U.S. Politics Archives - Zeihan on Geopolitics

The Question of Leadership…And Management

Donald Trump and Xi Jinping at the G20 Summit

Everyone gets mad at me for critiquing the leader that they like, but listen…I’m out here roasting everybody. Whether it’s Obama, Trump, Xi Jinping, or Grandma, nobody is safe. Okay fine, we’ll leave Gram Gram out of it for today.

Each of these three leaders has damaged long-term functionality of their respective governments. Obama was incredibly intelligent, but lacked the managerial skills to achieve bipartisan cooperation. Xi Jinping is paranoid and obsessed with preserving his power, which led him to purging the Chinese system and creating an overly centralized system that is disconnected from reality. Trump has adopted the worst qualities of both of these other leaders and brought them to his second term in office, results are obvious in daily news…

At least the US only has to deal with Trump for four years. The Chinese have no end in sight for their leadership crisis and are rapidly approaching demographic collapse. Hopefully the US can learn something from the chaos that will ensure in China, and avoid a similar fate.

Hey all. Peter Zeihan here. Coming to you from Colorado at the Denver, Colorado airport. Today we’re talking about leadership. There are a few things going on. But I want to talk about three of my least favorite, leaders that are on the public stage right now. A lot of people. And all of a sudden. First, to establish my bona fides, I consider myself to be a political independent, which means that I think that I can look at politics in objective manner.

It’s even handed. What that really means is that everyone assumes that I’m partizan for the other side. You know, it’s just my personal cross to bear. But let’s start with somebody who is no longer in power, and that’s Barack Obama. Barack Obama is one of my least favorite leaders of the modern age, largely because of his lack of managerial skills.

Now, it’s not that he’s not intelligent. I would argue that he is the smartest president we’ve had since Jefferson. And he gave a lot of kind of exit interviews in his last year as president, where he demonstrated that he really did grasp how everything works, like why the Israeli-Palestinian conflict really had no meaningful conclusion that could ever be resolved.

Why green tech in its current form actually increases carbon output rather than decreases it? Whether it was economics, politics or strategy, he really did understand how everything fit together. But he really hated people. He hated being in the same room as people. He hated having conversations with people. It was a constitutional law professor. He wanted to lecture from the front.

He wanted that to be the end of it. So we actually thought when he was elected, that just because he was there, that we’d have bipartisan cooperation on everything and everything would be easy. And since he didn’t have meetings with anyone, that just didn’t work out. So of the presidents who served full terms going back to Foundation, no American president met with his cabinet or went to Congress fewer times than Barack Obama.

And so for eight years, we basically didn’t have a president. But that didn’t stop him from thinking that he was the smartest person in the room. So in his first meeting with the Joint Chiefs, he basically told everyone that he could do all of their jobs better than they could. You know, let’s let’s assume that that’s true for a moment.

So, you know, my understanding is the presidency is not a part time gig. So even if you were the best person for every job, you can’t do them all at the same time and do your own. And so he never delegated or sealed himself in the white House, basically built an information wall around him and just sat there for eight years, and he’ll go down in history as one of the worst managers in the worst presidents we’ve ever had.

Next up is chairman Xi of China, who, like all world leaders, is a bit narcissistic, but his issue is power preservation. Whereas Barack Obama always insisted that he was the smartest person in the room and was so confident in his arrogance that he basically just could be in a room alone. He is always concerned about what the next threat happens to be from internal services, because if you look back on the long stretch of Chinese history, lots of coups, lots of assassinations, and he knows that in a ossified political system like the Chinese Communist Party, it’s only a matter of time before somebody else decides to kick him off.

So his policy was to preemptively stop that. So he purged. He started with the local regional governments. He worked with the federal bureaucracy. More recently, he’s taken on academia and the business community in the military. And really, the last time he had a meaningful advisor who would tell him the truth has been 6 or 7 years ago now.

And so he’s been making policy in a box all that time. And federal policy out of China has become more and more erratic and less and less connected to reality. You know, part of this is in the geography of China, it’s a big place with a lot of variety. And the saying is that the emperor is far away.

And so you get China spinning between these two extremes of over centralization, which is definitely what we have now, or when the emperor or the chairman loses control, all of the regions take out power and basically become five terms of not nations to themselves. There’s really no good middle ground. At least there hasn’t been since, Chairman Deng back in the late 70s. Throughout the 80s. into the 90s. Well, sorry. Ding. Lived a long time. Anyway, what this means is that leadership in China is completely broken, completely isolated from the wider world. And the federal bureaucracy in China has seen so many of their messengers shot, in some cases, literally, that they’ve basically not just started to self-censor, but to self guide.

So if you look at the statistics the Chinese system collects, it’s not as robust as you would expect for a country of China’s level of size or sophistication, because if they present a data point to the Chinese premier that he doesn’t like, the Chinese simply stop collecting that statistic. So there’s no longer any information on things like local political biographies, because that would allow people to start climbing the ladder and getting into the system.

Same for college dissertations. Same for death rates. Same for the bond market. It might generate bad information. It’s not that they collect it and sit on it. It’s it. They don’t even collect it anymore. So they can never have that awkward moment with the boss. And then finally you’ve got Donald Trump. Now, normally when a leader loses an election and spend some time out of power, they try to hire some new people who fill in the gaps of their knowledge base, have skill sets that they don’t have, especially built around things that they want to achieve.

They build up a cadre of legislation so that when they get back into power, they can hit the ground running, modify the laws and Congress, and make sure that the vision this time outlasts the president for at least his current term.

That’s not what Donald Trump did. Instead, Donald Trump purged his inner circle of anyone who knew anything about anyone, including his outer circle, including the leadership of a Republican Party. So it’s just a yes man crowd, and a very thin one at that. You see, when he became president the first time around, he really didn’t expect to win.

And so he tapped the Republican Party apparatus quite strongly, as well as the military for his circle. And when they would inform him of things that he didn’t like to hear, he would fire them. That’s why he went through more cabinet secretaries than any American president in history. By a significant margin this time around, he’s made sure that that can’t happen.

He hasn’t brought in anyone who knows anything. So we have a vengeful, incompetent running the FBI. We have a TV host running the Defense Department and so on. What this means is that Trump has achieved in just a few months, what is taking Chairman XI of China almost 13 years to achieve?

And so what he’s done is basically seal himself in the white House. Obama’s style built a hermetic seal around, and more information can’t penetrate Obama’s style. But then he’s also gutted all of the sources of information that leadership would normally rely upon Xi style. In many ways, we’ve gotten the worst of all worlds. About the only thing I can offer as hope here is that really, most of the purging is at the top of the federal bureaucracy and all of the people down below, you know, the 3 million people in the military, in the bureaucracy that do the day to day.

There’s still there. There’s still a cadre that over time can regenerate the leadership. But that’s going to be a 5 to 15 year process. So take this for what it is. We’ve got three world leaders. Two of them are active that are actively destroying the ability of their states to function, not just during their administrations, but long term.

Now, in the case of the United States, there’s a use by day here. Trump will be gone one way or another within four years. Who knows what’s going to happen next. But in China, who even before the trade war, their demographic situation was so atrocious, they probably only had about eight years left. And now they have to do it without a functional government.

So Xi will be the last Chinese leader, and he will ride this system into the ground, and he will destroy the People’s Republic of China. And hopefully here in the United States on the other side of the Pacific. We’ll look at how that goes down and learn a few things about what to do and what not to do with your government.

The Fire Hose of Chaos: American Brands

Many of America’s most beloved brands rely on Chinese manufacturing, but what happens when that goes away?

The impacts and shortages faced will vary based on how dependent each company is on China. There are three groups these businesses fall into: tech firms, consumer brands, and mid-tier companies. Tech firms like Apple, Dell, and Microsoft have complex and integrated supply chains that would be difficult to pick up and move; these companies will need years to rebuild, and they’ll face shortages in the meantime. Consumer brands like Nike, Mattel, and Keurig can be easily replicated. Middle-tier companies like Whirlpool and GoPro will face lots of competition and will need heavy investments to recover.

This disruption was inevitable, but Trump moved it up on the calendar and left companies no time to adapt. So, get ready for shortages, bankruptcies, and inflation. There might be one upside here though, we may not have to see Crocs around anymore…

Peter Zeihan here. Coming to you from Colorado. Today we’re talking about some of the impacts of the Trump tariffs on the American corporate space. There are a lot of companies that sell consumer goods in the American market, American companies primarily, that have outsourced most of their manufacturing to China. And with the tariff policy, we’re basically getting two things.

Number one, people can’t afford these products anymore. And so most shipments from the United States to China already stopped. And you’ll see that hitting the shelves at some point in the next 3 to 6 weeks, based on where you live in the country. From the point that the Trump administration were to cave on all of these tariffs and just say, you know, bygones, and the Chinese just say, okay, it will then be another six weeks before product starts to return.

So, let’s say that, June 1st is when that happens, you’re talking about three months without product. For most of these companies, that’s enough to kill them. And even if it wasn’t, the Chinese basically have the technical capacity to take over a lot of the supply chains themselves, because all of the equipment is already in China.

Most of the intermediate products are already in China. So these are companies that in some form are just going to die in the not too distant future and vanish from American shelves forever. Now, not all of them are the same. They fall into three general categories. The first are products that are more advanced, where the Chinese do a lot of the assembly, but a lot of the product in the intermediate product comes from outside of China.

These companies have at least a chance to rebuild their supply chain in other countries. But you’re talking about hundreds of billions of dollars of sunk cost for some of them. And you don’t do that in a year or two years or three years. This is five years or more minimum. And that just means that these products are going to disappear until that happens, or they’re just vanished from your lives for probably five years, maybe a little bit more.

And most of those fall into the category. Apple, Dell, Microsoft and Hewlett-Packard. So if you haven’t gotten your backup computer, do it now, because the inventory that is in the country right now is all that is left. Yes. Electronics have been at least partially exempted, but it’s already too late. And the Chinese are moving to take this stuff over.

Second, these are products that are on the other end of the spectrum. Things that the Chinese can take over now. There’s nothing that’s particularly sensitive about them. From a technological point of view, it’s just a the brand is what’s special, and it’s the brand that’s going to disappear, or they’ll misspell it and they’ll just make it a Chinese brand.

And this this is a very long list that includes a lot of consumer products and a lot of clothing. So Nike, Levi’s, Hasbro, Mattel, Ralph Lauren, Skechers, Under Armor, Estée Lauder, Columbia Sportswear, Patagonia, Yeti, KitchenAid, Black and Decker, Stanley Tools, shark, Ninja of At-Home Appliance Fame, Keurig iRobot Ray-Ban Pvt. That’s Hilfiger and Calvin Klein. Newell, which is Rubbermaid and Sharpie and Crocs.

So I guess there’s at least some bright spot here. Crocs will finally fucking go away anyway. They’re gone. There is absolutely nothing they can do at this point to salvage the production that they have in China. I do not feel all that guilty for any of these companies. Everyone who has been paying attention has been seeing some version of this coming for a long time.

And I’ve been warning companies like this that the Chinese were going to vanish from the space anyway because of demographic collapse, and they should get out while they can. Anyone who is left has basically lost. And then we’ve got companies that are somewhere in the middle. These are companies where, you know, they’re halfway between Apple and Crocs. There are some parts of the supply chain for some products that are more advanced that the Chinese can’t just walk in and take over.

So we could see these companies come back after some significant reinvestment. Not as much as will say for somebody like Apple, but they’re going to be dealing with a massive amount of competition in the international space from the Chinese, who can make their lower end products exactly as they used to. That’s fossil, the watch company whirlpool, other white goods companies, GoPro and Fitbit.

It’s a long list and this is only partial. Now again, some version of this was always going to happen, but Chinese were always going to go away. But the way that the Trump administration has done, the tariff policy basically front loading the penalties and not giving people a chance to adapt means that all of these companies and more are going to break in the American space.

Most of them will end up filing for bankruptcy, and someone will probably come and buy up the pieces and then do limited restarts of the production lines and other places. That does mean that in the interim, and we’re talking here for the lower tech stuff, a period of 1 to 3 years for the higher tech stuff, probably four or more.

We just don’t get the product. So one of the big challenges that we’re going to be having in the United States is inflation driven not just by tariffs directed not just by higher capital costs directly, not just by higher labor costs directly, but high tariffs caused by extensive product shortages in the consumer space, whether that is electronics, home goods, apparel, you name it.

We can recover from this. We can recover from this faster if we have Mexico and Canada and our other trading partners involved. But it’s not going to be quick and it’s not going to be free.

The Fire Hose of Chaos: Agriculture

US agriculture is heading towards a major crisis, and yes, Trump’s trade policies are to blame for this as well. Many of the US ag export markets are closed off, and farmers are feeling the heat.

China has already cut purchases of US agricultural products to (nearly) zero, and this market is likely gone for good. Not long ago, China was the largest buyer of US products, meaning US farmers are losing a huge chunk of change and output will need to shrink accordingly.

The meat industry is reeling. Demand is falling, per-animal profitability is tanking since there’s no export market for byproducts, and overexposed beef producers are in for it. Row crops like soy are in trouble as well since China was the largest market for much of this. Specialty crops like pistachios and cherries will face devastating losses.

The only path to recovery is through an extensive, long-term government support. Think France’s permanent ag welfare. Without it, American farming will face a collapse worse than the 1980’s farm crisis.

Hey, y’all. Peter Zeihan here. Coming to you from Colorado. And today we’re going to continue our Firehose of Chaos series about how the Trump administration’s domestic and international policies are affecting the US economy. And today, it’s the agriculture edition. Agriculture in the short to mid-term is probably the sector that’s facing some of the sharpest challenges. And it’s entirely feasible for me that over the course of the next 3 or 4 years, we’re looking at somewhere between a quarter and a third of U.S. producers just going out of business because of the trade war.

The issues pretty straightforward. Trump has basically picked fights with America is number one, number two, number three, number five, number nine, number 11, number 12, number 14, and number 17th largest trading partners when it comes to agricultural exports. And as a rule, agricultural importers fall into two categories. Number one, those who don’t have a choice, they just can’t grow the food themselves.

And then those who do have a choice, who can always switch products or switch consumers. And when it comes to export destinations like, say, China or the European Union, they’re definitely in the latter camp. And so what usually happens is that whenever there’s a trade spat for any reason, anywhere, agriculture is usually the sector that is targeted first.

A couple reasons for this number one, agricultural interests around the world tend to be very politically powerful, and they, can make their desires known to the local political system. And second, people have this wildly inaccurate view of how farmers work that they might be a little bumbling, that they’re a little backwards. But of all the audience that I ever speak to, they are always the most sophisticated and always the ones that look for the most because they have to.

Everything that they do is dependent upon supply lines and manufacturing and finance Trends go out a year, five years, a decade because of the decisions that they make now are going to reverberate throughout their operations for years to come. And this is true everywhere. So when there’s a trade fight, the other side knows that if they can damage agriculture, they can take producers off for the long term.

And that’s exactly what is happening now. Specifically, the United States, number one export partner for agricultural produce and meats is China. And because we now have in excess of 100% tariff going both ways on products, U.S. sales to China have functionally gone to zero. And they will not be coming back this year or next year or the year after.

And considering China’s export dependency and its demographic decline, it is highly unlikely that American farmers will ever have access to unified China again. China will break before that is fixed. And so you’re looking at an industry that is basically tapped out. Pretty much all the growth that has happened in American agriculture since the year 1995 has been from export markets.

They’ve been a direct beneficiary of hyper globalization, arguably the sector after tech and finance in the United States that has benefited the most. And now that some of their major consumers are simply beyond them, either because of economic stress or the trade war, they’re looking at basically needing to reduce overall output by something around 20 to 25% on a nation wide basis.

Now that’ll change specifically based on region based on crop based on season. But that is a horrific headline number that the industry now has to deal with. Let me break this down into three general categories. So first, meats, as the world has become richer, they want more protein, whether that is chicken or pork or beef or, fish.

And the sector that sells the most into the Chinese market is not pork. I’d like to take a little bit of credit for this one. I have been warning the pork guys for years that if they bet the farm on China, they will lose the farm. And in the aftermath of the last trade war with the Chinese during Covid, when, Trump was president, we had our phase one trade deal.

The Chinese decided that they were going to try to slim down their exposure to the US system. And the pork guys suffered, and they learned their lesson, and they’ve diversified into other markets. Well, the beef guys were like, oh, there’s a protein shortage in China. We can help with that. And they just surged into China and they made themselves exposed in a way they had never had been before. Well, now they’re kind of screwed, particularly those who are operating in the industry.

That is more export geared. And that’s where the slaughterhouses in Nebraska, South Dakota and Missouri kind of fall in, Texas. There’s a little bit more insulation because most of their market is either domestic U.S. or Mexico.

And hopefully, hopefully, hopefully, the Trump administration will ultimately salvage NAFTA in some form, in which case their primary export market will be okay. But if NAFTA goes away, then Mexican industrialization goes away and then the Texas agricultural sector goes away. That is still much a TBD, but the kind of stuff that’s locked in at this point. Also keep in mind that not everybody eats the same things.

So the United States does the select cuts the rump, roasts the tenderloins, or we grind it into ground for burgers, things like that. We we do that for all of our meats. But there are other parts of the animal that Americans like that other people are like, oh, that’s delicious. So chicken feet, for example. Entrails. Oh, Menudo. Or the Koreans are big fan of ass sphincters. Yes, yes. They cut out that little bit, they flip it in and they prepackaged it and microwave it. And they’re just like, know. And I’m just like, love me some Korean food. But no. Anyway, based on the animal and the region, somewhere between 10 and 30% of the proceeds from the sale of an animal comes from those.

What we would consider undesirable parts that are sent to foreign markets where they just yak it up. Well, that’s gone. So we’re now looking not just at a headline reduction in the number of head of cattle or swine or number of chickens that we need. Also, the profitability per animal just dropped by about 25%. If your business had a drop in income of 25%, what would that do to you?

And that’s a secondary effect to what’s happening to the agricultural folks in the meat production sector, a second row crop. Primarily, we’re going to talk here about corn and soy. In the short term, soy is the really big hit here. The Brazilians had a great production year last year, so there’s plenty of soy in the global markets.

And the Chinese will never buy soy from the United States again unless they have no choice. So we’re basically looking at that sale drop very close to zero. The decisions for planting for this year have already been made. So if you are a soy farmer, you are. You’re kind of fucked. There’s really nothing you can do at this point.

It’s too late in the season. Longer term, soy will do fine because it’s a cheap protein. And as the world, globalized as people are going to do, the switch the other direction for meat back to plant protein. So soy long term looks great. It’s there that corn’s a problem because if you’re exporting corn, it’s really only being used for animal fodder.

About the only, good thing I can put there is that if you grow corn, you can also grow soy. You actually need fewer inputs for it. You have to worry about a different sort of crop rotation, but you’ll ultimately be okay. But for this year. Ouch. For the soy folks. And then finally, specialty crops. This is mostly an issue for the West Coast, especially for the California Central Valley, but really, there are pockets of specialty crops all throughout the United States.

Michigan is known for its cherries, for example, apples out of New York. Any time you’re sending a specialty crop anywhere, you’re going to be sensitive to things like currency changes, which the United States isn’t doing so hot. So the prices have gone up, so sales have gone down, or climate, or especially politics. And in the case of China, they have basically underwritten the development of the US specialty crop industry for the last several years.

The Chinese follow a hyper financialization model where they basically print currency like mad, expand their money supply like mad in order to underwrite their industrialization. They treat money as a political good because that is what is necessary to keep the population employed and therefore not rebelling. Well, that also means that they’re relatively cost in sensitive, because for them, money doesn’t have an economic value like it has in a Western system.

And so they will pay anything for anything. Well, that means that they have paid for the development of specialty crops throughout the United States, especially on the West Coast, and doubly so in California’s Central Valley. And if you look at what the Central Valley produces, for example, things like pistachios, which I am doing my personal best to establish an American baseline for that.

Most of it goes to China. And now that is going to zero. So if you’re looking for a zone that is particularly screwed, there is very, very little in California’s Central Valley that is going to survive the next two years because their primary source of demand, the majority of the demand has just gone away completely. Now, can we save all this?

Well, like I said, agriculture is politically powerful. Trump considers rural communities to be part of his core constituents. But you have to keep in mind a couple things. Number one, Trump has not so far in his term treated his allies particularly well. He’s demanded a lot, but he hasn’t offered a lot in return. So if the farmers are going to get bailed out in a way that they were the last time around, Trump has to go back to Congress and get more money.

That hasn’t happened yet. I’m not saying it can’t happen. I’m not saying it won’t happen. I’m saying it hasn’t happened. And if you’re going to keep all of American agriculture above water, it’s going to take a lot more money than last time. And more importantly, it’s going to take it for a lot longer. China is not coming back.

Globalization is not coming back. The ability of the global system to absorb American agricultural production is not coming back. And until such time as we are on the other side of globalization and other agricultural producers, most notably Brazil, have shattered. We’re looking at a really hard transition time for anyone in American AG, especially if you’re producing protein or specialty crops.

The only solution. Is to become France. France gets a lot of crap for good reason for supporting its agricultural sector, even when it is wildly disconnected from demand trends. They see it as a cultural issue. And if we’re going to keep our current slate of ranchers and farmers alive, it’s going to take tens of billions of dollars a year from now on,

Or we get something about twice as bad as the 1980s farm crisis, which drove ultimately about 20% of agricultural producers out of business in a five year period. Those are our choices.

The Fire Hose of Chaos: The Fed

Jerome Powell has been on the receiving end of Trump’s threats and the markets have reacted negatively to the undermining of the Fed’s credibility. Here’s the full picture.

The Fed is raising rates to combat inflation driven by Trump’s tariffs. Higher rates = more expensive borrowing = slower economic activity. A necessary evil to prevent an inflation spiral. Trump wants rates lowered to encourage economic growth, counter to the Fed’s mandate. There’s no legal ground for Trump to fire Powell unless he wants to alter the Fed’s charter through Congress. Which, to be frank, is a feasible route given a weakened Republican party unlikely to resist.

Stagflation is just the tip of this iceberg. A deep recession is lying just beneath the surface, and Trump’s undermining of the Fed’s independence would only surface more problems.

Peter Zeihan here. Coming from Canada….Coming to you from Colorado. Sorry. It’s been a long week. One of the big things that happened in the week ending April 25th. On a number of occasions, Donald Trump indicated that he planned to fire the Federal Reserve chairman, Jerome Powell. Eventually he backed out and said it was just a joke.

And he never really considered it. But the damage has been done in the markets are kind of on fire in a bad way. So why does this matter? Well, the Federal Reserve is responsible for determining the monetary policy of the economy. And the tool that is generally gets the most publicity and is most directly relevant to most of us is interest rates.

When the fed raises interest rates, everyone else in the economy that is involved on the credit side of things raises the cost of everything. Whether it’s your mortgage rate, your car rate, or your credit card rate. And so higher rates means that it costs you more to do whatever it is you want to do, and your mortgage will go up.

Well, if you get a new mortgage, you’ll be more expensive. You get a new car, it’ll be more expensive if you do a purchase on layaway, it’ll get more expensive. And when you do that, you slow down economic activity. And that is the intent to slow down economic activity, because what they’re trying to do is suppress demand.

Because if you suppress demand, enough inflation goes down. And courtesy of the Trump tariffs, we have a significant inflation problem that is only going to get more intense in the weeks to come, as the product that used to come in from China is no longer arriving. So we have product shortages. And the fed is anticipating that the Trump tariffs on China, in addition to all the other Trump tariffs, are simply going to generate shortages in supply, and they want to reduce demand to match it.

So we don’t have an inflation spiral. Trump doesn’t like this. He wants economic activity to be robust. And so he’s pressuring Powell and the fed to drop interest rates in order to reduce those credit costs.

So the consumption remains stable or even better, goes higher and generates faster economic growth. But if you do that, you get higher inflation. So three things come from this.

First of all, the Federal Reserve is not going to bend the knee to Donald Trump because it legally cannot. The Federal Reserve Charter as established by Congress is very clear. The Federal Reserve is supposed to achieve a balance between inflation concerns and growth and employment concerns.

But when the two sides clash, it always should go with inflation, because getting inflation under control can be very difficult and in some cases can take years and trigger massive recessions. But boosting growth is easy. You just make the credit easier and it can come back roaring in weeks to months. So Donald Trump is not going to get his wish here.

So the threats against the Federal Reserve chair probably going to continue. Which brings us to the second thing the president can fire the Federal Reserve chair for cause. And for cause does not include doing your damn job. So if Donald Trump were to fire Jerome Powell, two things. I mean, number one, it would go through the courts over and over and over again.

And the federal charter is pretty clear or so. It’s pretty obvious to me that the Trump administration would lose that fight and would be very public and would be very humiliated. And I think Donald Trump knows that. In addition, power would still be on the Federal Reserve Board for another two years. So it’s not like it’s going to generate some sort of activity that is all of a sudden going to be in Donald Trump’s favor.

And I think he realizes that now. That’s one of the reasons why the threats have stopped a little bit. Which brings us to the third issue. If this is what Trump wants to do, if he really wants lower interest rates, if he really wants a looser monetary policy, he can get that without replacing the fed chair.

He just has to change the Federal Reserve Charter. And that just requires an act of Congress. In that, considering that he’s basically ripped the backbone out of the Republican Party that is normally in favor of fed independence, it would be a much easier route. So as the economy starts to slow, as inflation starts to tick up to levels that are incredibly uncomfortable, expect a Trump to slam his head in the fed a few more times, and then just go to Congress, and we will find out at that point whether or not there’s anything left in the Republican Party that can stand up to Trump when he makes a very, very, very bad economic decision, because we’re already in an environment where stagflation is our best case scenario. And if the tariffs continue in their current form, much less get expanded as Trump says they’re going to be. We are looking at a very deep, dark recession, just a few weeks from now.

And gutting the independence of the Federal Reserve will only make it deeper and darker.

The Fire Hose of Chaos: Recession Time

What do you get when you mix overly aggressive trade measures and a poor economic plan? Trump’s idea of a great start. Or, as I like to call it, a policy-induced recession. Here’s what’s happening.

Cargo shipments from China have collapsed and shortages will begin in a month or so. Trump’s eager to dump $1 trillion into new deficit spending, raising capital costs. Those DOGE cuts failed to offset spending and have backfired. Customer confidence is at its lowest since the ’08 crisis. We’ve already chatted about the construction issues. New tariffs are killing growth across numerous sectors. Policy confusion has stalled investment. And the global demographic picture isn’t getting any prettier.

The recession that the US is facing is no longer avoidable. Political choices have led us here, not economic fundamentals. Even if we flipped the switch today, recovery would be months away.

Hey, all, Peter Zeihan here. Coming to you from New York. There’s the World Trade Center, and I couldn’t think of a better place to discuss the recession that’s about to hit us. This is the latest in our series on the fire hose of chaos. How the Trump administration’s domestic and international policies are affecting the US economy.

If you were looking to avoid a recession, I’m afraid that that ship has sailed like it literally sailed out of China about three weeks ago. I’m recording this on the 29th of April and back on the first week, we had tariffs kicked into China that rapidly ratcheted up to 145%, and that basically turned into a trade embargo and ships just stopped sailing.

And at first it was just a few. And by now more ships have been canceled by a factor of two than what happened in the darkest days of Covid. The last of the three tariff vessels will dock in Los Angeles on or about May 5th. About two weeks later, the last will hit Houston about a week after that here in New York.

And at that point, the inventory that’s in the country is always got to work with, and we will see good shortages of almost every kind within a month. There’s also not much of a chance of changing policy to avoid this at this point, because even if the Trump administration were to climb down completely, and even if everyone in China were able to go back to work the next second, you still wouldn’t see loadings within a month, and then it’s another month for it to cross the ocean.

We’d already be talking about sometime in September or October. And that’s just one piece of the equation. We also have weakness everywhere else. The Trump administration says it wants to increase deficit spending by $1 trillion. That’s going to raise capital costs that won’t be compensated by the DOJ’s cuts. Doge has steadily revised down how much they think they’re going to cut out of the federal government, from 2 trillion to 1 trillion to 150 billion.

And the most recent data suggests that cutting that 150 billion actually cost 130 billion, because a lot of the jobs that were let go were people that were actually essential workers that Congress mandates. And so they’re being had to be rehired on a contract basis, which costs more. That’s before you consider what’s going on in the housing sector, where we’re seeing consumer confidence at its lowest since the financial crisis back in 2007.

That’s before you consider that industrial construction spending has dropped to zero, something that never even happened during Covid and that kind of blip doesn’t exist is going back as far as the data is. The issue is we’ve had roughly 100 different tariff policies in two months, and no one knows what the rules of the game are.

And we have had no effort by the Trump administration put in place an industrial policy. We actually encourage manufacturing construction. And so it’s just withered on the vine from lack of confidence. Also, we have significantly slower economic growth in places like Michigan and Indiana already from the car tariffs that are already in place. And if the Trump administration does what it says it’s planning on doing on May 2nd, those car tariffs expand to cover car parts, which will trigger a manufacturing recession in roughly 25 states. And that’s before you consider the consumer spending is going to hit by agricultural tariffs that are just around the corner. And that’s before you consider drug tariffs or semiconductor tariffs, which are being promised. Basically we’re looking at a secular slowdown in economic growth in almost every sector. At the same time, almost none of it has to do with economic fundamentals.

It all has to do with policy. And even if we got a complete policy change today, we’re going to have several months before we recover from this, just by unwinding things. And perhaps the darkest point of this is that some version of this was probably going to happen anyway. Birth rates have been dropping for decades, and it was always going to be the period between 2025 and 2035 when a number of countries including but not limited to Germany, Italy, Japan and China, basically aged out of being productive systems.

And when that happened, globalization was going to crash. But the tariffs are making it crash now harder. And in a way that is causing a lot of heartbreak for Americans. That wasn’t necessary. What is the other side of this look like? I don’t know, that has become a policy question.

The Fire Hose of Chaos: Housing Problems

Does everyone remember that bedtime story about the Three Little Pigs and the Big Bad Wolf? Well, the Trump administration is doing its best wolf impression and trying to blow the entire housing industry down. (We’re running out of metaphors for this administration, so cut us some slack on this one)

There are a lot of things hurting the US housing industry. The labor shortage will only worsen as more undocumented workers are deported. Material costs are on the rise, thanks to tariffs. All the stuff that goes into a home, whether you’re furnishing it or renovating it, is now more expensive due to tariffs. Mortgage rates are at 20-year highs and available capital is shrinking. Insurance companies are taking a hit. Not a fun time…

The pressure is on for the housing market, and it’s only a matter of time before the foundation cracks. What was a relatively healthy market just months ago is now the problem child in the US. And if that doesn’t worry you, we’ll talk about the recession tomorrow.

Hey, all. Peter Zeihan here. Coming to you from New York City, near Rockefeller Park. That’s like new Jersey or something over there. We’re gonna look over here, Trade Center and, Lady Liberty’s over there somewhere. Yeah, there. Anyway, today we’re going to continue our firehose series about how the Trump administration’s domestic and international policies are affecting the American economy.

And today we’re going to tackle housing. Now, there’s a lot of inputs that go into a successful housing industry. But generally you’re looking at the big four. The first one is going to be labor based on where you are in the country, seasonality, all that good stuff, somewhere between 20 and 40% of the cost of a house is just from labor.

And as a rule, somewhere between 25% and 35% of that labor is immigrant labor, with that number going to 40 to 50%. If you’re in California or Texas. So if you do what the Trump administration says it wants to do and deport 5 million illegal laborers, you can imagine what that’s going to do to housing costs, because there simply aren’t enough people in the country to fill those jobs.

And that’s before you consider that immigrants play an outsized role in the trade. So carpenters, electricians, that sort of thing. Plumbers. So you can see that turning housing into a very expensive proposition just right off the bat, the next raw material inputs, which again, 20 to 40% were based on where you are, what kind of structure you’re building.

And these fall into a bunch of different categories. First, most obviously is wood for framing. The second largest source comes from Canada that now has a 25% tariff. Next up are steel and aluminum, which are used for framing, flashings window frames, structural support, nails, that sort of thing. Right now, again, 25% tariff on both of those items.

Next up is one that people don’t think about very much. And that’s copper. But you know, if you don’t have copper, you’re not going to have electricity. Now, most of the world’s copper, or at least mostly copper that comes to the United States, is either from Canada or the United States or Mexico or especially Chile. But that’s the raw copper.

Once you turn it into wires and electrical outlets and all that other assorted stuff, most of that stuff is going to be coming from China. And now there is a 145% tariff, which basically means we stopped shipping stuff from China for this product category. About a month ago. And even if we were to flip the switch back on today, we wouldn’t get new shipments for another two months.

It just takes that long for everything to spin up and cross the ocean. Then there’s things like tile and stone. Most of that comes from the Mediterranean. That’s another 20% tariff. So for all of the things that go into the physicality of the House, we’re looking at significantly higher rates of cost. Assuming you can get the stuff at, oh, the third category is what you put into the house.

Once you buy the house, for anyone who’s a homeowner, you know, you’ve just started to spend your money. You then have to put things into it, whether it’s furniture or washer dryers, refrigerators, or you have to do an overhaul. As a rule, in the United States, for every 3 to $4 we spend on the primary purchase of housing, we spend another dollar or two on add on costs to fill it up with stuff, or to overhaul it, or put in new drywall doing additions, whatever it happens to be.

All of that has gotten more expensive to and then forth finance between the baby boomers retiring and liquidating their savings, and the Trump administration planning to increase the federal budget deficit by $1 trillion a year, the availability of financing for the private sector has shrunk precipitously. And we’re only at the beginning. Now, in, the end of you see, you’ll probably see this May 1st.

We’re only be beginning to see the increases of what that’s going to do. The financing costs. Right now, mortgages are at about a 20 year high. Expect that to get significantly higher. Now if you look back historically, like back to the 70s when mortgage rates were like 15% or more, we’re nowhere close to that yet. But we’re getting there pretty quick because of the problem and the discombobulation between supply and demand.

And that’s before you consider Trump’s tariffs, which and Trump’s financial policies, which are only going to drive financing up more. And then finally, something that’s not technically a housing cost, but we all have to have if we’re gonna get a mortgage insurance, because as much as construction is going to become more expensive, it is nothing compared to what’s going to happen to re construction.

Whenever there is a national disaster, a storm, a hurricane, a forced fire, and you need to rebuild, all of a sudden you need to rebuild lots and lots of things in exactly the same spot, which means that the cost for the repairs and the recovery are significantly higher than what happened before. Which means the insurance guys are getting hit on all sides.

All of the input costs are going up. Insurance guys, basically take your premiums and invest them into the market in order to generate capital that they’re going to need to pay out claims while the markets are tanking because of Trump’s policies. In addition, you have a real problem with foreign access of capital because that money is going away.

Maybe referenced the finance video we did a couple of days ago. I would not want to be the insurance. Right. Because between the level of populism and Trump government and the popularity of populism, the American political scene right now, the normal thing that the company would do would be to raise premiums and to reduce payouts. But populism isn’t going to allow that to happen. So we will have federal action to grind away the insurance companies in a way that is designed to benefit the consumer.

And the only way that insurance companies can deal with that is by stopping to offer coverage. Boy, so this all adds up to a housing sector that all of a sudden, from being an actually pretty good space four months ago, is looking to be the sector that is potentially most damaged by the mid and long term trends that are coming together.

And that’s really just the beginning, because we’re also about to have a recession. We’ll talk about that tomorrow.

The Fire Hose of Chaos: Steel and Aluminum

The Trump administration has given us a masterclass on how to set supply chains ablaze using tariffs. While some supply chains are smoldering, others are raging wildfires. So, let’s look at two that are in the thick of it: steel and aluminum.

Given the industrial growth and manufacturing buildout that the US has set its sights on, these two materials are essential; however, the US does not currently have the domestic capacity to produce the amount of steel and aluminum needed for what is coming.

That means the US will still have to import a good chunk of these materials…but it will cost 25% more than it would have previously. This throws yet another wrench into the US industrial buildout, especially for industries like construction and housing.

Hey all, Peter Zeihan here coming to you from Denver International. Today, we’re going to do the most recent in our host of chaos series about how the domestic and international policies of the Trump administration are affecting the American economy. And today, we’re going to dive into those two base materials on which everything runs. And that’s steel and aluminum.

There are similarities within the markets, but I think it’s best to just kind of break down what you do with these things and how you get those things, and then we’ll go into the broader impact. So let’s start with steel. Roughly 75% of the steel that the United States uses is actually recycled. Steel is one of those wonderful materials that you can recycle at once, or a thousand times, and it’ll still work.

But that doesn’t mean that all steel is equal. Recycled steel tends to be kind of ugly. And so you use it in places where you need strength, car frames, I-beams for construction, that internal skeleton you see in high rises, ships, that sort of thing. But if you’re going to do something where it needs to be pretty or where it needs to regulate electricity, you need something different.

Basically, there’s two kinds of steel you’ve got hot rolled, which is the ugly stuff that is usually recycled, and you’ve got coal, which is virgin steel made from iron ore and coke. And cold rolled steel can be used in more advanced applications, specifically in manufacturing and in the world that we’re in now, where most manufactured steel products aren’t about strength, they’re about regulating electricity.

You have to have something called grain oriented or non grain oriented steel. Different types of those things regulate electricity flows at different speeds and different insulation levels, and that really needs to come from virgin steel. The complication is something called a roller—when you pull the steel out of the molten mix and you’re really hot bars?

You then push that through a roller because the way the steel cools determines the crystalline structure, which determines how well electricity does or does not conduct through it. Now you can take recycled steel and put it through a roller, but rollers are big and expensive, and you only usually put that on a very large foundry. And only the very large foundries are making virgin steel, recycled steel, hot rolled steel typically is made locally because you basically you take down a building in your state and then you’ve got a local facility that can turn it into hot rolled steel.

If you wanted to get it to a roller, you’d have to get a completely different facility that operates on a different scale. Well, the United States needs to roughly double the size of its industrial plant. That means a lot of industrial construction. That means a lot of that ugly, high rolled steel. And while the United States is the world’s greatest steel recycler, there just isn’t enough to double the size of the industrial plant on anything less than a two century time scale, which means we just need more and more, more and more.

And if you’re to get more and more, more and more and more, you’re probably going to be important. And if you want to go into manufacturing, you need a lot more cold rolled steel. And if we’re going to triple the amount of steel products that we put in the manufacturing, we need more and more, more and more and more.

If you want to do this with foundries, you’re talking about a ten year buildup. If you want to do with imported steel, you could do it now. And what the Trump administration has done is put a 25% tariff on anything that is imported, which has brought construction and manufacturing costs up while decreasing the flow through of the input that we need to make any of this work at the base level.

So everything is now moving more slowly, at a higher expense at a time. We just need more. The second metal, of course, is aluminum. There is somewhat similar policy, about 45% of what we use. We produce ourselves. And almost all of that is recycled. But just as with steel, if you want to manufacture something that is pretty, that has the combination of corrosion resistance and light weight and strength and flexibility, then it’s probably going to have to be from virgin materials.

And the United States just doesn’t have the raw material here. The raw materials, bauxite, you basically mined that you dissolve in sodium hydroxide. You get a white powder called alumina, and then you electrocute the crap out of it to turn it into aluminum metal. And just as with steel, you can use recycled steel for construction things like window frames, for example.

But if you’re going to do high end work like, say, I don’t know, airplanes, you’re going to want the Virgin stuff in the US just doesn’t smelt much of the Virgin stuff itself. And again, just as with steel, we need to use 2 or 3 times as much as we have yet to get the smelters on line. And so this is an ongoing problem with all of the Trump administration’s policies.

The CART has been put several steps before the horse. We’ve raised the cost of imported steel and aluminum, but we have not. First built out the capacity of the US economy to smelt or foundry more of the stuff itself, so we get lower supplies at a higher cost when we need huge increases in the volumes that we use to in order to build out the industry, as the Trump administration says it wants to.

And so everything’s just slowed down and got more expensive. But there’s no sector where this is more true, where it’s more of a problem than construction and especially residential real estate. And that’s what we’ll turn to tomorrow.

The Fire Hose of Chaos: Finance

The US has known that a capital crunch was inbound for decades now. With the Baby Boomers retiring and Trump’s trade policies hitting at the same time, these financial woes might sting a bit more than we thought.

The retirement of the Boomers was always going to cause a capital supply crunch; it’s just what happens when people retire and begin shifting their investments to safer things. So, the cost of capital was already on the rise. Now mix in Trump’s rapid-fire tariffs and aggressive foreign policies…and you magically begin losing capital inflows into the US, exacerbating the US capital problem.

Hey all. Peter Zeihan here coming to you from Colorado. We are continuing our Firehose of Chaos series today about how various Trump administration policies are causing negative effects for the American economy. And today we are going to tackle finance. Now there’s a lot that’s going on in finance. On any given day, the bond market, the stock market, corporate bonds, municipals, blah, blah, blah, blah blah.

But the bottom line is that it’s ultimately an issue about the supply of capital. The more supply you have, the cheaper that capital is, the faster the economic growth is. And we even before Donald Trump got into office, we’re already facing an adjustment period. And the issue is retirement. When you retire you liquidate your savings. You go from stocks and bonds into T-bills and cash, because if there’s a market crash or a currency adjustment, you have lost out, you haven’t locked in your savings and you no longer have an income to recover.

So, for example, for those of us who are not retired, we’ve seen the markets drop by somewhere between 10 and 20% over the course of the last three weeks, and we are all feeling that, but we’re all young enough to continue to do contribute to our portfolio. So there’s hope that will emerge on the other side in a better position.

If you’re over 65, there is no hope because there is no income. So if you had not liquidated, you would be looking at a permanent loss in your portfolio. Even as you continue to draw income out of your savings, which would put you in destitution a few years down line. So if you’re a baby boomer and you hadn’t liquidated your savings already, you’re in trouble and you did everything you weren’t supposed to do.

Anyway, the issue for the economy writ large is the balance between the number of people who are turning 65 every year and the rest of us. So in the case of this current situation, the issue is the baby boomers, because the baby boomers, the largest generation we have ever had, are already two thirds moved into retirement and the remaining third are going to retire over the next 4 or 5 years.

As a rule, 70% of total global private capital originates with people who are doing this saving for retirement, people who are over age 55 but have not yet turned 65. Well now the number of people who are over age 65 is rapidly expanding, while the number of people age 55 to 65 is rapidly shrinking.

And that split has caused most of the movements in the credit market in the last few years. So I would argue that we’ve seen roughly a quadrupling of costs of credit writ large. I’m not talking about any specific credit product, but writ large over the last four years. And while there is a little bit of fed in there, there is a little bit of trump.

There is a little bit of Biden. It’s mostly just the baby boomers doing what you do when you retire. We expected this. We’ve anticipated this coming for 30 years. And really, no one got ready for it. Certainly not in government financing. But now we’re here and we’re living through it and we’re having to deal with it. So that’s that’s piece one that has nothing to do with the change of administration at all.

But the second piece does, we have now had 97 official tariff policies in the last 55 days, which is, you know, two orders of magnitude more than we normally get in that sort of time frame. And no one knows what the rules are. In addition, Donald Trump keeps changing his tune every day. It’s either we’re not going to be even going to have a memorandum of understanding with countries that we’re negotiating within six months, or we’re gonna have a finished trade deal in four weeks, both of which are kind of silly.

We’re not going to get any new manufacturers out of the plants for the first two years. Or maybe it’s going to be ten years. We’re going to have new tariffs on agriculture. Or maybe we’re not. We’re on drugs, or maybe we’re not, or in shipping or yes, we did, but then we didn’t. But then we decided to do port fees.

The point is that no one knows what the rules of the game are. So no one is doing anything to prepare for whatever the future is, because we don’t know what the future is going to look like in terms of industrial construction, to build the industrial plant that we’re going to need to live in a high tariff world that actually has gone to zero under Donald Trump, because no one knows what is going on.

On top of that, Trump keeps threatening other countries and not just with tariffs. He’s threatened to invade Canada, make it the 51st state. He’s threatened to invade Greenland, which is a NATO ally. He’s threatened to pull everything back from Ukraine, which is encouraging the Ukrainians, the Romanians, the poles, the Swedes, the Finns and the Germans to all get nuclear arsenals.

The bottom line is he’s shattering everything that worked and has yet to provide a vision or preparation for whatever might be next. And in that sort of environment, no one really trust the United States. Now the US dollar is the global currency. I don’t mean to suggest that that is in danger. And the US Federal Reserve stands ready to step in to save the government bond market, to prevent a run on the bonds, to prevent a financial catastrophe in this country, because that’s part of its job.

I don’t worry about those kind of headline disasters, but there’s a lot on the margin that is measured in trillions of dollars. In any given year. We have about $2 trillion of capital flight from the rest of the world to the United States. Now, that comes for its own reasons. And Europe, it’s because the countries of the eurozone are aging out, and you just can’t get a good return in Europe.

In China, it’s because you have an over financial situation system where capital is considered a political good and you can’t get a good return on it, and the government restricts where you can put your money. So people try to get their money out of these systems and into other systems. And while Canada looks great, it’s not enough. There is only one country that has the liquidity and the depth of capital markets to absorb this sort of capital flows, and that is only the United States.

And so this is where most of that cash goes, $2 trillion a year, and as we move into circumstances that are more problematic, Europe getting closer to its demographic cliff, China facing a trade war with the United States. Those flows can often increase. So, for example, at the height of the subprime crisis, after an initial shock, we were probably seeing three, $3.5 trillion of capital flight into the United States.

Now, this helps out the United States in any number of ways. It puts more strength into the real estate market. It keeps borrowing costs down for everybody, especially the federal government. But when you have the United States as the source of the geopolitical uncertainty, and when you have the white House is the single largest source of regulatory uncertainty in the United States, all of a sudden, putting things into US financial assets doesn’t look nearly as attractive.

And so what we’re seeing is some of that money is no longer coming and some it’s being reversed. So let’s go around the world real quick and see what that looks like. First of all, the Middle East, the Middle East has been desperate to build some sort of alternative financial system that doesn’t work on interest based functionality like the Western system does.

And that requires basically applying a degree of Sharia law to their financial sector and having their own financial systems to, at a minimum, serve as a bulwark and an intermediary between the Middle Eastern savers and the United States. They’ve been somewhat successful at that. And that has made places like Dubai to be pretty robust financial centers. But what we’re seeing now is the limits of that approach.

People are realizing that if you put your money into a middle eastern financial center that doesn’t allow interest, you don’t earn interest, and it’s starting to lose some of its shine. And so people are looking for other alternatives. On top of that, most of the oil Emirates in the Middle East, up to and including Saudi Arabia, have vastly overspent their income and simply don’t have money to send abroad at all.

So, for example, Donald Trump is trying to get Riyadh to invest a few hundred billion dollars in the U.S. and they don’t have the money to do it. They’ve wasted a lot of things on their own white elephant projects. They’re spending a lot more on social programs at home. There’s no money to send to the United States. So what used to be a relatively robust partner is going somewhere else or is shrinking in on itself.

And, you know, that’s several hundred billion dollars a year. Second is East Asia. Japan has been a big source of capital for the US for decades. China more recently, largely because both of these systems treat capital as a political good. I actually don’t think that this is going to change because the Japanese, the Chinese have known for a very long time that if you keep the money at home, it just can’t do very much.

The only reason we should expect countries like China and Japan to send less money to the United States is if they figure out that they can build industrial plant for their export industry somewhere else, and there aren’t a lot of good options. What? There are some options in Southeast Asia, but those are under U.S. tariffs as well. So we might see a little bit of weakening, but nothing compared to say what we’re going to have in the Middle East.

The big movement though is out of Europe. The Europeans have basically started to treat the United States like a security threat, because that’s exactly what the US under Donald Trump has evolved into. They realize they’re going to have to take their militaries in a completely different direction. They realize they’re going to fight on their own. For many of them, that means they have to have nuclear weapons.

And that means why, why, why, why would you ever send capital to the United States? So what? Until recently, and by recently, I mean January. It was about $1 trillion of capital flight from the eurozone to the United States. Every year has probably gone very close to zero, and in fact, is probably going in reverse as people liquidate their holdings.

Yeah, that all up. And we’re looking at capital flight into the US financial markets probably dropping by a little bit more than half. And if you put that on top of what’s happening with the baby boomers, it means capital costs are going up as well. And that’s before you consider that the US currency has dropped by about 10 to 15% in the time since.

All that adds up for significantly more expensive financing, regardless of who you are. If you’re the federal government and you’re issuing T-bills, you now have to pay more money. If you’re looking to buy a car, your car loan is now more expensive. If you want to refinance your mortgage, that goes up as well.

And it all adds up to slow economic growth across the entire American economic space.

The Fire Hose of Chaos: Port Fees

Today we’re discussing the Trump administration’s 96th tariff policy which imposes port fees on Chinese ships.

Chinese ships that enter a US port will be slapped with the higher of a $50/ton (rising to $140/ton overtime) fee or $150/container fee. This policy was initially set to be more extreme, but public comments helped scale the fees back as to avoid crippling US port logistics.

The issue with this tariff is that it increases costs for everyone but fails to offer any solutions. Since the US has no capacity to build cargo ships (as military shipbuilding is the priority right now), shipyards are already overwhelmed and dysfunctional. So, the intention is to reduce reliance on China, but there’s no path to doing it…

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

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

Hey all. Peter Zeihan coming to you from Atlantic City and today we’re talking about something that actually happened a little bit back on April 17th. That’s when the U.S. Trade Representative Office announced the 96th tariff policy of the Trump administration in less than two months. Oh my God. And this one is on port fees. Specifically, any Chinese registered Chinese built Chinese operated vessel will now have a $50 charge per ton, ramping up by $30 a year until it hits under $140 a ton.Or, $150 per container, again ramping up over a few years. Whichever one is higher.

This one is unique in that it was actually put out for a degree of public comment. And so people pointed out to the administration that there are no American ships. So, some of the more ridiculous versions of this, were rooted out originally was supposed to be like a million, a million and a half, maybe even 3 million per ship per visit.

Which would have basically taken everything and concentrated it. So, well, China is the source of most of our manufactured goods. It’s not where they’re necessarily manufacturers, where they’re assembled. It, the manufacturer requires basically everyone in East Asia and China is the low man on the totem pole, but the largest one. So it’s where everything’s put together.

And then it sails in finished form from Shanghai or Tianjin to, Los Angeles or Houston or New York or Savannah. If the old system have gone through, all of our secondary ports would have basically been starved and we would’ve just had endless traffic jams at the biggest one. So they decided to go with a weight slash volume version rather than just a flat fee, which make it a little less onerous.

From a logistical point of view, anyway, there’s still some problems here because, it’s starting to interface with other problems the Trump administration experiencing. And that has to do with Defense Secretary Pete Hegseth, who is rapidly showing himself to be up there with RFK Jr to be the most unqualified, and, incompetent cabinet secretary in American political history.

In the last two weeks, he’s basically fired everybody he brought in with him. And so in his office now, it’s just him. It’s wife, his brother, his lawyer, and that’s about it. And then, of course, Trump fired all of the deputy undersecretary, assistant secretaries and everybody and basically hasn’t replace him with anyone who knows what they’re doing.

And so Pete says big breakthrough in the last few days has been to build a studio and an editing platform, within his office. So he can share videos of himself working out in the morning. Because that’s what we need to prepare for military readiness. Yeah. Anyway, bottom line is that one of the things the Trump administration says it wants to do, which I broadly agrees to build more military ships.

Okay. Well, I take shipyards. And so basically, we’ve got an incompetent defense secretary managing a underfunded and unplanned shipbuilding program, which basically takes up every berth drydock that is available at every, shipyard the United States has of it’s being managed just completely incompetently. And so if you want to build a civilian cargo vessel, there’s no room and there won’t be for years.

So step one, if you want to start mucking around with the ports, is to build more ships so that you have options. And just as with steel and aluminum construction and all the other tariffs, the Trump administration has failed to do that. So we if we want stuff at all, we have to now pay more for the stuff because of the tariffs and then pay more at the ports because of these new port fees.

And there is no alternative for building an American equivalent, because the building blocks of what you need to industrialize still haven’t been done. And everything is just going to cost more for everyone. Yep. That’s it.

A Concerning Update to the Russian Reach Series

Well, the Russian Reach series needed an update, and it’s not a pretty one. The infiltration of the US government by Russian interests is growing and I don’t see an end in sight.

We have figures like Tulsi Gabbard with a foot in the White House and the Kremlin. The very institutions which were created to protect the US from these threats are being dismantled under the Trump administration. Don’t even get me started on ‘SignalGate’. Grenell is spewing pro-Russian narratives to whoever will listen. Navarro is echoing Russian propaganda as it relates to economic policy. Trump is still repeating disinformation. Russia is finding more ways to align itself with MAGA through its influencers. Russia wants in on the invasion of Greenland. And to round it out, we have Tucker Carlson as the only media source Trump’s admin is talking to (the guy that features guests like Russian fascist ideologue and genocidal proponent, Alexander Dugin).

I’ll let you sit with that one for a bit…oh, and have a good weekend!

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 Atlantic City. Today we’re going to update a series that we did last month called The Russian Reached what looked at the logic and the actions of the Russian government and how they were attempting and probably successfully attempting to penetrate deep into the American government right up to and including the white House. So the purpose of this is to give you an idea of how much is involved in just the last 3 or 4 weeks, and it’s unfortunately a very long list.

First off, keep in mind that the Director of National Intelligence, Tulsi Gabbard, is somebody who most of the intelligence community who is has thought of as a Russian agent for quite a few years and one of the first actions that she… well, let me let me put it this way. If she’s not a Russian agent, she’s probably a traitor because the Venn diagram of her worldview and Vladimir Putin’s are pretty much identical. I mean, there might be a little bit of not overlap like a half of 1%, but that’s largely just hairstyles because, you know, Putin is bald and got rich hair is fabulous.

Anyway, she’s pretty much completed gutting the counterintelligence arms of our various intelligence agencies. So most of those staff aren’t even doing the jobs that they once did, allowing the Russians to really plow into American society however they want. Also, the Trump administration has largely dismembered the parts of the intelligence community and the State Department that, were there to protect our election integrity from Russian intervention. Same thing for web hacking. And, the Department of Justice has largely stopped investigating white collar crimes, most notably fraud and cryptography. Cryptography. Wrong word like Bitcoin scams.

Which are another way that the Russians really, really enjoy getting their claws into American society. In the American government. We basically just stopped enforcing those laws. The same goes for white collar crimes in general, which, of course, for a country like Russia that is corrupt and uses US intelligence systems to undermine societal stability all around the world, is something that has made their job a lot easier.

The next big issue is, of course, signal gate. Now, signal gate, happened back in March, mid-March, when the United States was preparing military assaults against the Houthis, which are the militant group in Yemen. And basically the entire top tier of the American national security team, including defense and intelligence. And Gabbard, of course, basically participated in a chat on the signal chat program. Signal is a platform that supposedly secure, but the week that this all went down, the Defense Department’s internal Intel, indicated that the Russians had probably hacked the encryption protocols.

So, basically, the American national security apparatus were all using what had become an unsecured platform to communicate, basically operational intelligence. Tulsi Gabbard, again, testified, about halfway through the revelations to Congress that this really wasn’t a big deal. And no one should be overly concerned about it, because, of course, it’s not.

All right. Let’s see what’s next. Rick Grinnell. He is an on again off again semi diplomat who is, working for the Trump administration. He worked for Trump one, did a really bad job, basically just went around talking to German neo-Nazis the whole time so the Germans wouldn’t deal with him at all. Anyway, he’s back in the administration now, and he’s one of those people that is so unlikable that even Donald Trump doesn’t like to have him around in person.

So he kind of hovers outside of the West Wing and is basically spewing anti Ukrainian Russian propaganda in the ears of Trump Jr because he can’t get the ear of Trump himself. Specifically, he likes talking about the Budapest Agreement, which was something that dates back to the immediate post-Cold War years, when, the Ukrainians gave up their nuclear weapons. Basically, Grenell is a spouting the Russian equivalent of that deal. Their interpretation of it 15 years on, and basically trying to get the Trump administration to disenfranchise Ukraine as a state and suggesting that they’ve never had a claim to anything in the first place, which is, of course, exactly what the Russians would love the Trump administration to believe.

Let’s see. Next up, we’ve got Peter Navarro. Who is the manufacturing advisor to the president. Very protective guy. He started using Russian propaganda that has been recently designed and released into the ecosystem. That’s specifically targeting Canada. So Navarro has always been an anti-free trader. Don’t really have a huge problem with that. But it’s interesting to see Russian propaganda popping up in his statements on TV now that are very, very specifically tailored to a very specific issue that really wasn’t an issue in, the Russian propaganda sphere until just a few weeks ago.

Then we have Donald Trump reporting Russian propaganda on everything from broad strategic issues, to very tactical issues. So, for example, near the end of March, Trump started talking about how Ukrainian troops in Kursk had been encircled by Russian forces. And, you know, this or that should happen. I mean, that never happened.

The Ukrainians were able to withdraw from the Russian province of Kursk fairly, I don’t want to say easily, but without a lot of casualties. And in fact, that withdrawal had been completed more than 48 hours before. Trump is supposedly asking the Russians to modify their operations in Kursk. So this is something that actually came from internal Russian Federation propaganda that was designed to shape attitudes within Russia itself. But somehow it got on Trump’s desk. If I was a guessing man, I would say that that probably happened via gab or directly.

On Greenland, the Russians are trying to convince, the MAGA spear that a joint invasion, Russians in the North and Americans in the South would be a keen idea, something that would obviously shatter NATO overnight and end America’s defense alignments with, the Scandinavian countries that, in my opinion, are going to be the future of the American alliance network in Europe, which, of course, is something that the Russians would love to see destroyed.

You may have heard of Tim Poole. He is a far right influencer that’s very tight in the MAGA space. He has a number of podcast and, video vlogs. Kind of like, you know me a little bit. He’s been basically indicted, I think is the technical term for taking somewhere between $400,000 and $10 million from, the Russian state.

Basically, they’re shoving money into his platform to help spread disinformation throughout the American MAGA sphere. He claims he didn’t realize that it was going on. That’s his official stance on the investigation is impending. But, you know, he has on any given day, somewhere between a number of followers similar to me and twice as many. And I can guarantee you that if $100,000 per video least that I did suddenly showed with my my bank account, I would not need the FBI to tell me to investigate the shit out of that.

So let’s just say I don’t take it very seriously.

But the most important part of this is that Tim Pool is now part of the white House press pool. The Trump administration has brought him into the inside while kicking out, you know, those liberal rags like AP and successful farming.

And then finally, a name that, you may have started to hear bouncing around Alexander Dugan. He is basically a run of the mill Russian fascist who has been advising Vladimir Putin for over a decade now, basically making up the ideology to justify genocide against anyone they feel is necessary. And until a year ago, most of his vitriol was ultimately, reserved for the United States.

So preemptive nuking, death camps, that sort of thing. He’s a real peach. Anyway, he has started making the rounds of MAGA, publications, in the United States recently. And of course, the first one in that role, the first of the big ones that he did was none other than Tucker Carlson. Now, you guys may remember, Tucker Carlson used to be a Fox News host.

Tucker has been fired from every media job he has ever had for lying on air about things on purpose. And since he left Fox, he has now basically migrated directly into the orbit of Russian propaganda. And most of his shows deal with Russian propaganda from it. You know, sharing it with the world point of view. Perhaps the most concerning thing I have in the information space as regards the Trump administration is not this Tim Paul thing, although that’s, you know, not minor.

But this is the American administration throughout history that has had the least contact with the media of any form. It’s not just that they’re not talking to more liberal groups like, say, the New York Times. They’re not really talking to Forbes or Bloomberg or the Wall Street Journal. They basically shut out everybody. But many members of the Trump cabinet have done extensive one on ones with Tucker Carlson.

So we basically have a gutting of the normal means by which an administration would normally interact with the country and focused on a very, very few, avenues, of which the bigger ones are already in the Russians pocket. Anyway, I don’t have a lot of great news on that front, and I will leave everyone to their own recognizance as to what’s going to happen next.

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

The End of the World is Just The Beginning

Disunited NAtions

The Absent Superpower

The accidental superpower

The End of the World is Just The Beginning

Disunited Nations

The Absent Superpower

The Absent Superpower

Transcript

Transcript

Transcript

Transcript

Transcript

Transcript

Transcript

Transcript

Transcript

Transcript

Join 200,000+ other subscribers

Stay Social

GEOPOLITICAL INSIGHT STRAIGHT TO YOUR INBOX