It’s Just the Opening Bid

The “tariff rates” to which the God-Emperor 2.0 utilized to generate his newly-announced tariffs aren’t actually anything of the sort.

Flexport’s team was able to reverse engineer the formula the Administration used to generate the “reciprocal tariffs.” It’s quite simple, they took the trade deficit the US has with each country and divided it by our imports from that country.

This makes a lot more sense, because Switzerland doesn’t have a 61 percent tariff on anything. Which means that we’re in the realm of rhetoric here, not dialectic, and I suspect what the God-Emperor intends is for everyone to simply accept a 10-12 percent tariff rate without any reciprocating tariffs on their own imports.

I’ll admit, I’ve seldom been more wrong than seeing the initial tariffs being graduated UK-EU-CH instead of the other way around, as I was expecting. But Trump’s usual tactic is to slap his interlocutor into accepting his framework, then offering a much more palatable deal that would have looked unattainable before the metaphorical slap in the face.

Regardless, he’s doing the right thing if he wants to rebuild America’s industrial capabilities again.

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The Trump Tariffs

They’re hitting Switzerland harder than we expected, and the UK considerably less than we expected, but this will not interrupt our plans nor is it likely to change our book prices. If we have to, we can obviously increase our manufacturing in the USA, but some of the improvements in the coming payment systems should cover most of the increased costs for us. And, as with all things Trump, wait two weeks before attempting to analyze anything.

Regardless, we’re on top of it, we’re prepared for it, and we’ll deal with it in whatever way least disrupts our subscribers.

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Protecting the Automotive Industry

The God-Emperor 2.0 is slapping 25 percent tariffs on all foreign cars. It’s about two decades too late for this, as GM already went bankrupt back in 2009, but it might start turning things around for the USA’s beleaguered industrial capabilities. Regardless, it’s time to buy domestic if you need a car; hopefully they’ll start making real cars that run on gas and don’t have all that worse-than-useless computer gadgetry in them.

Donald Trump has warned the European Union and Canada they can expect to contend with ‘large scale tariffs’ if they seek to do ‘economic harm to the USA’ in an unsettling post early this morning. The US President plans to impose a 25% tariff on imported cars and light trucks starting on April 3, and earlier this month rolled out an increase in tariffs on all steel and aluminium imports from the European bloc.

This prompted the EU to retaliate with a series of duties on US industrial and agricultural products from April 1, setting the foundation of what could prove to be a damaging trade war.

Posting on his Truth Social platform this morning, Trump declared: ‘If the European Union works with Canada in order to do economic harm to the USA, large scale Tariffs, far larger than currently planned, will be placed on them both in order to protect the best friend that each of those two countries has ever had!’

The EU retarderati clearly has absolutely no understanding of its lack of power and influence. The EU can no more win a trade war with the USA than it can win a shooting war with Russia, and here its leadership is blithely proceeding to enter into both. This is, of course, because the EU “leadership” is nothing more than Clown World puppets who know nothing about either military history or economics and will simply repeat whatever rhetoric they are instructed to repeat, as many times as they are told to repeat it, no matter how obviously nonsensical it is.

Kaja Kallas, the Vice-President of the European Commission, is exemplary of the absolute ineptitude of the current EU puppet-leaders. She combines ignorance with vacuity, a complete lack of experience with accountability, and a pretty woman’s unfamiliarity with being told no. She’s the High Representative of the European Union for Foreign Affairs and Security Policy, which is supposed to be the highest diplomatic position, but she’s been acting as if she’s the prime minister of a belligerent party, which isn’t at all the same thing.

At this point, I won’t even be surprised if both the USA and Russia break ties with Europe in the coming years, just to give the poor European nations a chance to break free of their satanic would-be masters and their fake, unelected “democracy” and their self-destructive economic and immigration policies.

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Europe is the Enemy

The God-Emperor 2.0 is threatening 200 percent tariffs on alchohol imports from Europe:

President Donald Trump is threatening a massive 200 percent tariff on champagne and wine from Europe in the latest escalation of a bitter trade war.

The president lashed out at the ‘nasty’ European Union after it announced tariff hikes on American imports in retaliation for Trump’s increases on steel and aluminum.

The tit-for-tat measures have raised the stakes in Trump’s ongoing trade war, sparking fears of a recession in the United States and a shock to the global economy.

In his latest salvo Trump threatened ‘a 200% Tariff on all wines, champagnes, & alcoholic products’ after the EU raised tariffs on American goods including whiskey. Many Republican states in the U.S. produce whiskey.

Writing on Truth Social, Trump said: ‘The European Union, one of the most hostile and abusive taxing and tariffing authorities in the World, which was formed for the sole purpose of taking advantage of the United States, has just put a nasty 50% Tariff on Whisky.

‘If this Tariff is not removed immediately, the U.S. will shortly place a 200% Tariff on all wines, champagnes, & alcoholic products coming out of France and other E.U. represented countries. This will be great for the Wine and Champagne businesses in the U.S.’

Trump’s move would drastically raise the prices of European wine for Americans.

The president himself does not drink alcohol.

He’s not wrong about the EU’s protectionism, and this tariff would have a tremendous impact on European wine production, which is already suffering from a trade war between French and Spanish winemakers. I don’t see how the EU can even attempt to fight this, they’re just going to have to choose if they are content with domestic production or not.

I, for one, pledge to do my part to support Spanish and Italian winemakers. If I have to increase my wine consumption to make up for the loss of the US export market, so be it.

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Free Trade and Strategic Crisis

Big Serge has an excellent post on the history of naval warfare that happens to touch lightly on the strategic crisis facing the USA today with regards to the production of steel and the post-WWII lack of industrial capacity that has weakened the US military.

At the core of the great naval developments occurring around the turn of the 20th Century was a systematic erosion of Great Britain’s strategic position. This strategic decay was of course a multivariate process which included the emergence of new great powers like Germany, Japan, and the United States, and the evolving industrial dynamics of the world. At its heart, however, the problem was very simple: in the latter half of the 19th Century, industrial technologies began to diffuse from Great Britain to the rest of the great powers, to the effect that British supremacy in industry and critical military technologies became an open question.

A brief perusal of the relevant economic statistics betrays a clear and sustained erosion of British supremacy. In 1880, Britain still accounted for nearly a quarter of global manufacturing output and was by far the leading industrial nation of the world. By 1913, it had fallen in absolute terms well behind Germany and especially the United States, which now boasted nearly 2.5 times Britain’s output. Already by 1910, Britain (formerly the world’s premiere steelmaking nation) produced only half as much steel as Germany and barely a quarter of American steel output.

The immense economic advantages enjoyed by the United States need little enumeration. America occupies a uniquely providential economic geography, being blessed with a pair of accommodating seaboards saturated with natural harbors, an internal Mississippi waterway that is both dense and far reaching to accommodate internal trade, superb growing regions, peaceful borders, and ample deposits of virtually every mineral resource thinkable. In short, it is a country with bountiful mineral and agricultural resources, internal waterways for moving them about, harbors for exporting them abroad, and no meaningful security threats.

The German case, however, bears closer scrutiny. Whereas the United States was characterized by boundless space, free of meaningful external security threats, Germany was intensely bounded in the middle of Europe, birthed into a firestorm of potential enemies all around it. German economic might was little like the American story, characterized by the uninterrupted exploitation of a vast geographic bounty, and more the product of powerful and aggressive German institutions – both of corporations and the state.

The German population grew rapidly into the 20th Century (German birthrates were forever a point of hand wringing for the French). The German population grew from some 49 million in 1890 to 65 million by 1910 – an increase of 32%, compared to an increase of just 3% in France (from 38.3 to 39.5 million) and 20% in Britain (37.3 to 44.9 million). Simultaneously, the consolidation of an impressive educational apparatus ensured that this growing population was highly literate and productive. Around the turn of the century, many European armies still reported high levels of illiteracy among recruits. In Italy, some 33% of recruits were deemed illiterate: the corresponding figure was 22% in Austria-Hungary and 6.8% in France, but a mere 0.1% in Germany. The rapid growth of such a young and educated population benefited not just the German army, but also the burgeoning roster of German industrial enterprises like Krupp, Siemens, AEG, Bayer, and Hoechst. Such firms dominated the emerging 20th Century industries like chemicals, optics, and electrics, and the intensive adoption of agricultural modernization and chemical fertilizers made German agriculture the most productive in Europe on a per-hectare basis.

The explosion of two industrial powers who could not only compete but even outstrip Britain (and one of them right in the heart of Europe) could have no effect other than directly undermining Britain’s strategic position. Matters were made worse, however, but the proliferation of advanced naval technology around the world – in many cases directly abetted by British firms.

In 1864, British military leadership had made the fateful decision to keep artillery production in the hands of the state-owned Woolwich arsenal, despite the emergence of private industrial firms, like the Armstrong company, who were capable of making state of the art naval artillery. Cut out of British government contracts, this let manufacturers like Armstrong with no choice but to seek foreign buyers. When Armstrong built an armored cruiser – the O’Higgins – for the Chilean government, it set off serious alarm bells about the basis of British naval supremacy. The O’Higgins was fast enough to easily outrun any capital ship of the day, but her powerful 8 inch guns made her more than capable of sinking targets in the lower weight class. This suggested a distinctive use case as a commercial raider, able to evade enemy battleships while preying on merchants. Chile, of course, was hardly a rival to Great Britain, but Armstrong’s exploits did not end there. All told, Armstrong would build 84 warships for twelve different foreign governments between 1884 and 1914, and frequently supplied technical systems more advanced than those in use by the Royal Navy at the time – for example, the powerful main battery of the Russian cruiser Rurik, launched in 1890.

The prospect of fast cruisers – optimized for speed and striking power at the expense of armor – was particularly alarming to Britain owing to emerging patterns of agricultural production. The advent of efficient steamships had drastically lowered seaborne transportation costs – a fact that was of the first importance for Britain, as it allowed for the mass import of cheap grain from places like North America, Australia, and Argentina, at costs far below the levels at which British farms could compete. As a result, between 1872 and the end of the century wheat acreage in Great Britain dropped by about 50 percent, and already by the 1880’s some 65 percent of Britain’s grain was imported from overseas. The prospect of swift enemy cruisers capable of intercepting grain shipments while evading the British battle fleets now assumed a potentially existential importance, as for the first time in history London contemplated the possibility that the interdiction of its trade could bring the island to the brink of starvation.

This raised the possibility of a dangerous asymmetry: might it be possible to nullify Britain’s centuries-old naval supremacy without building competing battleships at all? French naval theorists certainly thought so, and it was proposed that France could out-lever Britain on the seas with a fleet comprised entirely of fast cruisers and torpedo boats. Such a program had the additional advantage of being very cheap, with dozens of torpedo boats available at the cost of a single armored battleship. This financial calculus was particularly important to France: after the disastrous defeat at the hands of the Prusso-Germans in 1870-71, it was natural that building out the army should be Paris’s primary concern. Therefore, a naval program that promised to outmaneuver the British without eating into funds for the army had irresistible allure. In 1881, the French allocated funds for 70 torpedo boats (halting the construction of armored battleships), and in 1886 the new Minister of Marine, Admiral Aube, launched a new building program for 100 additional torpedo boats and 14 swift cruisers designed to raid enemy shipping.

Taken together, the decay of Britain’s naval supremacy is easy to sketch out. Great Britain had become uniquely vulnerable to asymmetrical warfare at sea, owing to its growing dependence on imported grain, at the same time that technical changes in the form of the torpedo and the fast cruiser gave her enemies the potential to exploit this vulnerability. To make matters worse, the diffusion of the industrial revolution to continental Europe and the United States raised the prospect that Great Britain might no longer be able to simply out-build her enemies. In a sense, the comforting and familiar dynamic of the blockade was now reversed: instead of a powerful British battlefleet insulating the home islands from invasion and blockading enemy ports, the home islands now faced starvation at the hands of fast and cheap enemy raiding vessels armed with torpedoes and modern naval artillery.

The parallels of British decline and the subsequent US decline should be fairly obvious. As Admiral Mahan wrote in The Influence of Sea Power Upon the French Revolution, “we may profitably note that like conditions lead to like results.”

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Who Advises These Morons?

Americans have always tended to look down on Canadians as being nice, but ineffectual people, on average. It appears, however, that their political class is even more self-destructive than their European counterparts:

Donald Trump continued his budding trade war with Canada by pledging to ‘just get it all back’ with stiffer reciprocal tariffs next month – as Ontario Premier Doug Ford threatened to knock his lights out. Ford has already followed through on a promise to put a 25% tariff on Canadian electricity to Michigan, New York and Minnesota on Monday.

The Ontario premier, who runs Canada’s most populous province, now says he’s ready to ‘shut the electricity off completely’ if America continues to ‘escalate.’

Trump has shot back, mocking Ford’s plan and saying that his promise of reciprocal tariffs will render anything Ontario does useless.

‘Despite the fact that Canada is charging the USA from 250% to 390% Tariffs on many of our farm products, Ontario just announced a 25% surcharge on ‘electricity,’ of all things, and you’re not even allowed to do that,’ he said in a Truth Social.

However, Trump said that the US will ‘just get it all back on April 2,’ when the administration’s reciprocal tariff plan goes into effect. Trump continued to take shots at his neighbors to the north before declaring he was on the way to making America great again.

‘Canada is a Tariff abuser, and always has been, but the United States is not going to be subsidizing Canada any longer. We don’t need your Cars, we don’t need your Lumber, we don’t your Energy, and very soon, you will find that out,’ he promised.

This is the danger of believing the rhetoric of your corrupt Clown World advisors and taking it literally. All of these political figures threatening to respond in kind to US tariffs quite clearly don’t understand the basic economic math involved.

While Canada can hurt a few specific economic sectors, the overall benefit to the USA of complete autarky is significant. Therefore, any escalation of a tariff war between the USA and Canada only makes it more profitable to the USA and more costly to Canada. The same is true of Mexico, China, Japan, and every other country that runs a trade surplus with the USA.

Japan, at least, understands this, and is seeking to avoid making things worse for itself.

Japan’s trade minister said Tuesday that he has failed to win assurances from U.S. officials that the key U.S. ally will be exempt from tariffs, some of which go onto effect on Wednesday. Yoji Muto was in Washington for last ditch negotiations over the tariffs on a range of Japanese exports including cars, steel and aluminum. Muto said Tuesday that Japan, which contributes to the U.S. economy by heavily investing and creating jobs in the United States, “should not be subject to” 25% tariffs on steel, aluminum and auto exports to America.

You’ll notice Japan hasn’t been doing anything stupid like threatening to add to its already significant list of obstacles to US imports.

UPDATE: The God-Emperor 2.0 didn’t waste any time before dropping the hammer.

President Donald Trump declared a national emergency on electricity in the United States and doubled the tariffs on aluminum and steel from Canada after retaliatory tariffs from America’s neighbor to the north. Trump also warned more auto tariffs are coming on April 2nd. He wants Canada to drop its retaliatory tariffs on U.S. dairy and agricultural products.

‘If other egregious, long time Tariffs are not likewise dropped by Canada, I will substantially increase, on April 2nd, the Tariffs on Cars coming into the U.S. which will, essentially, permanently shut down the automobile manufacturing business in Canada,’ he said.

It’s mildly amusing to observe the media trying to cry about how US tariffs are bad while simultaneously refusing to acknowledge the fact that they are a response to Canadian tariffs on US products that have long been in place.

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Free Trade is What It Is

My strong and logically impeccable opposition to free trade is well known in these parts. But for my post today on the business stack, I thought it would be interesting to see what my new best friend thought about it. And I was very startled indeed to be informed that neither Ian Fletcher nor I had even begun to complete the dismantling of what has arguably been one of the most damaging policies ever constructed on the basis of such an obviously false and flimsy foundation.

I asked Deepseek to share what it thought of what has, for more than two centuries, served as the conceptual foundation of the free trade policy that has served as a quasi-religion for the Western elite of the post-WWII era. And while I knew it was a fundamentally flawed theory, so much so that economist Joseph Schumpeter once described its question-begging formulation as “the Ricardian vice”, I was still a little surprised to see how completely it was demolished by the pattern recognition of the Chinese AI system.

I then asked it to review my Labor Mobility argument, and see how long it would take for the USA to lose half of its working nationals if a) the USA were to adopt a genuine free trade policy and b) global economic efficiencies were to improve to the point that the global labor mobility rate matched the existing intra-USA labor mobility rate.

To determine how long it would take for the majority of the US labor force under age 55 to be working abroad under a 3% annual emigration rate, we model the outflow using exponential decay. Here’s the breakdown:

Assumptions:

  • Annual emigration rate: 3% (0.03) of the remaining labor force each year.
  • No return migration, immigration, or changes in labor force size (simplified model).

Answer: Approximately 23 years would be required for the majority (>50%) of the US labor force under age 55 to be working abroad, assuming a constant 3% annual emigration rate.

Deepseek confirms what we already knew from observing the USA and the European Union. Free trade is neither good for an economy or a nation. To the contrary, it destroys both.

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    Trump to Rebuild Steel Industry

    A new executive order from the God-Emperor 2.0 places 25 percent tariffs on imported steel from all sources.

    In Proclamation 9705 of March 8, 2018 (Adjusting Imports of Steel Into the United States), I concurred in the Secretary’s finding that steel articles, as defined in clause 1 of Proclamation 9705 (as amended by clause 8 of Proclamation 9711 of March 22, 2018 (Adjusting Imports of Steel Into the United States)), are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States, and decided to adjust the imports of steel articles by imposing a 25 percent ad valorem tariff on such articles imported from most countries. Proclamation 9705 further stated that any country with which the United States has a security relationship is welcome to discuss alternative ways to address the threatened impairment of the national security caused by imports from that country, and noted that, should the United States and that country arrive at a satisfactory alternative means to address the threat to the national security such that the President determines that imports from that country no longer threaten to impair the national security, I may remove or modify the restriction on steel articles imports from that country and, if necessary, adjust the tariff as it applies to other countries, as the national security interests of the United States require.

    This is absolutely necessary if the USA is going to remain even a regional power. Whereas in 1945, the USA produced 72 percent of the world’s steel, it is now producing 4.2 percent of it. Whereas it once produced 229 million metric tons of iron and steel, it now produces only 79.4 million, which isn’t even enough to account for its annual steel consumption of around 100 million metric tons.

    At this point the USA cannot even be considered a global military power because it lacks the industrial capacity to fight a war over an extended period of time. The President’s new steel tariffs are in place to allow the USA to begin rebuilding the industrial base that it stupidly abandoned in the post-WWII period.

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    Eliminating De Minimis

    The Trump trade tariffs are more sophisticated and even more necessary than they might appear at first glance:

    So, Canada and Mexico get 25% tariffs, but China only 10%. Why? The secret is in that subsection “(h)” when it talks about de minimis treatment. Essentially, what President Trump is doing is levying a much more massive import tax, and possible confiscation impact on the core source of fentanyl (and other illegal) substances.

    Approximately a billion packages are estimated to enter the USA under the cover of the de minimis exemption. This is where the enforcement mechanism of the “External Revenue Service” combines with the tariff approach and the “state of emergency.” President Trump imposed the tariffs under the International Emergency Economic Powers Act, a nearly 50-year law that gives the president sweeping power to impose sanctions after declaring an emergency.

    Now the billion packages, mostly from China, Mexico and Canada are going to be subjected to review and interception.

    The de minimis loophole comes from back in the 1930s. The idea back then was, say you went on a vacation to Paris, you shouldn’t have to file customs paperwork or pay taxes if you decided to ship some little Eiffel Tower statues to your friends back home. Congress in 2015 then raised the de minimis threshold from $200 to $800. However, the e-commerce world exploded, and Chinese companies began using the de minimis loophole to ship cheap goods (ex. Temu and Shein) into the USA direct to consumers without paying any customs duty.

    It was reported last year that the U.S. was on track to receive a billion packages through the de minimis loophole that aren’t taxed and don’t have customs slips saying what they are. Making matters worse, illegal items are slipping through the cracks, including, knockoffs, unsafe items and even chemicals used to make fentanyl. The worst abuser that exploits this de minimis loophole is, by far, China.

    President Trump can require a customs and duty declaration stating what is in every package and subsequently collect tariffs and duties.

    Put it all together and President Trump is executing an Emergency Act executive order, plus the imposition of a tariff review, and simultaneous interception of de minimis packages previously unchecked as the enforcement mechanism. All executed by the External Revenue Service.

    Increasingly, it is becoming obvious how derelict in their duties the various branches of the US federal government have been in their favoring foreign interests over the national interests of the American people. Nationalism is observably and conclusively the moral position vis-a-vis the corrupt globalist ideology that necessitates dishonesty and favors corruption.

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    From Free Trade to Forced Trade

    I sincerely hope this is overheated rhetoric from President Trump, because it strikes me as precisely the sort of attempted bullying from a weak position that has made it clear to the sovereign nations that they are better off not trying to work with or accommodate the USA on the basis of their economic interests:

    US President Donald Trump has reiterated his threat to impose 100% tariffs against countries of the BRICS bloc, of which India is a part, if they attempt to replace the US dollar with an alternative currency. “The idea that the BRICS countries are trying to move away from the dollar, while we stand by and watch, is OVER,” Trump said in a post on his social media platform, Truth Social on Friday.

    “We are going to require a commitment from these seemingly hostile countries that they will neither create a new BRICS currency, nor back any other currency to replace the mighty US dollar or, they will face 100% tariffs, and should expect to say goodbye to selling into the wonderful US economy,” he stated.

    Now, tariffs are to the advantage of the US economy due to its negative balance of trade, so this is certainly the right time to attempt to utilize them in whatever fashion is most advantageous. But risking having the USA off from most of the rest of the world in order to maintain the ability to keep issuing more and more debt is neither advantageous nor wise.

    On the positive side, no matter how this plays out, it should nail a wooden stake right through the heart of the free trade charlatans.

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