Trade Policy Trump Style

 

Just about the time you thought we had this wrapped-up, last Friday trade talks with Canada collapsed.

This is fascinating to me inasmuch as just like the decision to go to war with Iran; this administration leaves each and every last decision on all matters of trade and war, including right down to each and every last country, including terms, to the whims of one sole individual. 

Mr. Trump.

And just like Groundhog Day, every day can be a repeat of the prior or maybe something different; all dependent-upon Trump's mercurial personality, his feelings of self-aggrandizement in the moment and generalized impulsiveness.  Some days are predictable, most are tolerable; while the worst ones are like dealing with a whining toddler tossing toys out of his crib.

Mr. Trump's obsessive trade war with Canada is based-upon an imbalance of trade with the United States that is driven entirely by globally-needed oil. They don't like to talk about; but I'll make it simple enough for a layperson to understand.

An interesting factoid is that the US merchandise trade deficit with Canada is essentially an energy story.  In 2024 the US ran a $64 billion goods deficit with Canada, but that deficit disappeared and became a $34 billion US surplus when energy was excluded.  The US also ran a roughly $24 billion surplus specifically in manufactured goods.  Canadian energy exports, namely crude oil, account for the bilateral deficit.

In other words, Canada isn't beating American manufacturers in some broad-based flood of manufactured goods.  Canada supplies the United States with enormous quantities of energy that the US economy needs, while the United States sells Canada more manufactured goods than it buys from Canada.    

That doesn't mean every Trump tariff policy toward Canada is necessarily motivated by the headline trade deficit; Washington has cited border security, fentanyl, autos, steel and other issues.  

In 2025, the United States ran a $46 billion goods deficit with Canada, but it also ran an approximately $85 billion net deficit in energy trade. The implication is that the United States' overall goods deficit with Canada was not the result of a generalized Canadian advantage in manufactured goods; again it was overwhelmingly an energy phenomenon, offset by U.S. surpluses in other categories.

Nevertheless, if the argument is that America is being economically victimized by a one-sided Canadian trading relationship, the numbers don't stack-up.      

This time, and perhaps because the world needs North American oil; and possibly as a consequence of Mr. Trump's ill-advised unilateral war, it looks like Canada has its sights on our looming midterm elections and is digging-in for a protracted standoff with Trump.  I suspect with hopes for a change of venue in their on-again, off-again trade talks with the administration.   Other countries around the world are watching too; following how tit-for-tat retaliation works with Trump's personal negotiation style.  My sense is that Canada is willing to wait this out as post-election the ground may shift enough giving Democrats the upper hand in the House and providing some breathing room and space for normally trade-minded Republicans to find their balls.  Perhaps the Senate is in play too?  Who knows?  Time will tell.

Canada's retaliatory tariffs won't go into effect until after Labor Day and are likely to focus on things like appliances, agricultural equipment, minerals, steel, dairy, pulp and paper.  If Mark Carney were to take a page out of Ontario Premier Doug Ford's playbook, Canada will focus on taking a shot at Trump's base in both key swing states with significant trade ties to Canada (Michigan and other Midwest and Great Lakes states come to mind) along with critical red states such as Texas and Florida.  I can sense Canada's growing outrage and frustration.  After-all, Mr. Trump commenced his second term with demands that Canada become the 51st state.  

Brilliant.  

If Canada's first impression was that Trump is simply a garden variety asshole; I suppose given everything that has transpired since, he's gonna always be an asshole.   

Remember the guy who claimed that the tiny island nation of Madagascar was picking on us?  Yup, Howard Lutnick.  Whispered Palace Intrigue would suggest that the recent deal fell apart when Mr. Lutnick got bent out of shape over his impression that US Trade Representative Jamison Greer's dealmaking strayed onto Lutnick's turf; namely automobiles, steel and aluminum.  Imagine that; infighting among administration supplicants and sycophants.  In the mean time, the relationship with our single largest trade partner on the planet suffers and US consumers pay the price.

I cannot predict where this ends as I no longer have my crystal ball.  That said, and because we're only a couple of months from the mid-terms, I'll go out on a limb and predict Canada imposes more pain on American consumers who are already restless and grumpy about Mr. Trump's sloppy war and haphazard trade policy.  Between now and the election there will be an abundance of overblown reality television drama-style nonsense before we learn how this ends.

Meanwhile, as far as negotiation tactics go, Trump’s tariff threat hurts US automakers and consumers more than anyone else.  If anybody is under the impression that all Canadian auto and parts production will be re-shored in the US in the next four months; they are certifiably delusional.  That is a MAGA fever dream.

In closing there is this.  Further evidence that import taxes (tariffs) are ultimately paid by consumers; Mr. Trump is ostensibly and temporarily lifting them on imported beef.  And if you think temporary antics like this are a substitute for intellectually-solid trade dynamics or that the price of a Whopper is going to go down I have a bridge to sell you.

Such is the result of leaving decision-making on trade entirely in the hands of an impulsive and incurious individual.  Just like like a war in the Middle East that has gone south; you're gonna get sketchy results.... 

 

Brief Economic Briefing

 

Once upon a time you could count on Republicans to stand for lower taxes.  No more.  In case you missed it, last Friday, July 24, President Trump imposed new tariffs of 10% to 12.5% on 60 trading partners covering 99% of U.S. imports.  In a fit of pique, an additional 50% retaliatory tariff singling-out Canada was imposed as well.

Because the cost of these additional trade taxes are paid by consumers, the Yale Budget Lab now estimates that Mr. Trump's tax increase will cost American households an average of $1,100 per year.  That is double what it would have been had the president declined to impose higher taxes replacing the global tariff that expired on Friday.  

Notably, this tax increase wipes-out the $300 - $1,000 increase in average tax refund generated as a result of Trump's Big Beautiful Bill.

Five months into the Iran war the national price of gasoline is around $4 a gallon; so there is that additional household budget item. The Strait of Hormuz remains closed.  The Red Sea's Bab el-Mandeb (Gateway of Tears) is now threatened by the Houthis.  U.S. bases throughout the Gulf States remain vulnerable to attack.  And oil is trading close to $100 a barrel.

Naturally, it should come as no surprise that with the imposition of new and higher tariffs, rising energy costs, Iran war supply chain disruptions; businesses are raising prices.  Which increases the threat of rising inflation pressures. 

In closing this has pushed yields on the 10-year treasury - a major benchmark for setting consumer borrowing costs - above 4.6%.  The bond market looks spooked.  This impacts commercial loans and pushed the 30-year fixed rate mortgage rate to its highest level of the year, a move that could chill the housing market.  Notably, this is higher than where they stood following Mr. Trump's Liberation Day announcement that sent the bond markets into a tailspin. 

Admittedly, updates and briefings are incomplete.  For instance, unemployment for the month of June was 4.2%, ticking down from 4.3% in May.  According to the US Bureau of Labor statistics total unemployed persons stood at roughly 7.09 million, reflecting a stable labor market.  

Watch the Fed today. 

President Trump Pays a Call To The Farm

Yup; the City Slicker from the Borough of Queens blew-in to Wisconsin a couple days ago and maybe got his shoes dirty.  But I doubt it. This was all for show because things have become increasingly uncertain in farmland world.  By and large, farmers continue to support the president.  Why?  Trump gets it.  The truth is not in his actual policies but in his showing-up to address their fears.  How to make farmers think he sees them; the people that live in fly-over country.

For as long as I can recall I have not held any particular fondness for the Communist Red-Chinese government.  They have raised the theft of intellectual property to an art form and have bamboozled the trade negotiators of every administration for just as long; including Trump 1.0 and now Trump 2.0 as well.

If I had a rational discussion with a Trump supporter I would hear a case that the recent troubles felt by family farmers and ranchers are simply short-term nuisances that are necessary to challenge long-standing, unfair trade practices by foreign countries; China in particular.

And I suppose that my interlocutor would likely suggest that it is only "strong medicine," such as an aggressive tariff strategy, followed-on by subsequent renegotiation that would result-in better more structurally-sound and long-term trade deals.  Fair-enough.

Yes, American agriculture is a complex subject; nevertheless, my immediate neighborhood is an almost exclusively agricultural community.  We own a farm and farm policy is of personal interest.  Consequently, and anecdotally, I hear and have some tingly sense that patience may be wearing thin. Hardly for all but certainly for some.

And I am not alone; numerous agricultural economists and trade orgs - who know more about this than I do - would argue that Trump policy-making initiatives have resulted in no small amount of financial strain for American family farms. 

Specifically, the strong medicine and its side effects include: lost export markets, rising input costs, financial instability leading to bankruptcies and dependency upon federal subsidies.  

Let's dissect each.

Mr. Trump has famously expounded-upon his love of tariffs; thusly when your only tool is a hammer every trade issue is treated like a nail.  The extensive use of tariffs - particularly Section 232 of the Trade Expansion Act - has led to retaliatory measures from major trade partners, including China.  This impacts an expansive list of stuff ranging from auto parts to semiconductors.  While most certainly the president and possibly my interlocutor might erroneously persist with the notion that foreigners pay these tariffs and make us wealthy beyond belief; the truth is that import companies pay them and pass the cost on to US businesses and consumers.  Just like a sales tax, tariffs make imported goods costlier.  Another unintended and equally unfortunate outcome is loss of market share.   

For decades China has been the undisputed heavyweight champion when it came to buying American soybeans.  It is a fact that the Chinese used to be the largest buyer of our beans than the rest of the world combined.  From the end of May through November of last year China did not purchase a single American soybean, choosing to do business with other countries instead.  As a result of Trump's import taxes China responded with an imposition of their own duties along with a boycott of American beans.  Sales, along with domestic prices, plunged.  Meanwhile, American agricultural exports to Canada decreased by more than $1 billion largely as a consequence of Canadian boycotts of American products.

Farm economists now point to the acceleration of a structural shift in markets with China permanently diverting its agricultural purchases to competing nations.  Even after a handful of temporary trade truces were reached American farmers today have a significantly reduced share of the global market.

What about input costs?  The president would tell you that tariffs are intended to protect domestic manufacturing.  And while that might be a necessary and useful tool to shield boutique specialty industries; when applied in broad swaths these trade taxes increase the cost of raw materials used to manufacture heavy machinery.

Not surprisingly, manufacturers like Deere are faced with higher production costs due to tariffs on metal, microchips and other component parts which are passed on to farmers in the form of higher prices for Deere tractors, harvesters and combines.  Even Trump knows this as the administration relented and temporarily reduced the offending taxes impacting agricultural equipment from 25% to 15%. 

And then, of course, Donald Trump made a unilateral decision to go to war with Iran resulting in the closure of the Strait of Hormuz.  This set in motion a cascade of destabilizing events that have dangerous consequences for global stability, security and the world's economy.  This has spiked energy costs and disrupted the the global supply of nitrogen and urea.  Some fertilizer prices are up 47% year-over-year.  For us here in the northern hemisphere the manure hit the fan before spring planting.  What were they thinking? 

Putting-on my financial guy hat, I am now witness to a perfect storm of reduced export commodity prices and skyrocketing operational costs conspiring to squeeze profit margins.  

According to the American Farm Bureau Federation, last year, America's crop farmers lost $34.6 billion and farm bankruptcies surged to numbers not seen since 2020.  In farm states like Iowa, Nebraska, South Dakota, Minnesota and Wisconsin there is now a sharp uptick in family farm bankruptcies and foreclosures.

To cushion the gut punch from his unilateral trade war Trump has authored the distribution of billions upon billions of direct aid including a $12 billion market facilitation package and the Farmer Bridge Assistance Program. 

These payments are a lifeline to keep farmers afloat; nevertheless, they smell peculiarly of Soviet-style central economic planning.  Or garden variety welfare; you pick.

From a purely economic perspective none of these subsidies assist the local rural economy.  Almost all of it went to multinational fertilizer and seed syndicates and large corporate landlords.  Moreover, welfare payments distort market economics resulting in an unstable environment where farmers become dependent on federal intervention rather than stable global commerce.  See previous paragraph.

So when I opened with the observation that the president's visit was mostly for show ask yourself if following Mr. Trump's departure did anything change for Wisconsin farmers?

Have lost export markets returned?  Have import duties gone away?  Has the price of fertilizer, diesel or purchased and leased equipment come down?  The Strait of Hormuz might reopen tomorrow; yet because things are so horribly broken any return to normalcy will take a year or more.  That does nothing to stem the immediate rise in bankruptcies and foreclosures for family farms.  

Farmers like to joke about why they don't gamble or place wagers in the prediction markets.  They'll tell you every season already comes with enough business crippling risks to satisfy anybody's passing itch to speculate.  Ham-fisted government policy getting in the way simply exacerbates the risks.  Increasing dependency on the federal dole to mask flawed policy in both trade and war is a failed strategy by any historical measure.

Farming is hard work and unlike an IPO or private equity wealth comes slow and steady.  America's family farms are not experiencing some transitory short-term hardship; they are disappearing.  Bankruptcies were up 55 percent in 2024, 46 percent in 2025 and 70 percent already by May of this year.  It will be interesting to follow how support for the president holds-up amongst farm producers for the remainder of his term.   

Time will tell.... 

Central Planning Meets The Law Of Unintended Consequences

Central planning is frequently (and erroneously) considered synonymous with socialism or communism.  Central planning is a legitimate economic model.  Socialism and communism use central planning as a way of achieving other social and political goals, but generally operate within the construct of a mixed economy.

Does that sound familiar?  It should, because that is a Trumpian economic model.  However, President Trump puts his own nuance on the concept; he, alone, is the decider. 

The president has downplayed the economic stresses arising as a consequence of his tariff policy and unilateral decision to go to war with Iran.  Asked earlier this month whether the financial situation of average Americans was a motive to end the Iran war, he said not even a little bit.  And you know what?  I believe him.  The president is adept at saying the quiet part out loud.  After-all, just like going to war, he alone is the decider.

There is a weak link in the chain of a centrally-planned economy orchestrated by a single individual.  Particularly if that individual is surrounded by sycophants.  In the absence  of hybrid vigor,  economics becomes inbred and less resistant to disruption by outside forces.  Add a war to the mix and things get more complicated.

Consider this; the percentage of credit card balances at least 90 days delinquent rose to 13.2% in the first quarter, the highest level in 15 years.  America's total credit card balance reached $1.25 trillion in the first quarter, the highest first quarter balance since the Fed began tracking it in 1999.

The average interest rate on these cards rose to 21% in February from 14.6% in February 2022 putting an additional strain on consumers.  Why is this important?  Our economy is not driven by manufacturing; it is a service-based economy driven by consumers.

Soaring interest rates and rising inflation have led to the highest delinquencies since the financial crisis; a pattern economists refer-to as survival debt. 

And, of course, the Strait remains effectively closed leaving global supply chains seriously messed-up with all sorta unintended consequences.  So I'm still waiting on President Trump to improve everyone's (not just the investor class) prosperity and general lot in life.  Along with making the world a safer place.

I sure hope he gets this right.  After-all, he's the decider.... 

Mixed Messages

I've published on this subject previously and reflecting-upon recent gains in the investment markets, a reasonably robust jobs report, the peace process (or lack-there-of) for the Iran war why are the people seemingly down on their economic situation and possibly even a wee bit grumpy?

Consumer sentiment has dropped again.  According to the University of Michigan, the Consumer Sentiment Index fell to 48.2. from 49.8 in April.  The numbers are preliminary and subject to revision; nevertheless, this is the second consecutive all-time low in a data set that has been collected since the late 1970s.

I look at the economic world through the eyes of a recovering financial advisor and while I'm not wearing rose-colored glasses my sense is that excepting for global economic instability and rising energy costs as a consequence of the Iran war, economically-speaking, things are generally OK.  

What gives?  

Seems like the culprit are those nagging exceptions; namely the war, inflation due to energy costs and tariffs along with generalized economic uncertainty; all of which conspire to create bad vibes that bleeds into weakness in the mood of consumers.  This is important as the lion's share of our domestic economy is driven by consumers and their consumption.

According to the survey's director, Joanne Hsu, the drop is; "Owing to a surge in concerns about high prices both for personal finances as well as buying conditions for major purchases."  One-third of respondents mentioned gas prices as the biggest cause for concern; and another one-third cited tariffs. 

Stock indexes held positive in the wake of this news; and the Bureau of Labor Statistics reported that job creation was stronger than expected in April with non farm payrolls rising by a modest 115,000 and unemployment holding steady at 4.3%.  A recession is presently a low-probability event.  Further evidence that things, economically-speaking, are generally OK.  

My sense is the weakness in the Michigan survey numbers reflect public opinion in light of soaring prices for gas and diesel at the start of the summer travel season.  Consequently, there is a political shadow over all of this.  People are pissed-off and tiring of the drama have contracted a case of Trump fatigue.  And I get it; we just purchased airline tickets for a family vacation and with the cost of jet fuel doubling it's not a cheap date.

My preference is for policy that improves your and my prosperity and general lot in life.  Along with making the world a safer place; so, where’re we at?

On one hand the stock market is on an absolute tear, with the NASDAQ up 5% last week and nearly 13% year-to-date.  The proximate causes include a shaky cease-fire with Iran, a 28% surge in S&P corporate profits for the first quarter and some consensus-beating economic reports, like Friday's payroll numbers. 

On the other hand, there is this. 

The Strait remains off-line, inflation is up, Iran holds all of its enriched uranium and President Trump's war has set in motion a cascade of destabilizing events that have all manner of consequences for global stability, security and the world economy.  

Meanwhile there is a billion dollar+ ballroom, a triumphal arch, a glowering visage of Trump on passports and national park passes and a no-bid, resort-blue paint job for the historic Washington Monument Reflecting Pool.  

It's a mixed message for sure.

Good grief.... 

American Culinary Dominance

As the resident food snob here at The Platz it is noteworthy that the price of Rao's pizza and pasta sauces have near doubled in the last year.  How do I know this?  I am the chief grocery shopper and resident Pantry Warrior in our household.  I am also a fan of imported Italian bottled sauces as a consequence of their quality ingredients (San Marzano tomatoes) and unlike American manufacturers their scorning of sugar and preservatives in their recipes.  

Some of the cost increase is a consequence of Donald Trump's taxes on imported goods and the rest is a consequence of inflationary pressure on raw materials, packaging, logistics and labor.  Some of it is what I attribute to the 'Snobbery Premium' or the cost of high demand for a quality reputation and the balance to the $2.7 billion acquisition of Sovos Brands by Campbell's.    

Which leads to this walk down memory lane.   

This image is a print advertisement from 1964-1965 for Chef Boy-Ar-Dee Spaghetti Sauces that were part of a mid-century marketing campaign that ran during the 1950s and 1960s.

Not surprising is the emphasis placed-upon the slow-simmered, hand-stirred, 'Old Italian Way' of authentic Italian sauces directly from Nonna's kitchen stove in Naples to your own kitchen from an American tin can.  Mind you, the theme is that this is a recurring 'secret' as no self-respecting American housewife would dare reveal the ease of which such gourmet results could be obtained simply by opening a can and rewarming the contents on a stove top and pouring it over boiled noodles.  Microwave technology improved-upon the concept by the 1980s.

Chef Boy-Ar-Dee was a real person - his name phonetically spelled so salesmen could pronounce it correctly - Ettore 'Hector' Boiardi (1897-1985) was a honest-to-goodness world-renowned chef. Born in Piacenza, Italy, he immigrated to the states at age 16 and was employed at the prestigious Plaza Hotel in New York City.

Striking out on his own he opened his own restaurant in Cleveland in 1924 - Il Giardino d'Italia.  His sauce was such a customer favorite that he bottled it in repurposed milk bottles for customers to take home. Due to high demand he and brothers Paul and Mario opened a small canning operation in 1928 producing a Ready-To-Heat Spaghetti Kit.  Included was a small can of grated Parmesan cheese making Boiardi the largest American importer of the product at the time.  By 1938 operations had outgrown the Cleveland facility and moved to Milton, Pennsylvania where it could grow its own tomatoes and mushrooms to keep up with national demand.   

In 1942 Chef Boiardi transformed his highly successful commercial pasta business located in Milton into a massive 24/7 operation supporting the war effort producing beef ravioli and other canned pastas for C rations.  At its peak the operation employed 5,000 workers producing roughly 250,000 cans of food per day.  This immigrant chef encouraged his employee with the patriotic slogan: Keep 'em flying! Keep 'em rolling! Keep 'em well-fed!  In 1946 the War Department awarded Hector Boiardi with the Gold Star Order of Excellence - one of the highest honors a civilian can receive from the military. 

Post-war Boiardi faced a dilemma: his factory was too large for civilian demand and he did not wish to lay-off the thousands he hired for the war effort.  He sold the company to American Home Brands in 1946 and remained the public face of his brand until his passing in 1985.  

Immigrant child laborer, chef, entrepreneur, patriot and promoter of affordable canned pasta and sauce.  This is the stuff that made America great!

How to Learn to Stop Worrying and Love the Bomb

A funny thing happened on the road to the White House.  The president who turned-up isn't the same guy as the candidate.

The US war against Iran is unpopular and becoming more unpopular as it continues; furthermore, the latest Economist/YouGov Poll also finds few Americans support deploying ground troops to the conflict.

Or do other Americans see it differently?

Brigadier General Jack D. Ripper - Dr. Strangelove

It depends-upon whom you ask.

Only 30% of Americans strongly or somewhat approve of President Trump's handling of the Iran war with 60% disapproving for a net approval of -30.

Almost all Democrats (88%) oppose the war while independents oppose it by a 3-to-1 ratio.  

But there is this: Collectively, most Republicans support the war (62%) yet there is a huge gap in support between MAGA Republicans and non-MAGA Republicans (70% support vs. 33%).  Inasmuch as there are more than twice as many MAGA supporters as non-MAGA supporters among the GOP, MAGA opinion is basically settled science.   

Furthermore, a recent CBS News poll found that 92% of MAGA Republicans expressed support for military action against Iran, compared with only 70% of non-MAGA Republicans.

Amongst my MAGA acquaintances, and mostly on account of my unwavering support for arming Ukrainians in defending their country from a Soviet invasion, I have been characterized as everything from an armchair general to a warmonger.  

Naturally, beginning three years ago and following Vladimir Putin's unprovoked assault on Ukraine these same individuals reminded me at most every opportunity that supporting Ukraine's defense was distinctly at odds with candidate Trump's America First platform.  I quote:  'No foreign entanglements', 'We haven't won anything since WWII', 'Donald Trump is the greatest patriot ever' and 'You like war too much'.    

Candidate Trump may have ridden to reelection with a pledge to avoid forever wars yet systematically blowing alleged drug-running vessels and crews out of the Gulf of Mexico, a birthday military parade, deploying the military on America's streets, Houthis in Yemen (Operation Rough Rider), 529 air strikes across the middle east, Africa and central Asia, aerial strikes against Iranian sites last summer including ISIS in Iraq, threats to take Greenland by force, masked and unidentified federal paramilitary forces killing three American citizens, a military toppling of Venezuela's government, seizure of Venezuelan oil at the point of a gun, threats against Cuba, the current Iran war and recent musings to ditch NATO suggest that America First pretty much means whatever President Trump says it is; on any given day.  My impression is it is exceedingly warlike.

I had always figured that MAGA supporters preferred candidate Trump's populist pitch while bemoaning old-school Reagan neocons and their propensity for an assertive foreign policy.  Deservedly or not it is a fact I have been derisively called a neocon; yet the polling seems to suggest that MAGA world agrees-with and, only a short fourteen months into a second term, seems to have developed a powerful thirst for Trumpian military adventurism - both domestically and abroad.  

Just as with the CBS poll, if you dig thru the data, MAGA world is overwhelmingly in favor of mounting a war with Iran; and, when specifically asked if the war counts as an America First policy, only a mere 9% of the president's loyalists say it does not.

The Ronald Reagan Presidential Foundation and Institute's 2025 National Defense Survey reveals that self-identified MAGA supporters were also the most supportive of all sorts of interventions in Taiwan with two-thirds supporting 'committing US forces in defense of Taiwan.'  That doesn't sound like isolationism does it?

Speaking for myself I happen to think that the Iranian Mullahs are a dangerous collection of twisted religious revanchists who would represent a threat to a peaceful world order if they had nukes and the capacity to deliver them.  I generally lose no sleep over dealing with bad actors by means of force.

Nevertheless, dealing with security threats deliberately and with forethought is not the same as impulsiveness.  And the world has no shortage of bad actors.  Most days I think the president has stepped in it this time and unleashed a cascade of destabilizing events that have dangerous consequences for global stability, security and the world's economy.  Let there be no misunderstanding, it is in my own self interest that things somehow work out for the best.  I'm also smart enough to know that five weeks into this the president's excursion is nowhere near a forever war.  Oh; and we don't have the highly-enriched stuff in our possession either.  Yet anyway.  There is that as a denouement.  

I have yet to hear what the exit strategy is.  You?

So for now I think we might be in for a stretch of rising energy costs, inflation and possibly some economic stagnation or contraction.  Only the passage of time will write the end to that chapter.

Meanwhile, there's a pile of the US population becoming grumpy over rising gasoline and diesel, increasing grocery prices due to supply chain disruptions and escalating transportation costs.  I'm beginning to believe that post-election MAGA world doesn't really care about that as much as they did a couple-three years ago.  Nobody's bitching about it at all on social media and not a single sole Trump supporter I speak with on a daily basis has yet to bring it up.  Loyalists are called that for a reason after-all.  Which is just fine; and it is perfectly OK to own what you have wrought.

It has occurred to me this might have something to do with ideological principles; dictated by whatever president Trump tells us to believe and the possibility that the beliefs of some reading this might be insincere.  Which is fine too; people are disingenuous all day long.  I understand that sometimes it is difficult to admit making a mistake.  I get it.  I make mistakes too.  Get over it.  Own it.

Or perhaps at its core the principle is to agree with the president in every respect; even if his actions contradict what he promised in order to get a voter's support.  No matter it damages their business and costs them the actual farm.  On that matter I can only speculate.

So, for any of my MAGA acquaintances reading this; if you want to call me an armchair general or a warmonger; have at it.  Throw neocon my direction for good measure.  I have a thick skin and since you're doing it from the warming glow of your device and not personally to my face I understand the context. Water off a duck's back.  Das macht nichts aus.  

Polling is science.  With growing awareness the rest of the world is learning that MAGA world likes war; and way the heck more than me.  Does MAGA like it too much?  That's hard to know as we're only fourteen months into President Trump's military adventurism.  I think we ain't seen nuthn' yet.  But I'm perfectly happy to be wrong.

I'm old enough to remember back to 1965 when a certain general famously pledged to eschew ground troops and use naval and air power to bomb the Vietnamese - Back into the stone age.  In his April 1st address to the nation it was fascinating to see and hear President Trump invoke the very same oath - verbatim.  Curious about from whom the president is taking his cues? 

A general splendidly associated with ruthless scorched-earth tactics against civilians.

Stay-tuned..... 

Fact or Fantasy?

As a major voice in the American Libertarian movement the Cato Institute focuses primarily on policy analyses and independent research of contemporary topics including subject matter related to foreign policy, regulations, taxes and libertarian-influenced public advocacy.  

 

Naturally, over the last decade most anyone I'm acquainted-with who previously self-identified as libertarian have, for the most part, gone full-on MAGA.  Any of the remaining few diehard libertarians have gone underground or silent. Either way you slice it none of them are engaged in any meaningful dialogue with me anymore.  Which is too bad.  Productive dialogue lost and in some instances friendships broken is a waste.  I'm not sure how to fix or repair that condition; or if it is even worth the effort.  Time will tell and apologies for the digression.  

 

The purpose of this post is to discuss a recently-published commentary from the Cato Institute titled:  Trump's $18 Trillion Fantasy.  This article also appeared in The Dispatch on February 19, 2026 immediately preceding the recent groundbreaking SCOTUS tariff ruling.  You'll find it linked more than once in the post and I encourage you to read it at your leisure.  What follows is a summary of Cato's critique of White House claims that tariff policies have secured more than $18 trillion of new investment in the United States. 

 

They've performed yeoman's work in producing this commentary and hopefully this summary will tweak your interest in rolling-up your sleeves and engaging in some cognitive dissonance.

 

The key criticism from Cato is that a purported $18 trillion in new investment into our economy claimed by the White House is unsubstantiated and doesn't hold-up under scrutiny.  Trump's hyperbole and puffery is famous; and Cato describes the figure alternately as fantasy or a hoax correctly pointing-out that the number is nearly as large as the entire GDP of China.  Lacking any published evidence from the departments of Commerce or Treasury, or the Federal Reserve the real number, whatever it may be, is naturally much, much smaller.

 

The White House lists 132 'deals' totaling approximately $9.6 trillion; the lion's share of that doesn't come close to meeting the definition of 'new investment'.  Significantly, this figure includes previously-announced or planned technology ventures, routine and on-going business expenditures, orders already in the pipeline and vague promises lacking any enforcement mechanism.  The later are basically a verbal IOU with a promise of 'we'll see'.  

 

Foreign 'deals' are even sketchier as most of the 'pledges' lack even the creditworthiness of a verbal IOU as they come from countries unable to afford them anyway; or the respective government lacks any authority to dictate private business investment.  Previous pledges to purchase military aircraft and equipment or those that come with an implied Trumpian threat of a 'protection racket' do not count.

 

In my own view much of this is political theater intended to pacify Trump's mercurial tendencies before the Supreme Court brought-down the hammer on inconsistent acts provoked by one sole personality. 

 

On tariffs alone, Trump's claim of a manufacturing boom doesn't jibe with the continued decline of direct investment in American manufacturing which, in reality, has been falling and is continuing to fall uninterrupted.  Sure, tariffs may induce some domestic investment through protectionism; nevertheless, this comes at the cost of higher prices for business and consumers.  The math doesn't work.

 

Cato's concludes that the $18 trillion figure is a politically-motivated exaggeration used to justify a flawed and inexplicably contorted obsession with a high tariff regime that is lacking any basis in recorded economic data or accounting.

 

But don't take my word for it.  Read the the commentary in its entirety and draw your own conclusions about how much of it is fact or fantasy.

 

We've been to this rodeo before. 

 

 

Fools and Lapdogs

The U.S. merchandise trade deficit hit a record $1.2 trillion last year, despite President Donald Trump’s promise to eliminate it by imposing the highest tariffs in eight decades on foreign-made products.

Thursday’s Commerce Department report represents the first full-year assessment of the president’s ambitious reordering of global trade. The persistence of the deficit in the face of steep new taxes on imports from China, the European Union and scores of other nations reflects the limits of Trump’s blunt policy tool.

As expected, the Supreme Court today nullified Donald Trump's signature economic policy this morning in a ruling that invalidated the president's arbitrary and capricious imposition of trillions of dollars of import taxes on our trading partners around the world.  

Naturally, the President's response was to be presidential and call the justices fools and lapdogs for ruling against him on tariffs.    

 

Back in August the president threatened the court stating that this ruling would: Literally destroy the United States of America. 

Well, it's happened and in the long term we're all likely to be better-off for the ruling.  Tariffs, on their own, are not likely to raise-up or destroy the country inasmuch as imported goods account for only about ten percent of our total economy.  Because we are largely a service economy tariffs don't have much direct impact on things like education and healthcare.  Manufacturing constitutes less than ten percent of the US economy.

Nevertheless, the imposition of import taxes at the sky-high levels the administration imposed are a tax on all consumers, business and manufacturers shrinking the country's Gross Domestic Product by an estimated .3 percent per year. If you put a number on that it amounts to roughly $90 billion a year in losses. That isn't insignificant but nowhere close enough to destroy America.  It just raises everyone's cost of living, jeopardizes farmers, ranchers, small business and contributes to inflation.

So where is this all going to lead us?  Too early to tell but I suppose there are companies for whom imports are a necessary part of doing business; and they're going to want a tax refund. 

Meanwhile, I guess none of us are getting the tariff dividend we were promised and the income tax isn't going to be replaced by tariff revenue.  Of course the DOGE dividend never showed-up in my checking account either.  

Money talks, baloney walks.....

Disinflation v. Deflation

Inasmuch as it is the start to a new year I figured this would be an opportune time to discuss something that has been on my mind and recently seems to be misunderstood by a significant number of lay individuals.

While the words in the title of this post may imply similarities they are differentiated by singularly unique identifiers and consequences.

Disinflation is a slowdown in the rate of price increases.  In the real world prices prices might be continuing to climb but they're rising at a slower pace.  Think: 18 months ago inflation was 6%; today it is 3%.  Causes of disinflation include central bank (Federal Reserve) policies that tighten credit by means of raising interest rates to cool consumer demand for goods and services.  If the policy is successful it results in slowing the growth of inflation by stabilizing growth in prices. 

Deflation is a decrease in the general price of goods and services (negative inflation) meaning prices are actually falling.  Think: 18 months ago the price of a gallon of unleaded regular was $3.15 a gallon; today it is $2.30 a gallon.  Causes of deflation can include oversupply or increased productivity as well as tightening of monetary policy leading to decreased demand.  Generally-speaking, deflation can be harmful as consumers naturally may delay purchases if their expectation is for lower prices in the future.  This can lead to a drop in demand, reduced business profitability, wage reductions and a deflationary spiral.

So, what does that have to do with the price of tea in China?  Not much.  It has more to do with perceptions and messaging. 

During his campaign, and since taking office a year ago, Donald Trump has made repeated promises to bring down the overall price level - a goal of price reductions.  He has made specific promises that the price of various and sundry goods: gasoline, groceries and utilities would decrease from their inflated, post-pandemic levels.  To be sure, the president has promised what would amount to deflation, or falling prices.  The ramifications of this is two-fold; consumer expectations and economic consequences.

Consumers would be better served by a steady dose of disinflation and slowing the growth of inflation.  The economy would be better served avoiding an across the board sustained decrease in prices; the unintended consequence of which might lead to a recession.

My sense is that consumers seem to have placed a higher value on prices actually coming down than they want inflation to slow and prices to stabilize.  In my view, they don't completely understand the consequences of these two choices; and if I had to hazard a guess it may be a result of the president's own rhetorical excess. 

Donald Trump has promised, Prices will come down.  You just watch;  They'll come down, and they'll come down fast, not only with insurance, with everything.   

He promised that: Starting on Day One, we will end inflation and make America affordable again, to bring down the prices of all goods.

Only last month the president suggested that inflation was essentially done but cautioned that he did not want actual deflation, saying this:  We don't want it to be deflation either.  You gotta be careful.  

In case your memory needs a refresh; the troubled period of time spanning The Great Recession gave us a taste of everything. 

Inflation-Disinflation-Deflation Illustrated - Data BLS

The bottom line is that since he took office Trump has begun to walk-back any number of his promises as a consequence of two incontrovertible truths.  First, price reductions are more easily said than done.  Second, broad price drops can expose the economy to self-inflicted and unintended consequences.  Moreover, with consumers smarting from rising pressures in the cost of living, Trump has begun to walk-back and delay implementation of many of his import taxes.

Where does this leave us?  Three things to watch.

The White House's unilateral use of executive authority to arbitrarily impose broad trade duties (tariffs) on imported goods has most certainly contributed to inflation.  Thus, prices for consumers and businesses have continued to increase while at the same time the rate of inflation has slowed.  Perhaps as early as Friday it is expected the Supreme Court will rule on this matter providing guidance to the administration and the rest of us going forward.

The US economy finished the year on a strong note - gross domestic product grew at a 4.3% annual rate, faster than the previous three months.  The president will try to laissez les bon temps rouler.  

I expect him to continue badgering the Fed to reduce interest rates and he'll be announcing a pick for a new Fed chair before too long.  At the same time, corporate tax cuts under the One Big Beautiful Bill will be kicking-in this year and could juice spending. Will this stimulus and tariffs goose inflation?  If so, how will the Fed respond?  

Since I lack the powers of clairvoyance my only prediction is that 2026 may shape-up to be an interesting year.  I'm sleeping very well lately; yet because we've all been to this rodeo before only time will tell.

Quote Of The Day

This relief will provide much-needed certainty to farmers as they get this year’s harvest to market and look ahead to next year’s crops.  We’re going to make them so strong it will indeed be a golden age for farmers.

-President Donald Trump 

 

*Speaking about the latest farm bailout resulting from White House tariff policy 

More Soviet-Style Economics

Beef prices are up 15 percent over the past year according to federal inflation data released Friday.  One contributing factor is low supply and high demand.  The herd has shrunk as a consequence of recent droughts and high feed costs.  The second contributor is trade taxes (tariffs) on imported beef.  The high cost of beef has been a primary contributor to a price increase for groceries of 3.1 percent this year.

 

In another unsurprising example of his on-again, off-again trade policies - president Trump threw American ranchers under the bus with the announcement that he was unilaterally quadrupling beef imports from Argentina - tariff-free.  And that domestic beef producers should lower their beef prices in response.

 

The Cattle Ranchers, who I love, don’t understand that the only reason they are doing so well, for the first time in decades, is because I put Tariffs on cattle coming into the United States, including a 50% Tariff on Brazil, Trump wrote on social media.

It would be nice if they would understand that, but they also have to get their prices down, because the consumer is a very big factor in my thinking, also!

Soybean farmers were among the first to find themselves in the crosshairs of Trump’s tit-for-tat tariffs with China. Since May, China has effectively boycotted American soybeans as a response.  And now it's the cattlemen.  This is absolutely exhausting.

The domestic agriculture sector is already struggling with the rising cost of fertilizer as a consequence of tariffs and labor shortages driven by the president's immigration agenda.  The Center for Strategic and International Studies (CSIS) suggested; The result is not merely a short-term disruption, it could signal a sweeping reconfiguration of global agricultural trade stretching from Latin America to Europe and Australia.  

I'm not a big fan of conspiracies although I'm not surprised if some ranchers believe this is driven by the president's desire to help out his buddy, Argentina President Javier Milei.

It likely is some of the foregoing along with an extra helping of old school centralized economic planning at the whim of one guy.  You know; Soviet-Style.

Pretty Good Chow If You Can Get it

On the heels of two evenings of venison wieners yesterday's dinner was a terrific change of pace.

Those of you who are NYT subscribers will recognize this as Ali Slagle’s Salmon Teriyaki recipe from last week.

When I was in Sturgeon Bay the other day I purchased a bag of North Atlantic wild caught salmon fillets. Five of them - just like the one in the photo - individually frozen and shrink wrapped.  Product of Norway.

They weren’t cheap, yet the stiff import tax (tariff) was less than anything from China or Vietnam. So, there is that and wild-caught vs. something farm-raised; quality matters for something.

Texas Basmati rice and salade César as sides. There’s enough of that sweet and salty salmon deliciousness leftover for a Sunday morning omelet too.

Pretty good chow if you can get it….