Trump Goes on a Firing Spree

Donald Trump speaking at a podium and looking intense | Photo by Wikimedia Commons: https://upload.wikimedia.org/wikipedia/commons/9/90/Donald_Trump_speaking_at_CPAC_2011_by_Mark_Taylor.jpg

Just because Trump is finally purging some of his administration doesn’t mean that the problems are going away. The core issue still exists: Trump prioritizes loyalty and praise over competency and experience.

Trump even fires people for the wrong reasons. While these officials could be ineffective or downright damaging in their roles, they won’t feel the wrath of Trump until they do something that pisses him off personally or politically.

And the scariest part is that there is no longer a cadre of replacements to pull from, since Trump dismantled the Republican institution.

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Transcript

Hey, all. Peter Zeihan here coming to you from Colorado. A lot of people on the Patreon page have asked me what I think of the recent firings by Donald Trump of a couple of his cabinet members, at Department of Homeland Security. Kristi Noem is now gone and has been basically put into a pointless position, to oversee a summit that will probably never happen again. 

And Pam Bondi, the former attorney general now, is also gone. And so the question is this this is the start of a general bloodletting. You know, let me let me start with the simple stuff. Trump is erratic. So I don’t really know. But let me underline that. It really doesn’t matter. The president chooses co-leaders based on his own interests and his own style. 

And we have learned over the past five years that Trump does not want advice. He wants worship. So if you go back to Trump one, he really did not expect that he was going to win. So the Republican Party, specifically the former governor of Oklahoma, helped him staff out the government with people from throughout the Republican establishment. And so he came in with a lot of people that he personally knew her trusted. 

And he proceeded to almost fire all of them during the course of his first administration. He actually cycled through more cabinet secretaries than any other three American presidents in history. What we discovered was that whenever somebody was in the room who offered him good advice, that was usually because they had studied the topic and knew something about it, and that made him feel like he wasn’t the smartest person in the conversation. 

So when he was out of power, he took over the Republican institution, the party itself, and purged it of the research arm and the recruitment arm so that that could never happen again. So when he came in for his second term, there was no longer a pool of talent to draw from. In fact, the Republican Party no longer has a pool of talent to draw from. 

And so he installed people who would tell him what he wants to hear. Or, to be perfectly blunt, just praise him without any reason. And that is the bulk of the cabinet today. And if you look at the senior leadership throughout the government, we still have over a thousand positions that haven’t been filled. Things like, say, the ambassador to Russia or the, surgeon general. 

This is as much by design as anything else. So when you’re hoping that he’ll fire somebody in the cabinet who wasn’t any good at their job, keep in mind that they weren’t picked because they would be good at their job. They were picked because they couldn’t be good at their job. And any replacements going to fall into the same bucket. 

So let’s go through the candidates that are everyone’s talking about that are likely to get fired. I don’t know if they’re going to be, but, that, you know, they’re on the list. First up is at Commerce, Howard Lutton. Now, I have spoken to no one who is in the financial world in New York who has said anything other than he was the most corrupt person in New York. 

And so they all thought he would be a perfect fit for Trump Commerce. And it sounds like that’s exactly what’s gone down. The Trump policy when it comes to tariffs is incredibly erratic. We have now had over 7000 changes to tariff policy. So businesses within the United States just don’t know what the rules of the game are. 

And we’ve seen industrial construction spending steadily drop for the 14 months of the Trump presidency so far, to the point now that if you remove data center construction, we’re actually below where we were for new builds during Covid of all times. It’s getting very, very bad. But for let’s take this as an opportunity. What it seems to be happening is his family is selling access to lightning, specifically at Commerce. 

And lightning is selling his personal access in order to get people exemptions on the tariff list. So a remarkably corrupt setup. Trump knows this. Trump has no problem with this. Trump’s problem with Hutnik is that apparently the big family was very tight with the Epstein group, years ago. And so that has prevented the team issue from fading into the ether. 

So if Mick is going to be fired, it’s not because he’s doing a horrible job at Congress and crushing American economic activity and becoming rich in the process. It’ll be because of child molestation, apparently, or something like that. I really try not to follow Epstein. Okay. Next up, RFK Jr at, Health and Human Services. This guy is a full on nut bag. 

This is the guy who is making up studies in order to say that, vaccines shouldn’t be part of our system. This is the guy that says that the way to fix heart disease is to double your consumption of beef tallow. I mean, he is he is certifiable. And he’s undoubtedly causing massive damage to American health long term because decisions that are made by parents. 

Now, when your kids are young are going to affect their health their entire life. And this is grossly going in the wrong direction. Trump has no problem with that. What Trump has a problem with is that RFK is sucking up a lot of the oxygen in the room, and the Maha group, and they call themselves, Make America Healthy Again is now starting to split with the president because Trump just can’t stand sharing the stage. 

It’s a PR issue. I mentioned that the surgeon general, still hasn’t been filled. It’s been 14 months. It’s one of the most important jobs in the government and the only person who has been appointed. So far is a literal quack. Okay. Moving on. My personal favorite, Tulsi Gabbard. If she’s not a Russian agent, she clearly aspires to be one. 

She is had an anti-American position on every foreign policy question for the last 20 years, and now she’s in a position where she aggregates all of the intelligence that comes in from all of the bureaus and departments, and provides the president with a daily brief. And she, of course, aggressively edits that. So the president can’t possibly be informed. 

Most of the positions she’s taken so far in the administration have been purely pro-Russian, designed to denigrate American power. But that is not the problem that Donald Trump has with her. The problem that he has is that she doesn’t support the war in Iran. And so she actually testified to Congress, one of the few true things she’s ever said, that there is no evidence that Iran was, actively developing a bomb in a way that was any closer to who they had been over the last five, ten, 15, 20 years. 

True. Trump didn’t like hearing that. So now he’s talking about getting rid of her. Next up, Kash Patel at the FBI Patel. He’s one of the candidates for one of the stupidest people in the administration. He has no experience in law enforcement, just like Tulsi Gabbard. No experience in intelligence or management. 

And he’s a conspiracy theorist, and he came in basically knowing nothing about the job. And one of the first things that he did is remove people from counterterror investigations, kidnaping investigations, new color theft investigations, and sent them to Home Depots to arrest day laborers. He has wrecked the training system for the FBI. He’s done incalculable damage to American law enforcement long term at the federal level. 

Trump is aware of all these things. He has no problem with any of these things. His problem with Cash Patel is that he has proven so incompetent that he can’t prosecute Donald Trump’s political foes. Now, this is an impossible ask, because Trump accuses his foes of doing things that they just haven’t done. And I realize that there’s some people in MAGA that are going to scream at that, but tough. 

No facts whatsoever have ever been presented that Trump lost the last election, or that Trump doesn’t get along very well with the Russians. This is the same reason that Pam Bondi was ultimately dismissed because she realized that there was no relevance to these cases, and so she slow walked him and only prosecuted them in order to stay in Trump’s good graces. Kash Patel is basically in the same bucket. And if this is how Trump defines success, he will never be satisfied with anyone who is FBI director or attorney general. Competing with cash Patel for the dumbest person in the administration is Pete Hegseth at defense, the guy who, during his confirmation hearing, proudly proclaimed that he would be the least qualified defense secretary in American history. 

And while he was right, he still hasn’t appointed a chief of staff, so he’s still not even capable of scheduling a meeting among the Joint Chiefs without using their staff, much less the rest of the Defense Department. He’s gone through, and he’s wrecked some of the academy work. He’s certainly interfered with mid-career training. He’s interfered with the promotion process to make sure that no women or minorities are promoted. And as a result, he’s come into clashes with others of the senior staff within the, Defense Department. The big things has happened the last few weeks is that the Army chief of staff was fired because he objected to what Hegseth was doing with the promotions program. 

The chief chaplain was fired because the chaplain thinks that got. Oh, God, this is so awful. The chaplain believes that soldier should have a relationship with their spiritual side, whatever that happens to be. And Trump’s like, unless you’re going to be a crusader, fuck off. We’re now at the point that the Pope and the arch bishop of military services are now taking some pretty strong stances against Hegseth personally. 

And Hegseth is using Crusader language to justify the war in Iran, but having absolutely nothing to do with the manager of the conflict itself. Trump knows all of this, has no problems with any of it. But Trump realizes in his heart of hearts that the Iran war is not going nearly as well as he would like, and Pete Hegseth has now manifested himself as a potential scapegoat. 

So a couple of the firings that Hegseth did over the last week were potential competitors for his job. And so he fired them preemptively. Now, the point of all of this is that it’s not that these people should be fired. Of course they should all be fired. They should have never been selected in the first place. They certainly should have never been confirmed by the Senate. 

But they have been. And if Trump fires all of them, there is zero expectation that we’ll get anyone better. I make part of my living by being in a conference speaker. So I go around the country talking about geopolitics and economics, and where it takes the people in the room, and I try to stick around to see the other speakers. 

And typically you’re going to have a couple of economists and a couple of political speakers. And when you bring in a political speaker, they always try to get someone from both sides that has collapsed in the last year. What we’ve discovered is that there’s no one in the business community or academia or in security studies that believes in anything that Donald Trump is doing. 

There is no Cordray out there for MAGA that is rooted in anything real. It’s just ideology. So I have not been to an event in the last year where anyone has spoken on behalf of the MAGA movement, unless it’s been a direct representative from the administration itself. And most of those guys clearly don’t know what they’re talking about. 

What is evolved over the last 14 months is that the business community has kind of gotten fed up with what’s going on, and is starting to change its mind. The business community has been a core part of the Republican coalition, going back to the last reformation of the Republican Party during the depression, and now they realize it’s finally sinking in, that they’ve been kicked out of the coalition, and they’re only now starting to kind of tack. 

That’s kind of piece. One of all of this is that we’re seeing people who have always thought of themselves as Republican, realizing that they’re just not anymore. The second piece is if Trump decides to fire these people, he then is supposed to replace them. But there are no candidates that are more competent than the incompetent people that he would be letting go. 

And what has changed, in part because the business community is there a handful of Republican senators who have kind of woken up to the danger that Donald Trump is not just to the country, but to the party in? They’re for their own personal futures. It’s a little late to the game, but we haven’t seen any meaningful movement on Trump’s appointees confirmation for months now. 

And so if we get a new defense secretary, a new, attorney general, new FBI director, somebody new at HHS, I’ll say it’s a clean sweep. The candidates aren’t going to be any better. And the willingness of Congress to give him a second chance to run with people who were chosen because they were incompetent is pretty low. So we’re more likely to see more problems at the white House, more inconsistencies, more incompetence. 

And if you look back in the last several months, oh my God, the bar is already really high. But if you look at how Trump has been reacting in public since the Iran war started, you can see he’s very clearly losing his grip and getting frustrated. And the fact that his chief of staff, Susie Wiles, is probably the most competent person in the cabinet, is suffering, unfortunately, from breast cancer and so hasn’t been able to put in the time. 

She has always been kind of the Trump whisperer. And with her and a reduced role, there’s nothing left between Trump and the rest of the world. And that is starting to really show. I call it a failed presidency, but we were already there. We’re now looking at something worse. An old guy who is really frustrated, who has started a lot of problems he can’t solve, even with a good team who has no team at all. 

This is going to get a lot worse before it gets better.

How to End American Power

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Trump’s latest statement telling countries to secure their own oil dismantles the very fabric of the global order. We’d be stepping away from the post-WWII system where the U.S. provided security for everyone, so economic growth could be the priority.

Forcing everyone to secure their own resources takes us back about a century, triggering conflicts and competition over resource control. This move weakens America’s global position, as power projection will be challenged and former allies turn into rivals.

This move jeopardizes America’s long-term strategic power and could lead to a collapse…comparable to the fall of the Soviet Union.

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Transcript

Hey, all Peter Zeihan here coming to you from Colorado. Today is the 31st of March, and we, we’re having some fun things. On Donald Trump’s truth social account. So the big news is that Trump has said, NATO is pretty much finished, and all of the countries that want crude from the Persian Gulf now need to come and get it themselves and just take it. 

If you read the line which will print here, basically what he’s asking for is a return to the colonial era when each individual country maintained its own independent military forces, especially naval forces, and in doing so, looked after its own, economic issues. 

The reason we do things today, the way we have been for the last 35 years, is we know that that model guarantees inter-state conflict. There’s two big layers to it. The first is that if you maintain colonies, you’re fighting to control those colonies. In the case of the Persian Gulf, this is actually probably one of the easier places to do it, because so much of the population is dependent upon physical infrastructure, like, say, desalination. 

And so maintaining a degree of control is relatively manpower light versus the economic assets you get. You’ll have to manage those populations. You might have to move some of those population. You may have to kill a lot of those populations. But, from a purely technical point of view, it’s not too bad. The second problem is that everyone will have their own preferences as to where the resources go, i.e. home. 

So you are guaranteeing a degree of inter-state conflict among the oil importers, because they will all now need to have their own naval forces in order to secure shipments from point of production in the Persian Gulf to points of consumption, primarily back in Europe or East Asia. 

One of the things that really worked about globalization is we basically told everybody, you don’t need a military anymore because we will take care of that. So if you do maintain a military, it doesn’t need to be big. And if there is a fight, we will defend you and we will take full control of what military forces you do have. 

And what that did is it cleared the board. And every major power in world history, with the exception of Russia, was now, for the first time, on the same side under the NATO flag or the American flag, based on where you were. And the United States basically made all the security decisions, with very little debate, I might add. 

Moving away from that system to a situation where each individual power has their own military and is looking out for their own economic interests, is going to take us back to what we had roughly in 1930 when we were industrialized. And so everyone realized they needed crude oil. 

But now, with a whole new layer of technologies and things like drones, it’s difficult to overstate how much of a tidal shift this is, because American military power for the last 75 years has been based on the concept or the sole decision making. We’re the sole arbiter, and what we say goes, what Trump is now doing is deliberately forcing all of the allies to establish an independent military posture with independent military forces to look after their independent economic needs, because he doesn’t want to do it himself, said so very, very explicitly. 

In that world, we will have taken every major power in world history that still exists today and forced them to move away from the American umbrella and to set up their own independent system. And no matter what version the future holds, we are never going to see eye to eye with all of them in that sort of scenario. 

What part of what made globalization work part of it for the American alliance system work is we removed the military side of the equation from their thinking so they could focus entirely on the economic. And if you want to undo that deal, that’s, you know, there’s a conversation to be had there, but abrogated in this way and basically forcing everybody to take up arms for their own economic issues. 

It’s turning the clock back to the weakest American security has ever been. And that’s in the 1930s. So the situation we have now is we’re not simply guaranteeing more colonial conflicts. We’re not simply guaranteeing more inter-state conflicts. We’re guaranteeing the fastest reduction in American strategic power in our lifetimes and arguably in the history of the Republic. Because while the US military may be first and foremost in the world, especially when it comes to the Navy deliberately ending the basing agreements, deliberately fostering demanding competition is going to land us in a world of hurt. 

Ten, 20, 30, 40, 50 years from now. And we’re only now in the early second year of this administration. There is a lot of time to make this truth social post, which Trump deeply believes is the right thing. There’s a lot of time to make it stick. And if you look at what has happened in the last year with Donald Trump threatening invasion of NATO allies because he couldn’t get a chunk of ice, I’m concerned that we’re already well past the point of no return, and we’re now in a situation where the US military has to figure out how to close down its entire constellation of bases on a global basis and start building contingency plans for fights with all of the countries that have been on our side for the last 75 years, at a minimum, best case scenario, none of those fights happen, but it still means a massive reduction in America’s military global footprint and its ability to project power beyond the Western Hemisphere. So we are at the beginning of the greatest collapse in strategic power that I have seen in my life, the only similar situation that comes even remotely close would be the Soviet collapse, at the end of the Cold War. 

But if you look at the Soviet empire at that time, it was not nearly as global. What the United States has now. Most of their retreats were far closer to home, say the loss of Central Europe, for example, we’re looking here at the United States becoming unwelcome, not just in the Middle East, but in Europe and probably in East Asia. 

And we’re actively pushing to create strategic competitors for a generation or two from now. That is quite possibly the most fucking stupid thing that we could do. And yet here, here we are.

How to Break Iran

A ripped grungy back wall of the Iranian flag

If the U.S. wants to force a meaningful change in Iran’s government, there’s only one path forward. They have to destabilize the Islamic Revolutionary Guard Corps (IRGC).

The IRGC has become the center of power in Iran. While leadership is divided into three groups, the IRGC is the military-economic network that controls industry and enforces domestic control. Given Iran’s fragmentation and ethnic diversity, internal stability is essential. Should the IRGC’s revenue streams fall in the war, internal fractures would form.

If the younger members begin seeking power over the older elites who control the wealth, a civil conflict would erupt. Of course, it would be extremely destabilizing not only for Iran but also for the region.

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Transcript

Hey, all. Peter Zeihan here coming to you from Colorado. Sorry. Fever broke last night, so I’m better, but I’m still kind of weak. Where was I? Most of our coverage of the Iran war at this point is about what’s been blowing up the energy side of things. Strait of Hormuz, all that good stuff. Today, I wanted to go a different direction and talk about what might, might, might change in Iran that would end the war the way the United States would be really excited about, what I’m going to say isn’t necessarily how it’s going to go, but if we are going to break the Iranian government, it’ll look like this. 

So the Iranian government basically has three big chunks that matter. First, you’ve got your supreme leader and surrounding the supreme leader are all of the people who are in charge of the guns and the overall strategy. So the intelligence minister, the defense minister, the people who are in charge of the IRGC, that is the Islamic Revolutionary Guard Corps, which is a militia that controls most of the day to day operations and, the country and among these groups controls all of their overseas assets and their influences throughout the Middle East, whether that is militants in Syria, Hezbollah, Shia in Iraq or what have you. A lot of these people, at least at the top, have now been killed. The Supreme leader’s gone. The new Supreme leader was selected, but his parents is one of his kids, and his wife has been killed. 

The defense minister has been killed. And on and on and on. It’s not that this group is not functional, but it means that they’ve handed power down to the IRGC. More on them in a minute. The second group are the political and economic leadership that run the day to day operations of the country. The president, for example, the economics minister, the energy minister. 

For the most part, these people have not been targeted by the Americans and the Israelis because they’re not responsible for most of the policies that the Americans and the Israelis find problematic. So when you see Iran going up and mucking up the region, these aren’t the people responsible. These are the people, for the most part, stay at home. 

And they’ve been mostly left alone. But then you’ve got the IRGC, and that’s very different. A couple things to keep in mind. Number one, Iran is not a normal country. It’s all mountainous. And in each mountain valley you have a different ethnicity. And so how the Persians came to control this territory is they expanded out of their original mountain home in Persepolis and then went to the next valley over and conquered and intermingled with those people, and then to a third and a fourth and a fifth, and eventually did that a thousand times. 

So when people talk about the thousand nations of Persia, they’re not exaggerating. This is a multi-ethnic society that has been trying to slowly grind its minorities into amalgamation for several thousand years, and today they’re only about half completed. Only 51% of Iranians identify as Persians. Now all the others still identify as Iranian. I’m not suggesting that there’s like a really robust opportunity here for multiple fifth columns, but it does shape the decision making, and it’s pretty clear that it’s the Persians who are in control of all the major decisions, especially the IRGC, the IRGC, plus the military. 

Its primary job is to make sure that 49% of the population who are not Persian never get persnickety and rise up. So in many cases, the Iranian military force is primarily designed to occupy its own country. 

All right. That’s the background you need for us to get into the real stuff. Now let’s talk about what can happen. The clerical class that is part of those first two categories, the supreme leader chunk and the more technocratic chunk. 

That’s 10,000 people. And so if you wanted to destroy the political system of a country, that’s a lot of folks that you have to drop bombs on. And undoubtedly we’ve managed to do so for, for at least a couple hundred that were at the top. But there are always going to be more people waiting in the wings to step up and get into the big chair, even during a war. 

So grinding through that entire class, which was basically would be a religious war, going after all the priests, is something that just really isn’t viable unless you’re going to put 1 million or 2 million troops on the ground in Iran to go through a country that’s twice the size of Texas with three times the population and root out each individual one, not really viable. 

And then there’s the IRGC links to the clerical class, but more generally not of the clerical class. These are people about a quarter of a million to a half a million strong, based on whose numbers you’re using, who are also responsible for domestic pacification. 

So whenever there is an uprising the IRGC comes in and starts shooting people. They also have very good relations with, say, the Syrians and especially the Russians. And so the Russians provide them with technology to track down people who are using cell phones or Starlink and basically get them in their homes and then remove them from the equation. Not nice people, but where there might might be a weakness in the IRGC model, it’s not in the guns. 

Then the money. IRGC is self-funding. They control broad swaths of the Iranian economy from energy projects that they have forced private sector players out to the electricity system, which they control half of, to any sort of smuggled good. And since Iran is one of the most sanctioned countries in history, pretty much anything that is imported is smuggled at some level. 

And that means that they have a vast array of income streams that add up to the tens of billions of dollars every year, and that money train is what entices people to join the IRGC. So today, we’re in a position where the senior political leadership around the supreme leader has been neutered or is at least in hiding. And the IRGC, in many ways, is the face of the regime now, because power devolve down to them, because they control a lot of military assets, including the missile program, the nuclear program, the shadow program. 

And so when they see their interests get hit, waves of shitheads come out. So if you remember last week, Israel bombed part of a facility called the South Pars natural gas field, which is where the country gets the 70% of their natural gas. That natural gas is used to make power that hit the IRGC directly. 

So they sent out 50 different attacks into various places across the entire region, and in doing so, made it very clear that they were perfectly willing to burn down all the energy infrastructure in the region if their economic interests are hurt. But if you really do want to change the government, you have to break the IRGC. Now, since there’s over a quarter of a million of them, there’s no way, even with a ground invasion, that you’re going to go in there and root them all out. 

So you have to change the economic math here. It’s a generational issue. Ever since the Shah fell back in 79, there has been a baby bust and a consolidation of power among the people who were alive before that. And so we’ve seen the leadership of Iran, as a rule, get over and over and over. 

That doesn’t mean that there aren’t young people there just fewer young people than there are old people. And how the demographic issue is playing out with the IRGC is you have a lot of people in their 20s and 30s and maybe even into their 40s that have never really tasted power, and they see their elders absorbing most of the profits from the smuggling and the energy in the electricity sector and construction and everything else. And they’re beginning to wonder with the war, when is my time? 

Well, if the IRGC economic aspects get crushed in the war, then you might be able to generate this sort of uprising from within the Corps itself with the younger folks, the Young Turks, if you will, going against the older folks at the moment. That is the only path forward that I see where the United States might actually be able to change the regime in the country, forcing basically a civil war in the IRGC itself. 

It would not be easy. And every time you go after the IRGC economic assets, you know, they’re going to hit the economic assets of the broader Gulf. But at this point, we have at least another 4 or 5 weeks of the war before the batch of Marines that are coming in from California arrive. And in that time, we’re probably going to lose most of that anyway. 

So we’re already talking about the Persian Gulf being removed from the mechanics of global economics permanently. The question is whether or not you want to also try as part of that process to remove the IRGC. It’s an ugly way to do it, but at the moment, it’s the only real weakness in the way that Iran is set up that I think might be able to be exploited.

Trump Gets Introduced to Section 301

US Supreme Court Building

The Supreme Court ruled Trump’s tariffs were illegal, forcing the administration to do things…the right way. Welcome to Section 301 investigations.

This is the slower and more legally structured process of issuing tariffs run by the Office of the United States Trade Representative. Reminder that the USTR has been gutted, so they lack the staff to juggle multiple investigations. Especially since NAFTA renegotiations are just kicking off.

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Transcript

Hey all. Peter Zeihan here, coming to you from Tulsa. It’s way too windy outside to record there, so we’re into it right here by the coffee machine, which is keeping me alive today. All right. Today we’re talking about the next step of Donald Trump’s trade policy. As I’m sure you guys all knew, the Supreme Court recently ruled, six three that Trump’s tariffs, which he labeled as an emergency situation, putting tariffs on literally every country in the world were a gross abuse of the law that he cited that it was illegal and unconstitutional for him to do so, that, tariffs are the province of the Congress, unless the Congress has expressly granted authority to the executive. Now, there are laws where that has happened, and that is what brings us to today. There’s something called 301 tariffs where the president can say, hey, this country is not being fair. It’s violating American trade laws and any agreements that we have. Therefore, we will investigate this violation. We will open up the situation to public comment. 

So any consumers or American businesses can testify, will put it on record. We will pull all the information together, we will make a finding, and then we will use that as ammo in negotiations with the country on the other side. And if those negotiations do not go the way that we like, we will then impose some sort of punitive system that might include tariffs. 

That’s just one of many options. It’s very adult, it’s very constitutional, follows the letter of the law. Now that he has been unable to convince the courts that what he was doing before was legal, it also takes time. There are two problems that Donald Trump is going to face with the 301 approach. The first one is that it can’t be arbitrary. 

So something that Trump did over and over and over again last year is whatever happened in the international system that annoyed him. He threw a tariff on it. You’re trading with the country. I don’t like tariff. I don’t like you personally. Tariff. You say something about the military. I don’t like tariff. You seem to really like steel tariff. 

It didn’t matter what it was. You throw a tariff on anything and that is now been proven shockingly so. To be unconstitutional. Not what Congress intended. 

The problem, however, with this new approach is that there is a process and you have to start it and there’s negotiations and there’s a comment period. And you actually have to build your case. 

Now, I have no doubt that at the end of the day, the Trump administration will just say, oh yeah, of course we’ve now proven our case and we tariff, but that takes months. Second problem, all of this, all of it, every little bit of it is handled up by the US Trade Representative Office. Now the USTR run by a guy by the name of Jamison Greer, who knows what he’s doing. 

He was trained by one of the best in the industry, Bob Lighthizer. 

The problem with USTR is it can only do so many things at a time. And under Joe Biden, who did not push a single free trade deal, it was kind of hollowed out of its staff. And then when Trump came in and Dogecoin, Elon Musk and all that, it lost some more of its stuff. 

And that was never been rebuilt. So Greer and the USTR office in general, simply doesn’t have the capacity to really do more than one of these 3 or 1 investigations at a time. And Trump has already initiated 301 investigations on Canada, Japan, Korea, the European Union, Mexico, and, of course, China. And I’m sure there’s going to be many, many, many, many more. 

And because this is a process and you have to document and get comments and make findings, you can’t just wave a pen and make it happen. The US simply doesn’t have the staffing. That’s necessary to do that. And then third, on top of all of that, USTR is responsible for negotiating or renegotiating every other trade deal. 

Remember that when this all started in April of last year, tariff day, Liberation day, based on your politics, we put tariffs on every country on the planet. And Trump feels that that is necessary for every country on the planet. And now we’re doing 300 ones for all the big ones and probably many of the small ones in the weeks and months to come. 

But that ignores what else is going on, because the U.S. does have trade deals separate from all this. 301 stuff. So, for example, over the weekend, the United States, Canada and Mexico formally started the process of negotiating for what NAFTA is supposed to look like a year to five years from now, that until this moment was the US primary job, because Mexico and Canada or the United States is top and second largest trading partners. 

And whatever the future of American manufacturing happens to look like, or American agriculture, American energy or American population workforce, it’s going to be bound up and with whatever happens with NAFTA. But now the USTR has to do at least a dozen, three, oh ones, probably several 301 negotiations and investigations at the same time. Bottom line, this is like the hard, frustrating way to do it. 

Yes, but it should have started this way a year ago. The only alternative would have been to go to Congress and say that I need some sort of trade negotiation authority. Now, this is something that presidents in the past used to do. You’d have to go back to George W Bush for the last time this was done. It was called trade Acceleration or Trade Promotion Authority, where Congress grants the president the ability to do negotiations outside of the normal back and forth. 

Of the legalities. If you want to do that, you have to get congressional approval. The thing is, Trump really hates going to Congress because then he actually has to say out loud what he wants to do and put it up for a vote. Yay or nay. That was hard enough last year when he had a meaningful majority in the House and the Senate. 

But since then, Donald Trump has had a hard time staffing his government with people from the private sector, because there aren’t a lot of them that believe what he believes. And so he’s had to reach into his ideological allies, people who owe their political careers to him in Congress and in doing so, has whittled down the majority he has in the House, in the Senate to work with. 

And there are enough remaining trade based, business based, Republicans in the party that it’s unclear that he would get the sort of support that he would need in order to make the changes he wants to make. So that kind of leaves us in this stall where Trump is kind of forced to let the system be the system, but he’s unwilling to challenge the system legally. 

And so far in this administration, where that has ended has been with a Supreme Court case that tells him the thing that he never wants to hear. No.

The Shield of the Americas

Silhouetted soldier against a black background

Trump has launched a new regional security initiative called the Shield of the Americas. This partners with several Latin American leaders that Trump likes to target drug cartels throughout LATAM.

The U.S. would utilize special forces and intelligence teams to carry this out. While they could target cartel leaders, labs, and trafficking nodes, as long as there is demand in the North, the drug trade will persist.

Eliminating the industry would require massive troop commitments, resulting in significant political consequences. And even then, the drugs would find a way to keep flowing.

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Transcript

Hey, everybody, Peter Zeihan here. Coming to you from Colorado. And today we’re going to talk about what went down to the white House over the weekend. 

Specifically, there’s this new grouping called shield of the Americas that Donald Trump has initiated between the United States and a number of Latin American countries that he considers ideological allies. So, by the way, that the Latin Americans use the term further to the right, so not including Colombia or Brazil, but concluding places like El Salvador or Trinidad and Tobago or Argentina. 

Keep in mind that what means left and right in Latin America is a little bit different from what it means here in the United States, but the Trump administration has not picked up on that. Bygones. Second that to all of these governments, just like any other democracy, switch back and forth. So this is an alliance, an alignment of the moment. 

And first thing, you should not count on the current roster of countries being what is there tomorrow or the next day, or much less the day after. There are always elections going on. We won Columbia this summer. That is probably going to be quite significant. 

And so the roster moves. But what is more important about the Shield of Americas, is not so much the Secretariat or any idea of policy. There’s no talk of trade deals. It’s all all about security cooperation. And the idea is that the Trump administration has decided it wants to take the U.S. military, push it into Latin America specifically to go after drug smuggling organizations. Now, back story. Historically speaking, the United States involvement in Latin America has been somewhat limited unless there is a third party from out of hemisphere operating the whole concept of the Monroe Doctrine is it’s not so much that this is our hemisphere, but it’s certainly not your hemisphere. 

So whether it was the Germans or the Soviets or the Chinese or whatever, there’s always been a degree of built in American hostility to anyone on the outside pushing in here. That doesn’t necessarily mean that the United States is dominant economically, although there are periods in the history where that has happened. Second, with the United States is in the process, independent of Trump, exemplified by Trump of contracting its footprint and its interests in the Eastern Hemisphere. 

Now we can have a conversation of whether that’s smart or not, but politically, it’s very popular on both sides of the aisle to bring the boys home and to be less involved in trade on a global basis. I would argue that’s mostly self-defeating, and guarantees will get drawn into something bigger later. But, you know, I’m only one guy. 

If 330 million of us, my vote isn’t all that big. What it does mean, however, is that if you take the United States military and all of a sudden it’s not obsessed with the Eastern Hemisphere, and a lot of the forces come home, and of course, it’s going to be used more aggressively in the Western Hemisphere. And since there’s no country in the Western Hemisphere that’s even remotely capable of fielding a force that is of any conventional threat to the United States, then the question is, what are you going to use the tools for? 

They may have been designed for Islamic fundamentalism or the Chinese army or whatever it happened to be, but if they’re here, they’re going to be applied to different threats. And the threat of international drug trafficking organizations is obviously a significant one that everyone agrees is a problem. We just all agree on what to do with it. I would argue that the simple way to destroy all of these organizations overnight is just just not do cocaine. 

But again, I’m only one vote of 330 million. So we now have the Trump administration and at least 14 other governments, at least on the surface, agreeing to deploy American forces throughout the hemisphere to combat these cartels. Now, two things. Number one, as I said originally, the roster is going to change. And so you’re going to see a lot of small bases and coordination facilities popping up and then going away after an election and then popping up again after the next election. 

And that means we’re not talking about a regular army, and probably not even the Marines, because the type of permanent footprint that’s necessary for those two institutions is in the billions of dollars of investment. And you can’t just come and go and come and go and expect it to be useful at all. It takes months to deploy the Army in a meaningful way. 

Marines a little bit faster, but not by a lot. This is not a job for the Navy and aircraft carriers. This is much more specific. Once you limit what you can do with bases, and that means facilities that are small. And then if they get folded up tomorrow, it’s no big deal. Which means that the entire American deployment for this sort of thing is going to be special forces, whether it is the Green Berets or the Rangers or the Seals or the CIA. 

Now that community, the Special Forces community, has more than doubled the number of operators they’ve had as an outcome of the war on terror, because you never knew where you needed to drop in a small team of a dozen people. Now that the war on terror is over, I don’t want to say that the Special Forces Command has nothing to do, but they’ve gone from having a long grading war where they’ve been working in tandem with over 100,000 Americans deployed in combat situations, throughout the Middle East to all of a sudden that’s gone. 

And so they have become the premier force for the American president, whoever that happens to be, to address whatever issue happens to be coming up in the world or to a degree, deniable, they’re small, they’re agile, they’re lethal, they’re very skilled. They have a long logistical tail. But that means that at the point of the spear is a lot of force behind it. 

So when you look at things like Latin America, you think of drug cartels. This is really the perfect tool for the job, independent of the fact that it’s twice as big as it used to be. It depends on the fact that they’re actually very good at what they do. The only problem, and it’s not a really big one from my point of view, is that they’ve been training for something else for 25 years now. 

There’s not a lot of desert territory in Latin America where there’s drug trafficking. You’re talking primarily mountains. You’re talking primarily jungle or jungle mountains. That means we’re probably going to be seeing the teams deployed throughout the length and the breadth of the region. The question and only Donald Trump can answer this question right now is whether or not you’re going to deploy them exclusively in places where you have a degree of political cover and agreement with the host country. 

In a place like El Salvador, pretty easy. El Salvador is not a major drug trafficking location in places like Colombia, where the government is currently kind of hostile. That’s a different question. As a rule, when Latin American countries realize they have a cartel problem, they’re usually pretty enthusiastic about working with the United States on security matters. But it’s always been a step of remove. 

So, for example, if you look at Plan Colombia, which was the deal we cut with the Colombians in the early 2000, we shipped a lot of equipment, we provided a lot of Intel work. We provided some naval support, but it was always Colombian boots on the ground doing the actual grunt work. And in doing so, it ended their Civil War and led to a collapse in cocaine production. 

You’re not going to do that with ten special forces teams. You can go after specific nodes. You can go after specific production sites, you can go after specific people. But we’re talking about an industry here. The drug industry gets tens of billions of dollars. And as long as there’s demand north of the border in the United States for these products, special forces are not going to be able to change the math to a huge degree. 

That’s the second problem. The third problem is really much bigger. And that’s Mexico, in Mexico, with the current government in Colombia. Shame bomb. We have a government that is much more willing to work with the United States, even in the United States, as being a bully. But you’re talking about where the cartels, the big ones, originated. 

And while they are in the process of fracturing because their leaderships have been removed, all of the economics that are still pushing the cocaine north are still there. And so you’re talking about having to do something like not special forces, but actually deploying tens of thousands of troops in order to impose a security reality. Here’s the thing. We’ve tried that if you go back to the Afghan war, at its height, we had 90,000 troops there. 

And while they were trying to hold the country together to fight the war on terror, heroin production increased. Because you can only be so many places once Mexico is over twice the size of Afghanistan, Mexico has over twice the population of Afghanistan. And so even if we were to put a couple hundred thousand troops in Mexico, I really doubt it would be enough to change the overall economics of drugs. 

Anyway, bottom line of all of this is, while the United States can’t solve these problems, as long as there is an insatiable source of narcotics demand, it does have some tools that allow it to interfere in the region in a really deep piercing, meaningful way. The question is whether or not the political and economic side effects of that are worth the perceived benefits. 

Mild disruption of cocaine production, transiting versus breaking the political relationship that allows, say, the trade relationship to happen. Because Mexico is by far our largest trading partner and will be for the remainder of my life, and without them in the American trading network, everything we need to do gets a lot more difficult.

Strike Targeting Problems in Ukraine

Imagine of a drone firing missiles

The U.S. is pressuring Ukraine to avoid striking specific Russian energy infrastructure. As you could imagine, this all has to do with American economic interests.

Chevron and ExxonMobil have a stake in major Kazakh oil projects, which flow through Russia to be exported. Ukrainian strikes on any related infrastructure risk harming those American energy companies’ bottom line, and that simply will not do (even though Trump stopped providing military aid to Ukraine over a year ago).

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Transcript

Hey all, Peter Zeihan here. Coming to you from Colorado. The news this week in Kazakhstan, of all places, is that the United States is starting to point its finger at Ukraine about the targets it’s supposed to attack in Russian territory. The issue is that over the last several months, Ukrainian drones have gotten more effective with better range and more explosive capacity and better accuracy. 

And they’re now regularly targeting Russian infrastructure, several hundred kilometers. On the other side of the international border. And several of those attacks have struck an area called Novorossiysk, which is an oil loading facility on the Russian part of the Black Sea. The issue that apparently the American government has is upstream of that pipeline on the other side of another international boundary with Kazakhstan. 

We have some investments by American super majors, and those super majors have gone to the U.S government and said, hey, hey, hey. And so the U.S government has gone to Ukraine, said no, no, no. The two projects in question are called Tengiz and Cash are gone. Now. Tengiz is the original foreign direct investment project by Western companies into the former Soviet Union. 

So old that actually predates the fall of the Soviet Union, was negotiated under Gorbachev. And then Kazakhstan got it and it became a Kazakh project. It is a consortium that involves, Chevron, which has a 50% share. ExxonMobil, which has a 25% share, and then a series of local and Russian firms, it produces about what’s called 700,000 barrels a day. 

On a good day, considerably below where it was supposed to be. But the problem with that project is the pipeline. C, the pipeline, comes out from Kazakhstan, goes around the Caspian Sea, crosses into Russia, and then uses a lot of old repurposed Soviet section. So it’s kind of jigsaw together before it gets to another SEC. And so the Russians have insisted that they be able to put their crude into the pipeline as well. 

So while you do have a signal field that does produce a large volume, it’s kind of capped at what it can do because the Russians demand access to the pipe for the rest of the capacity. The second project, kasha gone is much more difficult. It’s offshore. It’s in the Caspian Sea. You only have one American company involved. 

That’s ExxonMobil. They have about a one sixth share. It’s not doing nearly as well, but even it is getting up over a 400,000 barrels a day. So you put it together. You’re talking over a million barrels a day. This is this is real crude. And the overseas terminal can handle it. And then some. But it’s impossible for the Ukrainians to attack the Russian energy infrastructure that ends in overseas without it also being perceived by American companies that it’s impinging upon their, economic interests. 

And so the Ukrainians are basically told, go attack something else. And that is exactly how the Ukrainians have interpreted it, not don’t attack energy infrastructure like the Biden administration used to tell them, don’t attack energy infrastructure for which American interests are involved. How this is going to go is going to get really interesting because when something loads up at an overseas port, you don’t necessarily know what it’s loading up with. 

And as soon as Ukraine started going after shadow fleet tankers, more and more tankers are refusing to even go to Novorossiysk. So this is one of those six and one half dozen another. How do you define it? How are you going to enforce it? But the bottom line is, is that the United States is no longer contributor to Ukraine’s military defense. 

And in the way it used to be. It used to be that the United States was the majority of the military aid and provided very little economic aid. They left that to Europe after a year of Donald Trump. The United States is still providing no economic aid, but is now providing no military aid at all. So how talks evolve among the Ukrainians, the Americans and the Russians is going to termine how the Ukrainians decide to leverage their military technology here. 

There are a number of ways that the Ukrainians could go after pumping stations on different projects for, say, the Druze, the pipeline that used to bring in lots of crude into Germany. 

But those attacks target facilities that supply crude to Hungary and Slovakia, which are two countries in Europe that are extraordinarily pro-Russian at the moment, to the point that they’re even shutting off fuel and electricity deliveries to Ukraine because they want to make sure they can still get Russian oil flowing through Ukraine. 

So it’s we’re still dealing here with the detritus of the Soviet collapse, because it’s not just one empire anymore. 

It’s 25 different countries across Central Europe. In the former Soviet Union proper. All of them have chunks of infrastructure that were designed for a different air and a different political reality. And Ukraine is just in the unfortunate part of being in the middle of it. 

While under attack. There’s no such complications. However, further north, there’s another major pipeline system, the Baltic Pipeline network, that terminates near Saint Petersburg, which is just as big as what’s going on in over a sec. And as we’ve seen in recent months, that two is now within range of Ukrainian drones. More importantly, we have the Europeans that are in the process of negotiating how to go after the shadow fleets directly. 

So we could actually have a number of NATO countries, ten of them who border this littoral, who could all of a sudden all decide on the same day because they tend to coordinate policies, that no more. And then you’ve got to have Denmark, Britain, Norway, Sweden, Finland, Estonia, Latvia, Lithuania, Germany and Poland all at the same time. 

Same. Nope. It’s over and there is no way to redirect that crude somewhere else. And if you want to talk about something that’s going to hit Russia’s bottom line, that’s the way to do it. And now the Ukrainians are in a position where they may be forced to concentrate all of their long range attacks on one specific system. 

I would not want to be running that system.

The U.S. Inches Towards Iran Conflict

Flags of the United States and Iran blending. Licensed by Envato Elements

U.S. strikes against Iran appear imminent, with two aircraft carriers being positioned in the Persian Gulf. Trump has presented Iran with negotiation terms that would effectively end Iran’s status as a regional power, so it’s no surprise that negotiations have stalled.

The terms laid out by Trump would end Iranian nuclear enrichment, force them to give up long-range missile capabilities, and stop supporting regional paramilitary groups. Spoiler alert: that’s Iran’s entire strategy and security model. Any conflict would likely start in the air, then move to targeting strategic assets like Kharg Island. Once that happens, Iran would be crippled.

Outside intervention would be unlikely, and removing Iranian oil from global markets wouldn’t be the end of the world. The main concern would be destabilizing the region and risking the formation of new terror groups, although things like that take time.

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Transcript

Hey, everybody. Peter Zeihan here, coming to you from Colorado. It’s the 23rd of February, and we’re going to talk about Iran, because what the United States has been moving into the region in terms of military hardware gives us a good idea of the, type of strike that the Trump administration is considering. The headlines are that one third of all currently deployed U.S. naval assets are in the region, which is really a bad way to look at it, because the Middle East, it’s in the middle. 

It’s between things. So it’s really not strange to have a lot of stuff there because it’s coming and going. So let’s talk about more specifics. The USS Abraham Lincoln, which is one of the Nimitz super carriers, is off the coast of Oman. And that’s a country on the southeastern corner of the Arabian Peninsula, right at the mouth of the Gulf. 

So if the United States wanted that carrier in the Gulf would take a day or two wherever it needs to go. Second, the USS Ford, which is the newest of our super carriers, by far the largest, most powerful military platform humanity has ever created is currently in the Eastern Mediterranean. It was sighted this morning off the coast of Crete. 

Crete is an island that’s in the southeastern part of the Greek territory. So it could be going through Suez in a day or two if it wanted to. In addition, there’s at least 60 aircraft in Jordan. If there was going to be a strike, we’re now basically looking at the capacity of hitting hundreds of targets in a very short period of time and suggesting an air war with a duration of a month or less, probably closer to a week or two. 

If you want to do anything more, you’re gonna need a lot more supply ships in the area, for replenishing bombs and missiles and whatnot. But it does look like the Trump administration is preparing for a scenario where the Iranians are utterly incapable of striking back at US forces, so they decide to attack Israel. Air go, all of jet aircraft that are in Jordan. 

There’s a handful of F-35, so you can see them from satellite imagery, and the rest are basically there to intercept drones as they’re going through. This is a significantly larger deployment into Jordan than what they had, during the last assault last year when they attacked the nuclear program end Iran with mixed results. This is intended to drop a lot more ordnance on a lot more places. 

And considering that even if all they do is go after the nuclear program, where there may be 50 sites, they’re going to have a lot more, subsidiary strikes in the areas to take out command and control and air defense in the rest. The question, of course, is whether the Iranians can do much about this. And the answer is no. 

Not only did American and Israeli strikes over the last year really gut the air defense network over Iran. No one has been able to step in and replace the equipment. Your options are Russia or China. The Chinese stuff, to be perfectly blunt, is really shitty. And the Iranians are really not interested in getting it unless it’s the only thing that’s on offer. 

They’d rather have offensive weapons to serve as retaliation than defensive weapons that really aren’t going to do anything. As for the Russians, the Russians are locked down in the Ukraine war and can’t make enough jets to replenish their own supplies. So while there have been a number of contracts signed to get things like the su 35, which is a fighter bomber jet, to Iran, the Russians just don’t have any to give. 

So the only thing that the Russians have been able to provide is some relatively low tech, anti aircraft systems called verbals, which are MANPADs, shoulder launch kind of things. You can use those to take out helicopters, maybe some very low flying jets, but not the sort of strikes that the United States is going to be making. 

They’re more about making a statement of solidarity than anything else, because any of the equipment that the Russians could provide is already in use. And as the Israelis and more recently the Ukrainians have proven, even the top notch Russian stuff like the S-400 really isn’t as hot as the Russians have tried to make it sound these last 30 years. 

And if they can’t stand against Ukrainian MiGs, they’re certainly not going to stand against American F-35s. So as to the goal here, remember that the Americans are demanding that the Iranians shut down their missile program, their nuclear program, and shut down all funding to paramilitaries throughout the region, which is basically the equivalent of them demanding that the United States shut down the Marine Corps, the Army, their entire air force, and decommission the Navy. 

So from the Iranian point of view, if they do this, they’re done as a strategic power. And so what we will probably see is the two of them heading to a collision. And if Trump gives the order, we will have a gutting of a lot of the industrial base in Iran. And it basically just becomes a sea. The state kind of like North Korea, but with not as many sharp, pointy sticks to point at everybody else. 

This would destroy their economic capacity to wage meaningful war, because right now, oil income is 90% of their earnings, in 90% of that oil income comes from one spot. And the idea that this administration in this moment is not going to take advantage of that, is pretty slim. 

I do want to point out one really weird thing about this, though. Iran doesn’t export a lot of crude anymore. Between sanctions and more importantly, their own idiotic approach to foreign investment that basically penalizes anyone who’s interested in investing in the country. Iran’s oil sector has been in a nosedive for the last several years after degrading for a generation. 

So total exports out of Iran are really only about a million barrels a day. And if the export infrastructure is just, disrupted, you know, it’s not going to come back anytime soon. The market can five that right now. And in a post Iran scenario, what’s going to happen is more or less what’s been happening in a pre Iran scenario. 

And that Oman and Kuwait and Bahrain and the United Arab Emirates and especially Saudi Arabia will be able to send their crude not to the United States for net exporters, but to the East Asian rim where the vast majority of it goes for China. So, ironically, we’re in a situation here where the strategic. 

What’s the word I’m looking for overhang of the United States not liking Iran in a run that like in the United States, that goes back to 1979, it’s kind of outdated. And an economic strategy point of view. No longer is Middle Eastern crude supporting the American ally network. It’s supporting China. And so we’re now in this weird situation where strategic thinking in the United States hasn’t caught up yet. 

And we’re considering going to war with a country that has no impact on our ability to fight whatever’s next. Whether you think that’s worth it or not, of course, do your own strategic math. But the old argument that we need to keep oil flowing from the Persian Gulf to support the allies against the Soviet Union, that became outdated more than ten years ago, and now it’s it’s kind of funny that it’s still driving decision making really anywhere. 

And I don’t mean that as a pure critique of the Trump administration. That’s a critique of Tehran as well. They just haven’t moved on either.

I’ve Got This Bridge to Sell You…

The Gordie Howe Bridge under construction | Photo courtesy of Wikimedia Commons

The Canadians built and financed a new bridge connecting Detroit and Ontario, but now Trump wants his 50%.

The bridge in question is the Gordie Howe Bridge. It will strengthen the supply chains in North America’s core auto industry hub and act as an alternative to the Ambassador Bridge.

Canada’s geopolitical reality is that the U.S. will always hold more leverage, because the Canadian economy is so deeply integrated with the American economy. This relationship typical manifests as the U.S. securing more favorable terms in infrastructure projects with Canada, and this is no different. Just your standard case of biggest kid on the playground.

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Transcript

Hey, everybody. Peter Zeihan here. Coming to you from Colorado. Today we’re talking about trade with Canada specifically. There is a new bridge, the Gordie Howe, that is supposed to connect, Detroit to the Canadian province of Ontario. It’s been under construction for about the last decade, and it’s supposed to begin operations this year. But Donald Trump has said that he’s not going to allow that to happen unless at least half of the ownership is transferred to the US federal government. 

The Canadians paid for the whole thing. The idea is it’ll be a toll bridge. once its construction is paid off the income will be split 5050 between, Canadian investors and the state of Michigan. Trump of course, because of this is an international connection, has the ability to end it in a heartbeat. 

And that’s what he’s doing right now. The backdrop, Gordie Howe is a desperately needed transport connection right now. All of the road traffic and rail traffic that goes between Michigan, which is one of the big U.S. industrial states, and Ontario, which is Canada’s primary industrial state, goes through a single bridge called the Ambassador Bridge. And it is the single most cross bridge for commercial purposes in the world and is the backbone of the relationship for the US auto industry. 

Keep in mind that pretty much everything that happens in Ontario, from an industrial point of view, is integrated into the United States in some way. And this is the primary conduit. So adding another conduit would be a huge boost to, the American economy from a manufacturing point of view, not to mention good for Canada as well. 

The proximate issue is that the commerce secretary of the United States, guy by the name of Howard Lutnick, is buddies with a guy by the name of Matt Maroon. Literally. That’s how his name is pronounced, who owns the ambassadorial bridge and has been campaigning against anything that would build another link ever since the idea was first floated back in, I want to say 2012, because it would be competition for his project. 

Right now he has a monopoly, and I have never met anyone on Wall Street who has ever described Howard. Let me, because anything other than desperate to be corrupted. And so apparently he had a conversation with maroon and then had a conversation with Trump. And now Trump is campaigning against the bridge. Let me go, by the way, is the guy on the cabinet who showed up the most in the Epstein files, if you’re into that sort of scandalous details. 

Anyway, the bottom line here is not that this is a corruption thing or a trade thing. The bottom line is this is a geopolitical thing. Whenever you’re dealing with trans border transport links between the United States and Canada, the United States is always, always, always, always going to have the upper hand. Canada only has about 35 million people. 

They’re scattered across the entirety of the southern border of the country. And even where they are in dense concentrations like, say, Toronto and Quebec, they don’t like each other very much and try to limit their infrastructure. So every single Canadian province but one trades more with the United States than they do with one another. And any infrastructure on the border that is designed to facilitate links is always going to be done. 

The U.S way. So if you remember back to the 5060s, we had something called the Intracoastal Waterway system, which uses the Saint Lawrence River, which empties up through eastern Canada. But comes down and connects to the Great Lakes. Great lakes have things like Niagara Falls. There’s a lot of natural obstacles. And so there was an effort in Canada back in the early 50s to build out this massive infrastructure that would connect everything together. 

But that also meant connecting to the United States. And so the United States basically did some version of what they’re doing right now with Donald Trump said, you pay for pretty much all of it, in this case, about 75%, and we get full access. Some version of that will undoubtedly manifest with this new bridge, regardless of what is right versus wrong and what has been agreed to before. 

Donald Trump actually agreed enthusiastically to the creation of this bridge when he was president the first time around. But the first time around, his commerce secretary wasn’t nearly as desiring of being corrupted. So here we are, for Canada, this is just part of doing business with the United States. There is no other option. And so just like with the intercoastal, Canada gets to pay for it all. 

The United States gets the majority of the benefits. The alternative is to not build or use the bridge in which candidate remains fractured and loses access to the world’s largest investment and commercial market. And for Canada, that’s basically a choice between a first world country and being something less. Is it fair? Nope. Is it new? Also? Nope.

Trump Announces $12B Rare Earth Stockpile

Photo of rare earth minerals: praseodymium, cerium, lanthanum, neodymium, samarium, and gadolinium. Photo by Wikimedia: https://en.wikipedia.org/wiki/Rare-earth_element#/media/File:Rareearthoxides.jpg

The Trump administration has announced a plan to create a $12 billion stockpile of rare earths. The goal is to create a buffer against any supply disruptions, but this is just a band-aid.

Depending on the metal and use case, this stockpile might give the US a five-month supply. But the core problem still exists: the US doesn’t have any domestic refining or processing. It’s not all that hard or expensive to extract and process this stuff; the US just hasn’t invested in the infrastructure to do so.

If the goal was to establish real supply security, this stockpile isn’t the way to go about it. But hey, at least we’ve got an extra five months.

Prefer to read the transcript? Click here

Transcript

Hey all, Peter Zeihan here, coming to you from Colorado. And today we’re looking at a new initiative from the Trump administration to solve the critical materials issues. Short version. The United States doesn’t refine most of its materials these days. It relies on countries that have much lower pollution concerns, like, say, China or India, to do the processing. And then we buy the process material and do whatever with us. 

What that means is, well, while you save a lot of money and you certainly clean up your own local environment, you subcontract all of this out to countries that, in the case of China, might not be the most friendly and then might cut off supplies at a later time, as the Chinese have done to a number of countries from time to time, including the United States. 

Anyway, the idea is you establish a $12 billion stockpile. The U.S. government is going to be tapping the import export bank. And so the idea of using one government agency to finance the development of another, I personally find that delicious, but bygones. And the idea is you buy these processed metals, primarily rare earth metals, and then they are in the United States. 

So you have a buffer. I don’t want overstate this. It’s a good step. It’s in the right direction, but it’s going to get crazy. $12 billion of critical materials for a country that is a $25 trillion economy is not going to last a long time, probably somewhere between 1 and 5 months, based on the specific material, because there are over 30 different materials that they’re talking about here. 

It’s a step in the right direction. But if your goal is to really achieve a national security issue and economic self-sufficiency, you need to make these things yourself. Right now they’d just be buying them from China on the open market a little bit more than what we need, and put them into basically a safe. What you need to do is build up the processing. 

The problem here is that there is no such thing on the planet as a rare Earth element mine or rare Earth element production line. Rare earth metals exist as small, small impurities in other mineral extraction, primarily things like silver, but also copper and zinc and a lot of other things, uranium, for example. And so what happens is you have your mine that produces X mineral. 

You process that to get X refined mineral and then the waste material you then go through a separate set of steps that involves several hundred vats of acid. Basically with every step you concentrate the mineral that you’re after, whatever it happens to be. And after six months to a year of such processing through acid, you eventually get some refined metal rare earth metal that you can use, but it takes several tons of raw material to generate one ounce of the finished metal over months of steps, and hundreds of vats us and until the United States builds that infrastructure, which isn’t technically difficult. It’s chemically very tricky. Until you do that, you are never going to have independence from international suppliers. Now, there’s nothing about this technology that is new. It was developed back in the 19 tens and 1920s. The U.S. obviously can do it. It’s not even particularly expensive even if it is environmentally dirty. 

But it does require space, and it does require capital and does require planning. It does require infrastructure. And at the moment, the Trump administration has not put a dime into that effort. If and when that changes, I will be there with bells on to sing and dance. That is not what is happening today. Today we are building the equivalent of a piggy bank that we still have to fill up.

Rolling Back Regulations in the U.S.

A gavel and law book on a desk

Trump’s pledge to roll back regulations isn’t inherently bad, but the way he’s going about it is problematic in just about every way.

Trump’s second term has brought about a new level of bureaucratic hollowing, leaving no capacity to manage regulations already in place. So, we’re left with a backlog of outdated policies, with an admistration who has no intention of enforcing them. Imagine the nightmare this creates for anyone trying to operate under those circumstances.

What we need is a functioning government with experienced staff who can regulate these systems and give clear guidance to those who need it. The bar is low, but the current administration is still trying to play limbo.

Prefer to read the transcript? Click here

Transcript

Hey all, Peter Zeihan here. Coming to you from Colorado. Taking a question from the Patreon page today, specifically about regulation in the United States. Donald Trump says that he’s going to strip out ten words of regulation for every word that gets put in. This is up from his first term when he said the ratio was going to be 5 to 1. 

And will this have a meaningful impact? The person was asking the question, was quite circumspect about this. And he realizes that some regulations are good. So it’s just a question of whether this is a pro or con at large. Overall it’s con, but probably not for the reasons that you’re thinking, the two most regulatory heavy administrations that we have had in modern history are the Biden administration and the Obama administration, and by far the most administrations we’ve ever had are Trump one and Trump two. 

But they’re very different beasts. The Obama administration stacked itself with people with no real world experience. There was only like five years total of people who’ve had a real job. Most of them came from academia and ideologues and think tanks and people who had never actually participated in the real economy. So a lot of their regulatory structures existed because the president hated to take meetings. 

And so he never went to Congress for anything. And so they made up what they thought the ideology would demand and try to force that on corporate America. And needless to say, it made a lot of mess. The Biden administration was kind of the opposite, and that most of the people who were in the administration had real world experience, either as mayors or governors or corporate titans. 

And so while there were still a lot of regulation that went in, it wasn’t nearly as crazy. 

Trump very different beast. In Trump one, the Trump administration, we’re all going to be right back that up. President Trump didn’t think he was going to win in his election with Hillary Clinton. And so when he became president, he tapped the Republican brain trust very heavily in order to build out his cabinet. 

And all the senior positions in the bureaucracy. And in doing so, a lot of people with corporate experience became bureaucrats. And in doing so, when they came across regulations that they knew from personal experience were stupid, they stripped them out or modified them to make it less onerous for the business community. And so, as a rule, the business community was broadly pro-Trump throughout the bulk of his first administration. 

That’s not where we are with Trump. Two, President Trump spent his time out of power during the Biden administration, purging the Republican Party of anyone who might ever come across as knowing anything, because he wanted to make sure that everybody knew he was the smartest person in the room. And the easiest way to do that was to dumb down the room. 

So he comes in to president the second time around. There’s no longer a brain trust and the Republican establishment, for him to tap. And then he goes into the bureaucracy and fire the top 1500 or so people, but doesn’t necessarily replace them. So what we have is this weird dichotomy. And yes, the regulatory frameworks, the the system that builds out new regulations that has been frozen in very, very, very, very, very few new regulations have gone into place under Trump. 

Two, however, these institutions are not staffed out, so they’re also not going through the old regulations and purging them or trimming them or amending them or getting rid of them or whatever it happened to be. So in some ways, we now have the worst both worlds. We have this massive regulatory hangover that dates back to the first Obama term, a lot of stuff that still hasn’t been cleared out. 

At the same time, we now have an administration that isn’t putting any brain power whatsoever into cleaning up that system. So yes, we’re not getting new regulations. And broadly speaking, for the business community, that’s a plus. But then we’ve got this massive overhang of stuff that is outdated or ill conceived, or never went through Congress or never went out for review. 

That is still on the books, and you’re legally required to still follow them. The Trump administration is telling people just don’t follow them then, which puts business in the worst of all positions. They’re legally liable if they violate the corporate codes. But this federal government is saying that they won’t enforce the corporate codes. So we get this rule of law problem. 

At the same time, we have an outdated and overburdened regulatory structure, and corporate America is left in the middle trying to decide which specific legal risk they want to deal with. Not a pretty situation to be in. The solution is for the government to be the government, but the government can’t be the government without people.