United States Archives - Zeihan on Geopolitics

The Fire Hose of Chaos: The Green Transition Is Over

The green transition in the US has made great progress in recent years, but the wheels are falling off. This is largely due to economic pressures, lack of financing, and the new tariffs instituted by Trump.

Wind and solar projects require heavy upfront investment, which isn’t a great combo with capital costs skyrocketing and available capital draining from the system (blame the retiring Boomers). The government support for the green transition has also dried up; the Biden admin had the Inflation Reduction Act and other Greentech subsidies, but the Trump admin has pulled support and funding for these programs and projects. And you can’t forget the new tariffs hitting key components for the green transition, which have made solar prohibitively expensive and wind an uncertain gamble at best.

So, it looks like the green transition in the US will effectively be on pause until the US can build out its own manufacturing base. And that’s at least a decade-long process…

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

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

Hey, all. Peter Zeihan here. Coming to you from my parents backyard in Iowa. I’m visiting because I’m a good boy. Anyway, today we’re going to talk about the end of the Green Revolution in its current form, at least in the United States. There are three things that have come together to basically completely destroy the economics of the green transition.

And then a couple of things on the side that are making it more difficult anyway. The first has to do with the baby boomers. Two thirds of them have retired, which means that all of the money that they were saving for retirement has been liquidated. And it’s gone into less exciting financial instruments such as T-bills and cash.

And that means there’s less capital available for everything. So we’ve roughly seen the cost of capital in the United States increased by a factor of four in the last five years, has nothing to do or very little to do with government policy. It’s just that there’s less money available in the system overall. So mortgage rates go up, car loan rates go up, anything it needs to be financed goes up.

And that’s a real problem for green tech. When you’re looking at, say, a conventional thermal power plant, coal, natural gas, that sort of thing, you only have to pay for about one fifth of the cost of the life of the plant at the front end. That’s the upfront construction. And then about two thirds of the expense over the full life of that power plant is the fuel, the coal or natural gas.

And you buy that as you go. That’s not how it works with wind and solar. With wind and solar, about two thirds of the cost has to be paid upfront. And that means it has to be financed. Well, you increase the cost of financing by a factor of four, and all of a sudden you’re talking about a financial commitment.

That’s just huge compared to what it would have been just five years ago. And that is now happening across the entire space. So that alone would have probably ended 70% of the power plants that are in solar and wind. Just just off the top. The second problem, of course, is that you have to finance everything upfront in the first place.

Anyone who wanted to do the green transition really needed a helping hand from government, typically at the federal level. And the Biden administration, through things like the IRA Inflation Reduction Act, was very big in providing that financing. Well, that’s basically gone to zero under the Trump administration. So your financing costs have gone up by a factor of four, and you don’t have any outside help.

But the real killer, especially for solar, has now been the tariffs. Almost all of the photo voltaic cells that are used in solar systems are produced in China, oftentimes with slave labor. And while the green transition folks were willing to overlook the fact that, most of the stuff was ha, I still have a sticker on there.

Well, most of the folks in the green transition were willing to overlook the slave labor thing, in order to get the panels that they needed. You can’t really overlook 145% tariff. So if the PV cells cost you two and a half times as much and your financing cost has quadrupled, that’s just not going to fly.

Now, it’s not quite as bad for wind because there are some non-Chinese providers of wind turbines. Most notably in northern Europe. But those were where we have a tariff of at the moment, 10%. It was 20% a week ago, that just introduces a lot of uncertainty into the system. So both of those things are gone.

Wind a little on the edges. Maybe. Solar’s absolutely out of the question for most people now. The only other remaining piece is batteries. When last year, the Biden administration slapped a lot of tariffs early in the year on Chinese electric vehicle bills to keep them out of the U.S. market. What happened is the Chinese repackaged all of the EV batteries into, container units to be sold as grid storage.

And so in calendar year 2024, adding battery storage, which is actually the cheapest form of power that you could add to your system. So the Texans in particular, you know, just boned up on that hugely. Because if you can have a battery grid system, it’s actually better economics and say having a natural gas peaker plant because they normally speakers or is would only run a few days of the year.

The batteries can take that load, but since you now have them. And since Texas is the number one green energy state, they would use their solar system to generate power during the day, store the extra in the batteries, and then use that during peak demand and evening hours when the sun’s going down.

It worked really well. She was like 48% off of power costs, but now we have 145% tariff on all of those batteries as well. So I don’t want to say that that’s going to stop cold, but the pace of the application is going to slow considerably because the Chinese dominate that space. And we haven’t built the industrial plant here yet.

That isn’t necessarily to fill the gap for ourselves. So for the moment, minimum two years, probably until we have a better battery chemistry, probably until we have better PVS, certainly until we have more diversified manufacturing base, which is a ten year process. We’re looking at the green transition taking a bit.

The Fire Hose of Chaos: Government Debt

With everything that’s going on in the US, it makes sense that foreign investors decided to dump US T-Bills. But what does this mean for the government debt market and the future of the USD?

The selloff of $100 billion in T-Bills caused interest rates to spike and US Treasury yields to jump; however, the US remains the global financial baseline. Other countries simply can’t offer the volume, stability, or scale that the US Market can.

With no real alternatives, the US will remain in the number one spot. If things did heat up, the Fed can always monetize the debt (which is something they’ve never had to do at large scale). And the US has structural advantages and policy tools that will keep the US stable in the long run.

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

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

Hey, all, Peter Zeihan here with a home office video. We’re gonna take a question from the Patreon crowd, and that is, do I worry about what’s going on with the government debt market? Specifically, some of Trump’s economic policies have been so erratic that they have been causing foreign investors, most notably the Chinese, to dump a lot of us T-bills on the market.

We’ve had reports that as much as $100 billion has been dumped in a short period of time, and in doing so, the cost of financing that debt has gone up, with the US T-bills briefly hitting about 4.6% before falling back. Basically going up a half a percentage point in a day doesn’t sound like much, but typically if you go up more than like 5/100 of a percent in a day, it’s kind of a big deal from a financing point of view, because in the US, government has issued more debt to pay for the financing.

And since there’s $36 trillion in outstanding debt, you move that needle just a little bit and all of a sudden the US government can get into a lot of financial trouble. And some version of that is what destroyed the Premier ship of Elizabeth Truss in the United Kingdom a couple of years ago. She instituted a policy of tax cuts that were going to be funded by debt, thinking that the growth would then make up for the difference.

And the market absolutely destroyed the pound briefly. And she was out in only a few days. I don’t really worry about that from the American point of view. A few reasons for that. First and most importantly, the US T-bill market is the global standard. Whether or not it is the 80 list standard is not the point.

The point is it’s the baseline that everything else trades around. So you can have governments with tighter fiscal ships like say, the Netherlands or Australia or Germany, whose debt is generally considered higher quality than the US. And it doesn’t matter because with $36 trillion, we are the baseline for pretty much all financial instruments, and that provides a lot of cushion against big shocks.

The bigger problem is whether or not the United States is risking losing its position as the global currency, the global store of value in the currency of first and last resort. After April 2nd, when Trump put in the tariffs, it basically would have generated a global meltdown if they would have stuck around. The concern is that there is a flight to safety, and usually in a flight to safety, people go to gold because they interpret as it being inflation resistant, and they go to U.S. T-bills because they’re the global standard in the US economy.

If something happens to it, the rest of the world has already melted down. Well, since the cause of the problem was the US government, the T-bills didn’t seem to be a particularly viable option and money went elsewhere. But if you look at the other options, they kind of suck. They went to the European Euro, and the euro has risen since the US dollar in the last couple of weeks.

But at the end of the day, the countries in Europe are demographically dead, and they can’t provide this type of baseline activity that isn’t necessary to underwrite a new store of value or a new source of exchange. And the euro is bigger than all the other options put together. The British pound still hasn’t recovered from the Truss episode, and without the Empire behind them, they’re just a mid-sized country.

They could never provide the volume. Canada, Australia. They run a tight ship. But you’re talking about countries with under 40 million people. In the case of Canada, under 30 million people. In the case of Australia, they just can’t compare to 330 million that are in the United States. Not to mention, the United States is a larger economy per capita than any of the others.

And that just leaves Japan, which until recently had one of the most manipulated currencies in the world. People like to talk about the yuan, but the one is not internationally traded. It’s not even an option. There’s just nowhere else to go. But even in the worst case scenario where everyone, everyone decides they just have to go somewhere else.

Which, by the way, does indicate a complete financial meltdown of all countries. Even in that scenario, the United States has an ace up its sleeve that has been used as a matter of course, by pretty much every other central bank for the last 30 years. You see, as countries have been demographically declining, their debt has become less and less attractive.

And so the central banks have had to step in and monetize that debt bit by bit by bit, basically printing currency to buy up the government debt. It’s not that the US doesn’t do this, but the US has never done this on the scales. Everyone else has done it. And since the Covid crisis ended, the federal Reserve has basically been cleaning up its balance sheet month by month by month.

And so there’s a lot of wiggle room for the fed to do just that. Now, that would still have consequences. But we’re talking here about an end of the world scenario, which is kind of my specialty. And in that scenario, you basically would have the Federal Reserve monetize large portions of the debt and become the buyer of government debt, a first and last resort.

In that scenario, the existence of the US t-bill as the baseline for everyone else would be a little bit different, but it wouldn’t stop. So having that in your back pocket gives you a lot of options that nobody else has. Don’t feel great about it. We’ll be okay on this measure.

The Fire Hose of Chaos: What Is Hegseth Doing?

Official government photo of Pete Hegseth

Pete Hegseth, the current Secretary of Defense, has been doing his best to completely dismantle the United States’ ability to fight a war now or in the future. Let’s look at why this is happening…

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

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

Peter Zeihan here. It’s Easter Monday. You’ll see this on Easter Tuesday. And today we have to talk about the Department of Defense and in particular, the Secretary of Defense. A guy by the name of Pete Hegseth. Pete Hegseth is the least qualified, most incompetent secretary of defense the United States has had. And over the couple of months that he has been in the office, he has done more to destroy the United States’ capacity to fight a current war, much less a future war, than really anyone in American history.

And it’s worth exploring why. The big news that came out over Easter weekend that has prompted me to talk about this topic is that if you remember back a few weeks ago, we had the SignalGate issue where the Secretary of Defense, Hegseth, set up a chat room with a bunch of other top national security folks, as well as the Treasury Secretary.

And somehow a reporter got invited onto it, and on an unsecured platform that the Russians had cracked the security on, started discussing active war plans and operational intelligence—something that under normal circumstances would have gotten everyone involved fired. But this is the Trump administration, and decisions are made differently these days. Anyway, turns out that around the same time that he did that, Hegseth had another single chat—again unsecured—but this time with personal friends, his personal lawyer, his wife, no one who had a security clearance.

And to be clear, this is a felony that would get anyone in the armed forces put away forever and dishonorably discharged in a matter of seconds. The Trump administration has already said they see nothing wrong with this, and Hegseth will continue in his position. I think it’s worth understanding why the United States military is the most powerful military force in human history, and how Hegseth is looking to rip that up, root and branch.

The first issue is education. When you have a force that spans the globe, you will need dozens of different skill sets, especially in your officer corps. So the United States maintains the most advanced staffed college system in human history to train up their mid-career officers for any possible outcome, as well as to teach them things like history, economics, trade, technology, electricity, energy, and all the rest.

One of the things that Hegseth has said is that anything that does not directly encourage activities for an active war fighter should be cut. That includes all of the staff colleges, which is where we get all of our officers. Basically, it’s a return—or an attempt to return—the training system to something that was much more reminiscent of what we had in the Civil War, where you just threw bodies at everything.

Gone would be the efforts of leveraging technology or anything else. The second issue is these educational institutions that we have to keep in mind: globe-spanning military force. So we do two things. Number one, we fly the troops to the educators. We try to fly the educators to the troops based on the circumstances. In addition, there’s the little issue of allies. Because the United States has the best training system in the world, we kind of lend it out, if you will. We invite other war fighters from allied countries to come to our training institutions to basically get a doctorate in the American way of warfighting, as well as seal up alliances and potential alliances with countries that are not, yes, treaty allies. Well, that requires people moving about.

And one of the things that Hegseth has done is a blanket travel ban on all the educators so that they can’t travel. So if you want a war fighter to get trained, he now absolutely has to come to where the university happens to be, whether that’s in Annapolis or in Monterey. And everyone else is just shit out of luck.

So we’ve seen what is arguably, in my opinion, the single biggest advantage we have long-term whittled down to just a weak spot. Then there’s technology. You may have noticed, but since the age of computers, the type of hardware that we are using in the world has been evolving, especially in the last few years with the Ukraine war.

So, for example, the military gets a lot of crap, I think, fairly or unfairly, for being kind of stodgy because the technologies that they have used really haven’t evolved or mutated a lot in the last hundred years. I mean, yeah, yeah, yeah, we got jets after World War Two or at the end of World War Two. We got tanks at the end of World War One. We developed missiles during the Cold War. But guns, artillery, missiles, jets, helicopters, ships—you know, the general playbook hasn’t evolved all that much. The same basic platforms haven’t evolved. We just upgrade specific technologies and put them together in different packages and throw them at different problems in different ways.

But the pieces really haven’t changed all that much. Well, starting about five, ten years ago, that really started to shift because we got breakthroughs in things like information technology and energy transfer and digitization, and they’re all happening at the same time, and they’re combining into new weapons systems that we’re only now starting to game out and design. And the Ukraine war is famous, of course, for drones.

And drones are absolutely the leading edge of this revolution. But we don’t know what this is going to look like in five years or ten years or 15 years or 30 years. And keep in mind that we have a lot of weapon platforms that we designed back in the ’50s that we’re still using. So you have to have an institution within the military that games out the future.

This takes two forms. First, you get the best and the brightest from the Intel systems within the military. You put them together in a room and get them to imagine the sort of thing that the president is going to be demanding of the military forces in ten, twenty, forty, eighty years. Then you need a technical team that can design a weapons system that will not just be useful ten and twenty years from now but can be upgraded and still be used a generation or two from now.

Well, Hegseth is firing all of those people. The Office of Net Assessment—whose job it is to do the first part of that, imagine the future—has already been disbanded, and we’re seeing massive cutbacks in excess of 70% for all the officers that do the technical work. So basically, the United States is taking a giant technological step backward in its warfighting under Hegseth.

And then the third issue is recruitment. Remember, we don’t know what the weapons of the future are going to be. So why in the world would you put any restrictions on how someone might choose to serve their country? We need everyone of every background. And if you look back at the history of the U.S. military going all the way back to before the Civil War, it’s not just that the military has always been a social ladder for underprivileged groups to attain status within a society.

It’s a way they can attain leadership. They can get the skills that they need to remake their own futures. And from the American point of view, from the military point of view, from the tactical point of view, from the warfighter point of view—we need everyone we can get. Newsflash, folks: straight white dudes are less than one third of the population.

And if you put restrictions on how the other two thirds of the population can choose to serve the country, you will never meet your recruitment goals. So in the last two months, we’ve seen a series of things go down. Most notably, Hegseth recently changed the physical requirements for what you have to match in order to serve in the military.

Gold review phraseology—a policy that almost seems like it was custom-designed to kick all women out of the U.S. military. And then, of course, recruitment for any place that is not totally stocked with white dudes has basically been cut to zero. Even Black engineering universities are no longer being visited. And I know, I know, some people are going to say, well, if you’ve got a standard and everyone can’t meet it, it doesn’t work.

No, no, no, no, no. The Israelis broke the seal on women in the military over 50 years ago. And today, every first-world military has a substantial proportion of women in the field. So if you can’t adjust for that, you’re going back to the 1840s. Moreover, there are some jobs—like, say, fighter pilots—where women are better because they can handle the G-forces better.

So is Hegseth going to change the policy so only chicks are fighting in the jets? I don’t think so. What we’re seeing is it’s all adding up to the greatest degradation of American warfighting potential that we have ever seen. And this is only two months in. I also don’t think this is the end of it. Yes, Hegseth has now committed multiple felonies.

Yes, Hegseth is an unmitigated disaster in his leadership. And yes, his entire inner office has now been fired. Oh, this is rich—he fired everybody in his office saying that they were all leaking information. I have no idea if that is true, but Hegseth has a history—especially in the SignalGate stuff—of saying something that is just a bald-faced lie, knowing that the information is out there to prove him wrong.

And it’s usually released in the next couple of days. So by the time we see this video, we will probably have multiple lawsuits against Hegseth personally, for people firing, quitting, etc. So by the time you see this video, it’s entirely possible that the office that was fired—they will have all issued wrongful termination lawsuits and provided the information that will prove this guy is just an absolute moron.

Okay. Do I think he’s going to go? No. Remember, the Trump administration did not build its cabinet because it thought these people were capable or change agents. He chose them because they were incompetent. The first time around, when Donald Trump became president, he really didn’t expect it. He thought he was going to lose to Hillary Clinton. And so he didn’t have a cadre of people around him because he had never been in government.

Well, he reached into the Republican Party, pulled their policy experts, and—especially on security affairs—relied very heavily on generals and admirals to fill out the billets. Well, what he discovered in that environment is when you have generals and admirals who have been through the staff training program and they know how the world works intimately, they have opinions about how things should be done, and they can point out consequences if you do things the wrong way.

Well, whenever that happened, Trump fired them. And so he went through more cabinet members than any American president in history. Just a huge number of generals rotated through the White House in positions like, say, Secretary of Defense or CIA Director. Fast forward to this most recent race.

Trump had decided while he was out of power that rather than build a team of competent people who could push an agenda through, he wanted to make sure that there was never anyone in the room who would tell him no. So he reached out and hired people like Pete Hegseth, who I would argue three months before he became Secretary of Defense, had no idea that that was in his future.

Well, because Trump values incompetence near him, there is no reason to expect Hegseth to be dismissed. I mean, of course he should be dismissed. But of course, in a normal administration, he would have never been nominated, much less confirmed. And that brings us to the next problem: Hegseth and people who are at his level of general incompetence—that includes the Director of National Intelligence, who is Tulsi Gabbard, or the Health and Human Services Secretary, who is Robert Kennedy Jr.

All of these people should not be in their spots, but they’re going to stay because Trump values their lack of expertise. He values their yes-man mentality. He values the fact that they’re not keeping him informed because it allows him to live in his hermetically sealed, Obama-esque bubble. The only way that these people can go away is if they are impeached.

And since the Trump team has basically gutted the Senate of anyone who is willing to stand out, that’s a really tall order. As Senator Murkowski of Alaska pointed out, retaliation against Trump is real. And so she’s considering leaving the party and being an independent in her home state of Alaska. That would still leave us with 52 Republican senators who are either unwilling or unable to stand against the president on issues of national security.

And if you’re going to impeach someone, you have to get two thirds of both houses of Congress. So now you’re talking about roughly 20 Republican senators having to flip. In this political environment, I just don’t see that as feasible. So we are looking into the long, painful, drawn-out crash of the United States’ ability to manage its national security concerns under a leadership that is thin, that is broken, that is incompetent—and unfortunately, that we are stuck with for the foreseeable future.

The Fire Hose of Chaos: Corruption

Photo of a bronze trump doll on stacks of 0 bills

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Why There’s No Fentanyl in Easter Eggs This Year

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Should the US Stay in the Middle East?

Photo of a Marine on top of a HESCO barrier

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Food for thought.

India Complicates the US Fentanyl Crisis

The 2025 US threat assessment has revealed that India is now a significant source of precursor chemicals used in fentanyl production, alongside China.

Fentanyl is a synthetic and much easier to produce then cocaine, meaning just about anyone can do it. Trying to pressure supplier countries and crack down on drug labs doesn’t work with a substance like this. Since fentanyl precursors are legal, regulating them is tough and inspecting shipments is a losing battle. So, a new strategy will be needed.

The only effective long-term solution to this crisis is addressing demand and consumption within the US and given historical American drug policy…it’s going to require a lot of work.

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

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

Hey, all. Peter Zeihan here coming to you from a snowy, foggy morning in Colorado. Today we’re gonna talk about something that came out in the new 2025. And that’s American, threat assessment. And basically it says that some of the precursor materials that are being used for fentanyl are now not coming necessarily from China, but from India.

So quick backstory. Fentanyl, unlike cocaine, is a synthetic. It is manufactured rather than grown. And because of that, it takes about four man hours, 4 to 6 man hours to make a single dose of cocaine. Because you have to clear land, you have to grow the crop, you have to harvest the crop, you have to dry the crop.

You have to then process the crop and eventually ship it north. A lot of involvement because it’s an agricultural product. Not so with fentanyl. With fentanyl you get your pre precursor materials. You process those into something called a precursor material. Fancy. And then you basically cook the stuff in a lab for a week. And then you have several thousand, probably several tens of thousands of doses that you ship north.

It only takes a few man seconds to make a dose of fentanyl. The problem is twofold here, the way the United States has chosen to go after fentanyl is, number one, to try to put pressure on the countries that are providing the precursor materials. The issue is that one of these countries is China and the precursor materials are legal.

You use them in any number of things, from making installation to medicine. So you can’t like, not produce them. And it’s very easy for you to siphon off a very small amount to ship to the United States. So you’re talking about things that are measured in liters here. In fact, all of the precursors that were used to make all of the drugs, all the fentanyl that was intercepted at the U.S. border could fit into 33, oil drums.

It’s not a lot of material. Once this stuff gets to the United States, it’s repackaged and sent into Mexico, typically by just a pickup truck. And then it’s distributed to the drug labs, which are just little facilities about the size of your average garage, typically in your average garage, where the processed into the final drug and it’s shipped north.

And so what the U.S. does is it tries to convince the countries that are producing the precursors to not and it tries to convince the, countries that are have the drug labs to have better security. And it’s not that these are stupid plans, but they’re not going after the low hanging fruit. The low hanging fruit is how you shipped the stuff from China, the United States.

And that’s the post office. If you’ve got a decent scanning system for small parcels, you’d probably be able to cut that link. But even that isn’t going to do very much because the precursors are legal and they can come from anywhere. And this is where India’s getting on it. One of the things that we see whenever we’re fighting the drugs is we don’t get good data until it’s two years out of date.

And so two years ago, India didn’t make the radar at all. And the Biden administration and now the Trump administration are talking to the Chinese about trying to find out which Americans are doing this to crack down on the personnel. It’s probably the better way to do it. And in the meantime, you squeeze the balloon, it just pops up somewhere else where it’s legal.

And then, of course, the border crossing from Mexico to the United States isn’t really something that we can lock down. And even if we could, one liter of finished fentanyl is enough to create somewhere between 50 and 100,000 doses based on the purity. So all you need is one dude in a backpack to get through to supply the entire country for a couple of days.

And at the end of the day, there’s no reason that those labs need to be in Mexico any more than the precursor materials need to come from China. The stuff is ubiquitous. It doesn’t take much of a capital investment to set up operations, and you can do it in Kansas and just as much as you can do it in Mexico.

And for the precursors, you can do it in China, you can do it in India. You could do it in new Jersey. So, the only real way to get fentanyl under control, it would be to address the consumption side of the equation. And that has always been a flaw in American drug policy.

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

Why I’m Okay with Some of the Secondary Tariffs

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

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

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

You Mess with the Don, You Get the Tariffs

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Half A Million Immigrants Get the Boot

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

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

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

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

Auto Tariffs and the Art of Routine Vehicle Maintenance

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The 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

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Why I’m Okay with Some of the Secondary Tariffs

You Mess with the Don, You Get the Tariffs

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Half A Million Immigrants Get the Boot

Auto Tariffs and the Art of Routine Vehicle Maintenance

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