Trump's Tariffs Are Just A Distraction - Here's What's Actually Going On
A high-stakes game is afoot
One of the many things people don’t seem to understand about Donald Trump is that he does what he says he’s going to do.
The man has been talking about tariffs for forty years.
He was elected on a platform of massive tariffs in order to magically bring all the factories and sweatshops back to America.
But, the second he actually slapped his allies with import taxes, parasitic shareholders freaked their freaked and sold up, wiping trillions off the market, evaporating confidence in America and American business, and pummeling Trump’s approval ratings.
Thus, tariffs on again, tariffs off again, tariffs possibly on and/or off again in the near future.
What is going on here?
There are two dimensions:
The personal dimension
Can we all agree that Donald Trump is first and foremost interested in himself?
Not his country.
Not his wife.
Not his kids.
DJT is #1 in DJT’s mind.
My hunch?
History will show that Trump’s network of insiders — particularly his big donors in banking and finance — just made billions, if not tens of billions, on shorting the markets before the tariffs were announced, then they took that money and went long when the tariffs were revoked just days later.
If they didn’t, they’re either far more ethical or far more stupid than we can possibly imagine.
No one causes this amount of uncertainty and chaos without some sort of personal benefit. The sort of engineered volatility is where fortunes are made.
The ancient Romans asked, “Qui bono?”… who profits?… and we should do the same.
The geopolitical dimension
The hard reality is that financialized shareholder capitalism (making money from owning things instead of making things) has been running on hundreds of trillions in fake money created as interest-bearing debt by private banks.
The inflation of the money supply is now devastating the poor, the working class, and the middle class with price inflation, so interest rates need to go up. (The “natural” interest rate is the rate of interest that cuts inflation to true zero.)
But interest rates going up means more service cuts, more public asset selloffs, and more tax rises (just never on the rich, heaven forbid.)
But even that won’t be nearly enough to pay the projected $1.2 trillion in interest owing this year, and next year, and the year after that, compounding forever.
Plus, inflation means corporations will be forced by desperate workers to raise their wages, which shareholders don’t want to do. But when they do, it will fuel further inflation.
In other words, the U.S. dollar just got cornered by its own money-printing.
Pair that with the fact that the supply chain for goods flowing into the U.S. is becoming a hostage situation — the States gets nearly half of its stuff ($1.3 trillion) from countries that are often direct competitors for wealth and power.
Let’s recap:
Americans can’t afford to repay the public debt that banks have heaped on them.
Americans can’t afford the price inflation that banks have heaped on them.
Americans can’t afford the prices that corporations have heaped on them.
This system allowed billionaires to get trillions richer by making Americans real-terms poorer.
How do tariffs fix this?
In the 1800s, taxing imports encouraged overseas companies to move to America and gave domestic producers breathing room to build up companies that could compete on a global scale.
Trump is living in the 1800s.
In the age of AI and automation and financialized shareholder capitalism, tariffs simply mean Americans will pay way higher prices for foreign and domestic goods while tech bros work around the clock to replace all human labor with robots.
Catch-22.
Damned if you do, damned if you don’t.
The game plan
There’s speculation that tariffs are just the first move in a drive to reassert American superpowerdom.
If true, tariffs are just the opening salvo.
Trump is already using the threat of tariffs to secure American energy dominance, as indicated by his attempt to stiff-arm Europe into buying hundreds of billions in oil and gas per year from his corporate sponsors.
He’ll also need to prevent the dollar from losing even more value — hard to do when you refuse to stop banks from printing new money out of thin air — so expect more capital controls that restrict the movement and usage of $USD (and crypto for that matter).
Who’s behind all this?
Trump is not smart enough to come up with a world domination plan on his own.
His corporate sponsors are the ones who stand to benefit bigly from America the Superpower 2.0…
Taxing imports leaves Americans hostage to American corporations, ensuring quasi-monopolies and pricing power like they haven’t seen in years. (Trump’s top donors include Elon Musk, a bunch of casino owners, real estate magnates, and private equity vulture capitalists. Billionaires like Peter Thiel and David Sacks know how to make money and see Trump as a way to get richer than ever before.)
The American oil industry will be a huge gainer if their boy can force U.S. energy on unwilling buyers. (Oil tycoon Harold Hamm was a top donor, and Trump mentions Roger Penske regularly and calls him a good guy, so presumably he’s an industry representative of sorts.)
Considering Trump’s biggest donor ($150M) was the banking heir Timothy Mellon, it’s safe to assume bankers will continue to make out like the bandits they are.
Who loses?
The American people who actually do all the living and working and spending and dying.
But remember: At the end of the day, what matters most to Donald Trump is Donald Trump. If the road back to American global dominance doesn’t burnish his reputation and poll numbers the entire time, expect jerky movements like the past two weeks. If it looks like he’s flailing, it’s because he is.
What can you do?
Don’t fear.
It doesn’t help.
Diversify.
Stocks were only ever a way to rob the working poor anyway.
Buy what you need.
Your money will be worth less next year, and goods will cost more.
Pay off debt if you can.
For yourself and others.
Expect more inflation.
It’s a mathematical inevitability. Brush up on eight stealth ways inflation robs you.
Prepare for higher energy costs.
If the U.S. starts exporting more, domestic prices will likely rise. Insulate your home, explore solar, invest in energy efficiency, buy a Birley log-burner or wood boiler.
Support fellow locals.
The faster we all revert to relying on domestic production, the faster prices will stabilize.
Boost your skills.
Get good at stuff that will take robots a long time to do well.
Make friends.
At least you won’t be alone in the uncertainty ahead.
At least you won’t be alone in the uncertainty ahead.
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Good economic policy discussion.