsor. And so they were integrated to the system. They had passed checks. So we’ve basically done all the work necessary to make them citizens. And then at the last segment, like say so, unless they’ve already proceeded on to the next step, they now have to go home.

That’s problem one. Remember, we need to double the size of the industrial plant if we’re going to be ready for the Chinese collapse. That means a lot of construction. That means a lot of people building things. And as a rule, construction is a sector where most American citizens don’t want to work. So this is a real problem for the labor force.

So to invest all of this time and effort and money and man hours in making these people ready and then kicking them at the last second, that’s just a waste. Second problem is legalities. And not the legalities of doing this. President obviously has the authority. The problem is on the other side, you see, when you’re legal, when you’re in the system, you can get a bank account, you can own property, you can register for health care.

You can send your kids to school without having to worry about pulling them out the next day. And when you’re in that sort of environment, law enforcement is a resource you can draw upon. So, for example, if you’re a legal, illegal, you’re in the cash economy. And that means that everyone in your area who knows you’re not a legal migrant knows that you basically deal with cash.

And as a result, you’ve identified yourself as someone to rob. And if you are Rob, you don’t go to law enforcement because you’re afraid you might get deported. So for these 530,000 people, we weren’t in that category. They were, for as far as we can tell, law abiding immigrants.

And that means that now the Trump administration has basically penalized a half a million people for following the law, which means that the next half a million that come will probably not make the same mistake.

This is an issue that we have had pretty chronically, since the 1980s, when the Reagan administration was the last administration to go through and change the legal structures for migration. We haven’t really given would be migrants an incentive to participate with the system? And this sort of thing is definitely going to accentuate that problem.

Keep in mind that within the last month, the Trump administration has, started arresting, would be migrants that have also participated with the system through the, the, CBCp, arresting them on their way to their court hearings where they were supposed to be ruled upon, whether or not they were legal or not, and just grabbing them and send them home.

So the next wave is definitely going to cross illegally and form an underclass in American society. And as we’ve seen with the phase one of the Trump administration. And, you know, four years ago, the wall did wonders for encouraging illegal migration, made it a lot easier because the Sonoran and the Chihuahuan Desert are the greatest natural barriers in the hemisphere.

And by building 50 construction roads across the desert to build the wall, we basically obviated half of the barrier. This is definitely going to take advantage of that when we get our next big wave, which will probably happen as soon as the migrants can figure out how to navigate the new system, which, historically speaking, takes about a year or two, so we won’t have to wait too long.

Hey all, Peter Zeihan here. Coming to you from Colorado. It is the 27th of March and late yesterday. Donald Trump initiated yet another tariff. I think this is the 87th tariff policy that we’ve had in the last six weeks. Oh my God. Seven weeks. Seven weeks. Anyway, 25% tariff on all imported cars and car parts. This is not the one that I was dreading.

This one is actually not too bad, considering the scope of all of the others. Because if the car or the car part is produced within Canada, Mexico, in the United States, and is registered as a NAFTA product to import lifts, then it gets a bypass. So if your car is made out of one half content that comes from somewhere else.

You now have a 12.5% tariff on the vehicle. It’s still going to drive up the cost of vehicles in the United States on average by about 2000, maybe $3,000 in some cases. But, because most of these imported parts don’t go back and forth across borders, in the NAFTA system. It’s not nearly as bad as what a NAFTA tariff would have been, which is what Donald Trump is threatening for April 2nd anyway.

This will kick in on April 2nd as well. Not all vehicles are made equal. And just because it’s in a U.S. company does not necessarily mean that they don’t use a lot of import content. Automotive is unique among the world’s manufacturing sectors in that everyone produces some of everything because almost everybody needs cars at some level.

So the Germans make the good transmissions, the Mexicans make the mediocre transmissions, and the, Chinese make the crap transmissions. Just to pick one. So just because it’s a Ford or a Chevy doesn’t mean it doesn’t have a lot of imported content. As a rule, the Big Three American automakers do have more. The the changes model by model.

And as a rule, the Japanese, most notably Toyota, also have a lot of North American content because they have this concept of build where you sell and they put their money where their mouth is, and they’re trying to get on the right side of tariff and political issues. Once you get into Korean cars, it drops quite a bit.

And once you get into the European cars, it really drops. Most of the European and manufacturing centers that are in North America actually use almost 100%, in some cases, 100%, imported content from Europe. And then, of course, if you’re getting a Beamer that comes from Bavaria, it’s probably 100%, European content as well. Anyway, we’re putting up this handy little chart so you can see of the top 25 models, which ones or which.

Generally, the closer you are down into the red towards zero, the more your vehicle is going to cost. And a quick reminder that this is just one of the tariffs that is hitting automotive. We’ve got another one that’s in place already. And that’s the 25% tax on imported aluminum and steel, which you know every vehicle has a lot of both of those.

And then once we get to April 2nd, that’s when Donald Trump is going to be announcing a lot more tariffs, something he calls reciprocal tariffs, probably NAFTA tariffs and then additional tariffs on everybody on the outside that he doesn’t like. He calls them the dirty 15. And they’re really just our 15 largest trading partners. So you put those three together.

Remember these all stack up with one another. They’re cumulative and could easily see the cost of automobiles in the United States going up by $10,000 a vehicle, or maybe even a lot more based on where they come from.

Now the data in this graphic is from 2021. There is more recent data available from the Department of Transportation. Unfortunately, because of the bonfire of staffing that is occurring in the federal government right now, it is not in an easily absorbable format. So it’s going to take us a couple days to process it. And we will get that out as soon as is feasible.

Which reminds me. We’ll be covering all of this and all of its, and to severe effects when we do our quarterly briefing, our question time when people can ask me questions in real time on April 9th.

It is for our Patreon subscribers at the top tier. So sign up now and learn about all these tariffs as they happen. And then we’ll pull it all together for you and show where it’s going to take the American and the global economy over the long run. See you soon.

The Future of NATO’s Supreme Allied Commander + Live Q&A Reminder

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The Supreme Allied Commander position in NATO allows the US to lead allied forces in wartime. However, the Trump administration is considering withdrawing the US from that position (mainly for cost-cutting reasons).

Stepping away from the Supreme Allied Commander position would signal America’s withdrawal from NATO, since US forces cannot legally be placed under foreign command. There must be some strategic misunderstanding of the power this title holds, a lack of expertise in Trump’s circle, a penetration into Trump’s thinking by Russian propaganda, or a combination of all of those.

Should the US move forward with leaving NATO leadership, US power projection in Europe would be crippled and another box on the Russian wish list would be crossed off.

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 a sunny Colorado. Today we’re going to talk about something that is making the rounds within the Trump administration as it relates to the NATO alliance. The idea is that the United States is going to withdraw from something called the Supreme Allied Commander position. Now, the Supreme Allied commander, as it sounds in times of war, takes command of all local military forces that are affiliated with the Alliance. So in a hot shooting war, the US would take control of the world’s third, fourth, sixth and seventh largest navies and the world’s fourth, fifth, sixth, ninth and 10th largest armies, as well as that of all the smaller members of the European structures. And the question is, why would you give that up?

Well, keep in mind that NATO is the most powerful alliance in human history, and it was founded by the United States, and it was run by the United States. And, yes, the lion’s share of the equipment and the troops come from the United States. But since all of the Europeans have regional militaries, while their militaries may be stronger, they’re all focused on one area as opposed to ours, which is spread out around the world.

So collectively in the European theater, the rest of the European forces actually are on par with what the US can do. So a massive force multiplier there. The Trump administration says that the NATO countries, the European countries, have been taking advantage of the United States and trade. They need to defend themselves. But how? Giving this up would be a big deal. It would be the end of American ability to project power throughout all of Europe.

You see, unlike the other NATO countries who can sublimate their military commands to American authority, the reverse is actually illegal here in the United States. So if we give up the ability to command Europe and say, a European has to take that position, we’re also saying that no American forces are now available for NATO use, and that’s functionally leaving the alliance.

Now, I personally think that would be a horrible idea, but I think it’s going to happen anyway. The Trump administration seems fairly hellbent on leaving NATO. Three things going on here. Number one, the Trump administration seems has a very inaccurate idea of how militaries work. Because in a time of war, when you need the help to be able to automatically, reflexively just be able to take control of everyone else’s militaries in the alliance and just go through.

How much is that worth to you? How much is it worth to have that on standby the whole time? It’s worth the cost of a trade deficit, in my opinion. The second issue is that Trump doesn’t really have anyone in his circle telling him otherwise or correcting him on these things. One of the weird things about the Trump administration is, you know, normally when you lose an election, they’re out of power for a few years. You try to learn from your past mistakes. You try to build a team that is competent, that fills in the gaps with the things that you don’t know. And you get people who are experts in legislation so that when you come back, you can get everything pushed through Congress as quickly as possible.

Codify what you want and have it outlive you. Trump’s taken the opposite lesson, and he’s removed everyone from his circle who knows anything about anything, because people who know things tend to say that they know things. And that means that Trump is not always the person who appears as the smartest one in the room. It’s the difference between a good leader and a bad leader.

That means that Trump is making the decisions based on the advice that comes to him from a handful of people he trusts, and the people trusts aren’t honest with him, which is bring us to the third problem. Russian propaganda has penetrated up to and including the white House. Last week we had Donald Trump repeating some particularly interesting propaganda.

Notice he was saying, in true social posts and in interviews that the Russians had surrounded several thousand Ukrainian troops, and he was pleading with the Russians to not kill them in what would be a bloodbath. Here’s the thing that never happened.

In fact, that didn’t even occur in Russian propaganda in American political circles. That was Russian propaganda for Russian citizens to try to convince the Russian citizenry that the war in Ukraine was going very well.

Somehow that little bit got lodged in Trump’s mind. And it didn’t come from the CIA or the FBI or the Defense Department. It either came directly from Vladimir Putin or through one of the other vectors that the Russians have been using to influence this administration. So we have a white House that is making public statements and policies, basing on an internal Russian propaganda.

Now. And if I could think of one thing that the Russians want in the short term from this administration, it’s to destroy the NATO alliance, which was always formed to contain Russian aggression. And here we are.

The American Reindustrialization – A (Stalled) Progress Report

I recorded this video before Trump took office for his second term. At the time, this video outlined the trajectory the US was on. We held off on releasing the video because…well, everything was going to be changing. So, here is a look at where we could have been. In the coming days, we’ll unpack where things are heading 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.

Hey everybody. Peter Zeihan here, taking a question from the Ask Peter Forum on the Patreon page. And that is where is the United States or where do we stand in the re industrialization process that started a few years ago? Just a quick backgrounder. The Chinese population is plummeting. And we now have about the same number of people in China above age 50 as below.

And so we’re looking at an economic collapse over the course of sometime in the next decade. And so if the United States still wants manufacturing goods, we’re gonna have to get it from somewhere else. And the quickest, easiest, cheapest way to do that is to build out the industrial plant within North America. And to that end, we have seen industrial construction spending.

Think of that as the construction of factories, expand by a factor of ten over the last five years. So we are definitely hitting the ground running in a number of sectors. The two sectors that have seen the most activity are things that are energy adjacent. Taking advantage of the fact that the United States has the largest supply of high quality crude in the world and the largest supply of natural gas in the world, retooling our entire chemical sector to run off of, especially the natural gas.

And now using all of these intermediate products that we get from the processing of this for other things going into heavy manufacturing. So that’s a big part of the story that is moving very, very fast and is being moved almost exclusively by, domestic economic concerns without any push from any politicians anywhere in the system, because it’s just we have the most and the cheapest.

And so the next logical step is then to move up the value added scale. That’s proceeding just fine. Most of the stuff where the government has put its finger on the scale involves electron IX, and especially computing. Think of the Chips act and the IRA, which are designed to bring back the manufacture of things like semiconductors. Now, it’s not that I think that any of this is a bad idea.

I just think it’s kind of missing the primary need we’re going to have. There are 9000 manufacturing supply chain steps that go into the manufacture of a high end semiconductor. And the Fab facility, while important, is only one of the 9000. And there are any number of ways that the United States can build out the supply chains, in addition to the fabs that are a lot cheaper than the fab.

So I’m not saying no. I’m saying it’s really, really myopic, focusing on one very, very specific piece when you need all of them. If you’re looking for a recommendation, I would say the single biggest restriction on manufacturing in general is going to be processed materials. I know that doesn’t sound very sexy, but it really is a problem.

In the United States, we have steadily outsourced pretty much anything that is energy intensive and might have an environmental footprint that we don’t like. The Europeans have done the same to a lesser degree, the Japanese the same thing. And most of the stuff has gone to China. It’s not that China is better at it, a more efficient at it.

It’s just that the Chinese massively subsidize everything and their environmental regulations are significantly lower. So taking raw materials like bauxite and then turning them into an aluminum and then aluminum, the Chinese control roughly 60 to 70% of that market for something like gallium, which is a byproduct of aluminum processing, it’s closer to 90% for things like rare earths, it’s over 80%, for lithium.

It’s not that they have the lithium that comes from Australia and Chile, but they take the lithium concentrate in the lithium ore and they turn it into metal in China. And you can just go down product after product after product for the Chinese. Basically, if cornered, this market. Well, if the Chinese go the way that I’m anticipating all of that’s going away and we’re going to make our own, it’s luckily there’s nothing about these, material processing technologies that is difficult in most cases.

You’re talking about things that were developed over a century ago, and it would probably only take a couple of years and a few billion dollars to set up for each specific material that we need. So not hard, but something that is cheap and quick is not the same as saying that it is, free and overnight. Right.

And until we do the work, we haven’t done the work. And if China cracks before we do the work, then we have to figure out how to re industrialize without lithium or aluminum or cobalt or on and on and on and on and on. So this is something where I would expect state governments to take the lead, because it’s ultimately about an environmental regulation issue paired with the energy intensity that’s required.

And so most of this is probably going to end up going on in the Texas or Louisiana coastal regions, where those two things kind of come together right now nicely for the federal government to be part of the solution. But considering politics in the US, I think that’s a kind of a high bar. One other broad concern, no matter what the industry is, no matter what is reshoring, no matter what, we’re expanding automotive, aerospace, insulation.

You know, take your pick. All of it requires electricity. For the last 35 years, the United States has become a services only economy to a certain degree. We do manufacturing still, in terms of net value, we produce more in the manufacturing sector than we did 35 years ago. But everything else has gotten so much bigger. And while the AI push with data centers does require more electricity than what we’ve done before, as a rule, moving things, melting things, stamping things, building things requires more energy than sitting at a computer and typing.

And so we have, for the first time in 35 years, a need for a massive expansion in the electrical grid. We probably overall need to expand the grid by about half. And half and expand, generating by about half. And there are certain parts of the country like the Front Range, Arizona, Texas in the south, going up to roughly Richmond, that probably need to double their grid as soon as possible, because if you don’t have enough electricity, it’s really hard to have meaningful manufacturing.

The problem in the United States is we don’t have a grid. We’ve got one that’s basically from the middle of the Great Plains West, from the middle of the Great Plains East, and another one in Texas. But even that makes it sound like it’s more unified than it is, because almost all utilities are state mandated local monopolies. So they all have their turf, and all of them have to individually make a case for expanding their electricity production, because that cost ultimately has to be passed along to someone else.

One of the reasons why I’m so interested in things like small modular nuclear reactors is if you get the tech folks to pay for that, then all of a sudden you get the power and you don’t have to go through all the normal regulatory rigmarole because you have to, as electrical utility, prove to your regulator that, what you’re doing is in the best interests of your end consumers and until you have the manufacturing capacity, it’s hard to make the argument that you need electricity to make manufacturing capacity.

So it’s a very chicken and the egg thing. The easiest way to get around this would be for state and regional electrical authorities to loosen up the ability of one electrical mini grid to provide electricity to another. That would do two things for us. Number one, it would increase the amount of transmission we have within the system, allowing power to go from where it’s generated to where it’s needed.

And second, If you’re in a rural area that’s not likely to get, say, a major chip’s factory, you could still build a power plant and export it to an urban center that is likely to need a lot more electricity, and all of a sudden you can get someone else to pay for your electricity development in your own region.

So that is where I’d say the shortfall is. It’s a solvable one. It’s just one that we need to do as soon as possible. Because if we say, wait ten years and the Chinese are gone, then we have to do this all from scratch with less money, less labor, and everyone trying to do everything at the same time.

And if you think inflation was uncomfortable for the last three years, nothing compared to what that environment would be like. All right, that’s it for me. Take care.

Introducing the Next Generation Air Dominance Platform, F-47

President Trump and Defense Secretary Pete Hegseth have announced the approval of the Air Force’s newest toy, the Next Generation Air Dominance (NGAD) platform, aka the F-47 fighter jet.

In recent times we’ve seen the very impressive F-22 built for air superiority and the lackluster F-35 designed as a multi-purpose aircraft. Shifting priorities have sidelined the F-22 in favor of the F-35, but how will the F-47 fit into the picture? Here are some of the big concerns I have.

This thing will be expensive, posing problems for foreign buyers. The details are still unclear on this aircraft, so we’re not sure if the limitations that faced the F-35 will persist. Since this will be an air superiority fighter, a ground attack jet will still be needed. And given the evolving tech, manned fighters could be rendered obsolete before reaching full deployment.

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Hey everybody. Peter Zeihan here, coming to you from a sunny Colorado. Today is the 21st of March. And there was just a press conference between American President Donald Trump and American Defense Secretary Pete Hegseth, where they announced the launch of a new fighter program called the NGAD, the next generation air dominance fighter. It’s been, dubbed the F 47 because it’s Trump’s the 47th president.

But anyway, you can’t make this stuff up anyway. It in theory will be made by Boeing and should come into manufacture in a few years. That’s the goal. Before we go forward and talk about what it can do and implications, let’s talk about how we got here. So if you dial back to the 1990s and the early 2000, the Defense Department realized that they had a window.

The Soviet Union had collapsed, and the Russian Federation, which emerged from it, was a pale shadow of its predecessors. And so there was going to be an extended period of time where the Soviet slash Russians weren’t going to be able to develop new air products. No new bombers, no new fighters. They did get a couple off the drawing board, but they were never able to produce more than one of them at a time.

And even now, 35 years later, they only have 12 of some of their more advanced fighters. And that meant you had an opportunity to skip a generation. So Donald Rumsfeld, who was working with the Defense Department at the time, had this idea that we will look at the best technologies we have available right now and build the absolute minimum that we possibly can, and then research the next generation.

Back at the time, we were dealing with F-15s and F-16s and the two programs that were greenlighted to proceed on that limited production basis were the F-22 air superiority fighter, which I think is one of the most badass pieces of military technology I’ve even heard of. It can hit supersonic speeds without using its afterburners, and all of its weapons are internal bay, so it has the radar cross-section of a small bird.

I mean, it is bad ass. And then the other one is the F-35 joint strike factor, which is a flying pig. From my point of view, yes, it’s better than what we had, but its range isn’t very good. And the technology that’s gone into it has had all kinds of teething pains, and this has driven up the cost of the fighters to over $100 million per fighter.

And it’s not very good at doing what it needs to do because its range is so limited. And that’s even before you put external weapons on it. The problem is it’s a Joint Strike fighter. It’s designed for both air to air combat and ground assault. And by being a multi-role platform, yes, you can do more, but you don’t do any of it particularly well.

So we only made a few less than 200 of the f-22s, even though they are the perfect tool for the job, because we also need ground strike. And so the decision was made to do more and more and more of the F-35s, despite its many, many shortcomings. And that meant looping in lots of allies in order to help defray the overall production cost.

And that brought it down to $100 million per airframe. Anyway, Rumsfeld and people like him thought, you know, we’ll just build the minimum we possibly can and then launch forward. And then the war on terror happened. And in the war on terror, what we discovered is we don’t need an air superiority con or a fighter against the Taliban because they don’t even have blimps, much less jets.

But we do need ground strike. And so the F-22 was pushed to the side, kind of stuck with that initial plan of just a limited run. And the F-35 went into mass production. And we’re getting lots and lots and lots of those. Fast forward to today, because of the war on terror, we spent 20 years fighting ground wars, and we weren’t able to put the resources that would have been ideal under the Rumsfeld plan into the next generation.

We’re only now getting there, took this long, and the end gap is supposed to be an air superiority fighter. The next generation after the F-22. Well, that leaves us with four complications. Problems. The first is cost. We saw the cost of the F-35 go up and up and up and up and up, and the end guard got a really nasty review from an internal Pentagon audit.

I think it was just last year or the year before where they said it looked like the cost could be upward of $300 million per airframe. And the days of us being able to spread that out across the alliance are gone. The Trump administration is careening very rapidly to breaking most of our alliances, including the NATO alliance, which is where almost all of the F-35 sales we’re making are going.

And every country that is committed to buying them is now rethinking it. Because if the United States is not going to be there in a real fight, not only are you not getting the implicit security guarantee that you thought you were getting, but if the Americans are responsible for all the tech and all the technicians and all the repair work and all the servicing, all the software and a lot of the weapons, do you really want to be dependent on the Americans at all in this brave new world we seem to be falling into so the F-35 is likely to get even more expensive, and no one is likely to sign up for the end guard at all. Problem two range. This is a black issue. It’s just an issue of, classification. We don’t know what the range of the guard is yet. It is in limited production, very limited, basically handmade. Nothing manufactured. The manufacturing wouldn’t be in for a few years yet.

Three at the absolute low end. So this is a weapon system for the future, not for tomorrow. And until we know that range, it’s really hard to know if this is going to give us some of the advantages of the F-16 and the F-22, or weigh us down with some of the restrictions of the F-35. We’re just going to have to wait for more details on that.

The third problem is that the end guard is going to need a complement. It is an air superiority fighter in the vein of the F-22, and we will still need something for ground attack. And if it’s going to be the Joint Strike Fighter, if that’s what we’re going to use for the next 30 years, then that puts some really huge limitations on what the United States can do militarily.

Its range is just about 600 miles. Not great in terms of deep strike. And if we are moving into a world where the United States is walking away from most of its alliances, then we’re losing all the forward bases that allow us to launch these things in any meaningful way in the first place, which means we will also need a new ground strike jet. And that is an entirely new program that is going to have its own cost structure. And overlaying all of this is the question of technology during the course of the last 60 years. We haven’t seen actually almost 80 years. We haven’t seen a lot of changes. I mean, yes, yes, yes, we’ve gotten better at stealth.

Yes, yes, yes, our missiles have gotten more accurate. All that’s true. But we haven’t really seen a change in what, a fighter or what a fighter bomber does. Until really recently, in the last few years, we’ve had building breakthroughs in things like materials science and digitization and energy transfer. And we don’t know where this is going to take us in terms of military technology.

Yet the end guard looks interesting to me. It’s basically like a narrower version of the B-2 bomber, which is a badass piece of equipment, but it’s not a fundamental break. The stealth is cool. Don’t get me wrong, stealth is awesome, but it doesn’t do anything that you wouldn’t expect an air superiority fighter to do. These three breakthroughs in technology are in the very, very beginning stages, giving us drone technology, and we have discovered that the Ukrainians, for less than 20,000 a pop, can build a thousand drones that can saturate a battlefield, or for something closer to $200,000 a pop, develop rocket drones that can strike targets that are about as far away as the F-35 can reach. So we’re seeing these newer technologies come in and we don’t know how they’re going to mature. And so investing billions, tens of billions, hundreds of billions into a new manned fighter program, you got to wonder if this is the right call. I’m not saying it’s not. I’m saying we don’t know. And in a world where the United States is walking from its alliance structure, the new systems are probably not appropriate to what bases we’re going to have in a few years.

I don’t mean this so much as a condemnation of Trump, although there’s plenty of that going around right now, but just a recognition that as our technological envelope evolves, one of two things has happen. Either we develop technologies to match the geography of our deployments, or we change our deployments to match the evolution of the technology.

And there’s plenty of examples throughout history of both happening. We don’t know where we’re at yet. What we do know is if we try to do both.

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