The column is a brilliant exposition of the nuances involved in what COULD be a profoundly interesting strategy for reordering geopolitical interests. Marshall Auerbach adds a well articulated extension here in the comments. But as Cass and Auerbach both indicate, sotto voce if you will, is that turning over the chessboard and scattering the pieces seems to be, as it often has been in the past with Trump, the only thing in view. Neither the president nor his minions are conveying any of these nuances to the American public, nor do I think any of these nuances are inhabiting Trump's "mind". The "deal" on offer to Mexico is "I win, you lose", where winning works out to dominating the news cycle, cowing weaker countries and collecting scalps. Could I be wrong? Sure. But I think I've got 12 years of track record going for me here, along with the wrecking ball being swung in several other directions with maximum speed and force. Good luck rationalizing the chaos we're entering.
Best analysis yet of the situation and also the real underlying agenda of the president. But while the end is good, the means are problematic. In a multipolar world beset by Cold War, there cannot be a global economy. Instead, the economy will be divided into largely self-sufficient—dare I say autarkic?—-economic blocs, each based on one or more great powers, since national security trumps (pun intended) consumer interests. Inter-bloc trade and investment will be managed, not free.
Each great power should, therefore, seek to augment its own home market, immense as it may be in the case of the U.S. and China, with a larger bloc “home market” to take advantage of economies of scale for manufacturing and network effects in infrastructure and services.
For this to work, however, the bloc must be cohesive, and its members must be reliable. If the bloc is too big and too loose, some members will be tempted to free-ride or betray it to the rival superpower. So the goal is the maximum cohesive and geopolitically united bloc, not the biggest trade bloc on paper.
A US-NAFTA-Anglosphere-EU bloc would be the first choice if it could be cohesive.
The second choice would be US-NAFTA-Anglosphere bloc.
The third choice is a U.S.-NAFTA bloc.
An autarkic US national economy is the last resort when all else fails; too small.
In Trump’s defence, the U.S. as the hegemon, no longer of a world economy, but of a smaller U.S. bloc may have to use crude pressure to discipline its bloc members. We are talking about power politics, after all.
As for Canada and Mexico, he seems to be weaponizing tariffs for non-economic purposes—pressuring them to cut off drugs and illegal immigrants by taking action on their side of the border. This is blunt force, and if I were president, I would do this in a more cooperative and behind the scenes manner. And it applies a lot more to Mexico than Canada.
And if I were president, I would offer a common external tariff for the Anglosphere. Personally, i think the continental Europeans are and will be too anti-American and jealous of their sovereignty to be reliable U.S. trading partners and military allies.
At least for Trump, there is a 5th tariff purpose: appearance of winning. Take the Mexican tariffs. Does Trump really care if Mexico sends 10,000 troops to the border or is the point that it appears he made them do (say) it? Will the administration even really follow up to make sure the troops arrive and stay there? Trump is about appearances and performance. He may view this as negotiating but it’s really about the up front sizzle and not so much about the actual results.
I agree. He will claim success for decline in Fentanyl deaths when they have already been declining for two years because of his initiative to have Mexican troops to the border. I really don’t get the Canada Fentanyl angle - it is generally agreed that about 1% of drugs and illegals cross at the Canadian border. I actually think most of the drugs go the other way from the East Coast through New Haven and Springfield up into Canada.
Canadian here. This is a brave attempt to sanewash what just happened (and will likely continue to happen). Does it not seem odd to you that you have seemingly put more thought into this than the current administration?
I cannot emphasize enough how ticked off Canadians are right now. In the service of getting something that we already offered to you last month, you have insulted and permanently alienated us. We will not forget this.
"The vision that we should be pursuing is one in which the United States anchors a free-trade bloc centered in our own hemisphere and including allies around the world similarly committed to the principles and legal framework of democratic capitalism."
Shouldn't the United States commit to such a framework first?
Yes Oren, tariffs can do all the things you mentioned. In the manner Trump is using them, they create instability in the economic sphere; not good for business, internationally or domestically. And a questionable strategy for pursuing our national security. It doesn't say much for your negotiating skills, nor your skills in leadership; after all we are perceived as the leader in international relations. A skill we seemed to have forgotten.
If you think Trump is a business mogul, like the make believe act on ‘The Apprentice’, I will remind you that he had six business bankruptcies, and that was his main business – construction and casino/hotel operations – not including side ventures like Trump Champaigne, Trump Steaks, Trump Airline, and Trump University. His last business bankruptcy was in 2009, when he refused to make a $50 million loan payment and wanted it renegotiated, which the lender refused. His board of directors held a meeting in which Trump, as the CEO, argued with them. They demoted him and reduced his share in the company; firing him as the CEO – and you can look that up. That is quite an irony because in 2009 he was still doing ‘The Apprentice’ show where he was showing his make believe business acumen and firing people.
Not an expert on this. But it's not Trump's personal idea only, you check it out "A User's Guide to Restructuring the Global Trading System" published on Nov 16, 2024 by Stephen Miran, the nominee to the Chairman of Presidential Economic Advisors.
I think your article is excellent. It is very logical and is indeed full of common sense. I have only days ago signed on to your newsletter. Also, I listened to the CBC interview you recently did with our national broadcaster. I was so impressed by your insights and presentation that I immediately looked you up and subscribed to Understanding America. I am very pleased. I am not a professional analyst, but I am a deeply committed conservative, and because of that I believe I understand what President Trump has in mind and it is correct. Your article today helps immensely.
While this article might have explained a coherent theory, the reality in what is being proposed doesn't line up. Even if key US cabinet members have this type of strategy in mind, they're filtered through presidential postings on social media that seek annexation.
Fantastic article. I really enjoyed in your recent debate "What Will Trumps New Economic Policy Look Like" your ideation of a new TPP style deal. Critical to this is of course the Mexicans and Canadians agreeing to cede much of their trade sovereignty to Washington.
I think a really good historical model for how to think about this would be Fredrich Lists Zollverein. While we don't have to have Mexico join the United States, it is a really intelligent idea to tariff them into submission to join a Pan-American Custom Union based on a modern model of the Zollverein. This would make the United States and this new trading bloc an absolute powerhouse, and greatly mitigate the risks that are ever growing in Asia.
Which allies are those that are committed to democratic capitalism. Our so called allies are all socialist and increasingly undemocratic. Perhaps Japan. All agreements should be bilateral only and serve American interests. I assume that the other parties will want to serve their interests and that's fine.
Why is it important that each country inside of the same bloc balances trade? Why is it not enough that the bloc as a whole is balanced?
After all, we do not seem to worry too much about trade imbalances between the states of the US.
Why do people think that exporting more to the US than importing from the US is taking advantage of the US? Why not say that the US takes advantage by consuming what other nations produce?
If say, Germany, exports goods for Americans to consume and the US provides security for Germany, why is that not a fair deal?
Not an expert on this. But it's the Twin Deficits Hypothesis. The U.S. trade deficit reduces U.S. GDP by sending dollars spent by American consumers and businesses to foreign producers, stimulating foreign economies rather than our own. To make up for this loss in potential GDP, the federal government chooses to run a budget deficit as a growth stimulus.
Excellent analysis. The best place to start, however, is the original executive order. While Trump throws around shiny objects, it ultimately is about controlling illicit drug flows and illegal immigration, both of which have soared in Canada and Mexico over the past several years. That's why I think Trump uses #4, which is consistent with his first term and well laid out in his 2009 "Art of the Deal." It's a negotiation, not a war.
Trump ranks as the least successful negotiator in the history of American business. The list of his failed business ventures is lengthy. These include the USFL New Jersey Generals, Trump Hotel (Chicago), West Side railroad yard option, the Plaza Hotel, his Atlantic City casino and hotel properties, and the DC Old Post Office.
In 1986, Trump‘s tax returns recorded income from his core businesses as a negative $68.7M, and he carried over another loss of $42.4M in losses from prior years. In 1987, his core businesses reported negative income of $45.4M. In 1989, his tax records reported losses of $185M from his core businesses. In 1990, tax documents reported $263.7M in losses for his core businesses. He carried over $154M in losses from prior years. His overall reported total adjusted income was a negative $400.3M.
Trump’s 2008 tax return declared his Chicago Trump Tower venture to be worthless, and his total losses from businesses he ran to be $678,005,977. His Atlantic City casinos went into bankruptcy in 2009. For tax years 2008 and 2009, Trump declared losses totaling more than $1.5B.
In June 1990, Trump owed $3.4B, nearly all in high interest debt. In about a year, he had taken on almost $1.7 B in new debt for the Taj Mahal, Plaza Hotel, Trump Shuttle, and Trump Palace. None were producing enough profit to cover his interest payments. He went into bankruptcy for the fourth time in late 1992 because he was unable to make payments on the Plaza Hotel debt. He sold the Plaza Hotel for 100,000,000 less than he borrowed to buy it, losing a $20M investment and millions more on renovation and planning. In 2016, Deutsche Bank’s annual review said that Trump “had reported negative cash flow for four of the last five years.”
The deals and numbers set out above are from Russ Buettner & Susanne Craig, Lucky Loser (2024).
Trump’s business success was that his losses were far less than those of the banks and junk bond purchasers who funded his folly. Now he is playing with our money.
If “flipping the board” is a good idea, then why not a full on embargo? Businesses, and not just the highest donating few, should ALL pitch in and feel the pain, not just the US middle and lower income classes who primarily bear the brunt of rising costs. And tariffs should not be looked on as just a synonym for embargo.
Are you going to comment on Scott Bessent's giving the keys to the Treasury to Elon Musk? He's unelected, unconfirmed, head of a non-existent government department. What right does a private citizen have to have access to the Treasury data and expenditures. And -- as for shutting down USAID -- his moves are beyond anything we ever expected or can believe. I would love to hear your thoughts on this.
Hmm, pardons for coup plotting felons came on the first day, tariffs did not. But yes, not nearly as thoughtful as a president publicly bragging about “acing” a dementia test:). Or fingering his sexual assault accuser as his wife during a deposition, shortly after announcing to us that he couldn’t have assaulted her because she “wasn’t his type”. Person, woman, man, camera, tv…. Y’all keep on believing in the addled, aging Don. Good luck America.
I’m sure the self proclaimed “very stable genius” has something clever in mind that puts the national interest over his personal interest:). That is, if history doesn’t repeat itself…We all know the truth, these are shakedown tools, hence the parade of tech bros. Who could possibly believe he has a strategy?
The column is a brilliant exposition of the nuances involved in what COULD be a profoundly interesting strategy for reordering geopolitical interests. Marshall Auerbach adds a well articulated extension here in the comments. But as Cass and Auerbach both indicate, sotto voce if you will, is that turning over the chessboard and scattering the pieces seems to be, as it often has been in the past with Trump, the only thing in view. Neither the president nor his minions are conveying any of these nuances to the American public, nor do I think any of these nuances are inhabiting Trump's "mind". The "deal" on offer to Mexico is "I win, you lose", where winning works out to dominating the news cycle, cowing weaker countries and collecting scalps. Could I be wrong? Sure. But I think I've got 12 years of track record going for me here, along with the wrecking ball being swung in several other directions with maximum speed and force. Good luck rationalizing the chaos we're entering.
Best analysis yet of the situation and also the real underlying agenda of the president. But while the end is good, the means are problematic. In a multipolar world beset by Cold War, there cannot be a global economy. Instead, the economy will be divided into largely self-sufficient—dare I say autarkic?—-economic blocs, each based on one or more great powers, since national security trumps (pun intended) consumer interests. Inter-bloc trade and investment will be managed, not free.
Each great power should, therefore, seek to augment its own home market, immense as it may be in the case of the U.S. and China, with a larger bloc “home market” to take advantage of economies of scale for manufacturing and network effects in infrastructure and services.
For this to work, however, the bloc must be cohesive, and its members must be reliable. If the bloc is too big and too loose, some members will be tempted to free-ride or betray it to the rival superpower. So the goal is the maximum cohesive and geopolitically united bloc, not the biggest trade bloc on paper.
A US-NAFTA-Anglosphere-EU bloc would be the first choice if it could be cohesive.
The second choice would be US-NAFTA-Anglosphere bloc.
The third choice is a U.S.-NAFTA bloc.
An autarkic US national economy is the last resort when all else fails; too small.
In Trump’s defence, the U.S. as the hegemon, no longer of a world economy, but of a smaller U.S. bloc may have to use crude pressure to discipline its bloc members. We are talking about power politics, after all.
As for Canada and Mexico, he seems to be weaponizing tariffs for non-economic purposes—pressuring them to cut off drugs and illegal immigrants by taking action on their side of the border. This is blunt force, and if I were president, I would do this in a more cooperative and behind the scenes manner. And it applies a lot more to Mexico than Canada.
And if I were president, I would offer a common external tariff for the Anglosphere. Personally, i think the continental Europeans are and will be too anti-American and jealous of their sovereignty to be reliable U.S. trading partners and military allies.
But I am not president, alas.
6:51 AM
·
I like the idea of focusing on creating a “fortress America” and then approaching South America with our own parallel Belt and Road style initiative.
At least for Trump, there is a 5th tariff purpose: appearance of winning. Take the Mexican tariffs. Does Trump really care if Mexico sends 10,000 troops to the border or is the point that it appears he made them do (say) it? Will the administration even really follow up to make sure the troops arrive and stay there? Trump is about appearances and performance. He may view this as negotiating but it’s really about the up front sizzle and not so much about the actual results.
I agree. He will claim success for decline in Fentanyl deaths when they have already been declining for two years because of his initiative to have Mexican troops to the border. I really don’t get the Canada Fentanyl angle - it is generally agreed that about 1% of drugs and illegals cross at the Canadian border. I actually think most of the drugs go the other way from the East Coast through New Haven and Springfield up into Canada.
Canadian here. This is a brave attempt to sanewash what just happened (and will likely continue to happen). Does it not seem odd to you that you have seemingly put more thought into this than the current administration?
I cannot emphasize enough how ticked off Canadians are right now. In the service of getting something that we already offered to you last month, you have insulted and permanently alienated us. We will not forget this.
"The vision that we should be pursuing is one in which the United States anchors a free-trade bloc centered in our own hemisphere and including allies around the world similarly committed to the principles and legal framework of democratic capitalism."
Shouldn't the United States commit to such a framework first?
Yes Oren, tariffs can do all the things you mentioned. In the manner Trump is using them, they create instability in the economic sphere; not good for business, internationally or domestically. And a questionable strategy for pursuing our national security. It doesn't say much for your negotiating skills, nor your skills in leadership; after all we are perceived as the leader in international relations. A skill we seemed to have forgotten.
If you think Trump is a business mogul, like the make believe act on ‘The Apprentice’, I will remind you that he had six business bankruptcies, and that was his main business – construction and casino/hotel operations – not including side ventures like Trump Champaigne, Trump Steaks, Trump Airline, and Trump University. His last business bankruptcy was in 2009, when he refused to make a $50 million loan payment and wanted it renegotiated, which the lender refused. His board of directors held a meeting in which Trump, as the CEO, argued with them. They demoted him and reduced his share in the company; firing him as the CEO – and you can look that up. That is quite an irony because in 2009 he was still doing ‘The Apprentice’ show where he was showing his make believe business acumen and firing people.
Not an expert on this. But it's not Trump's personal idea only, you check it out "A User's Guide to Restructuring the Global Trading System" published on Nov 16, 2024 by Stephen Miran, the nominee to the Chairman of Presidential Economic Advisors.
I think your article is excellent. It is very logical and is indeed full of common sense. I have only days ago signed on to your newsletter. Also, I listened to the CBC interview you recently did with our national broadcaster. I was so impressed by your insights and presentation that I immediately looked you up and subscribed to Understanding America. I am very pleased. I am not a professional analyst, but I am a deeply committed conservative, and because of that I believe I understand what President Trump has in mind and it is correct. Your article today helps immensely.
Thank you.
Marc Barbeau
Edmonton, Alberta.
Canada
Confidential, thank you.
While this article might have explained a coherent theory, the reality in what is being proposed doesn't line up. Even if key US cabinet members have this type of strategy in mind, they're filtered through presidential postings on social media that seek annexation.
Fantastic article. I really enjoyed in your recent debate "What Will Trumps New Economic Policy Look Like" your ideation of a new TPP style deal. Critical to this is of course the Mexicans and Canadians agreeing to cede much of their trade sovereignty to Washington.
I think a really good historical model for how to think about this would be Fredrich Lists Zollverein. While we don't have to have Mexico join the United States, it is a really intelligent idea to tariff them into submission to join a Pan-American Custom Union based on a modern model of the Zollverein. This would make the United States and this new trading bloc an absolute powerhouse, and greatly mitigate the risks that are ever growing in Asia.
Which allies are those that are committed to democratic capitalism. Our so called allies are all socialist and increasingly undemocratic. Perhaps Japan. All agreements should be bilateral only and serve American interests. I assume that the other parties will want to serve their interests and that's fine.
Why is it important that each country inside of the same bloc balances trade? Why is it not enough that the bloc as a whole is balanced?
After all, we do not seem to worry too much about trade imbalances between the states of the US.
Why do people think that exporting more to the US than importing from the US is taking advantage of the US? Why not say that the US takes advantage by consuming what other nations produce?
If say, Germany, exports goods for Americans to consume and the US provides security for Germany, why is that not a fair deal?
Not an expert on this. But it's the Twin Deficits Hypothesis. The U.S. trade deficit reduces U.S. GDP by sending dollars spent by American consumers and businesses to foreign producers, stimulating foreign economies rather than our own. To make up for this loss in potential GDP, the federal government chooses to run a budget deficit as a growth stimulus.
I agree. But I am wondering why this is framed as bad. After all, consuming without producing is good for consumers, isnt it?
Excellent analysis. The best place to start, however, is the original executive order. While Trump throws around shiny objects, it ultimately is about controlling illicit drug flows and illegal immigration, both of which have soared in Canada and Mexico over the past several years. That's why I think Trump uses #4, which is consistent with his first term and well laid out in his 2009 "Art of the Deal." It's a negotiation, not a war.
Trump ranks as the least successful negotiator in the history of American business. The list of his failed business ventures is lengthy. These include the USFL New Jersey Generals, Trump Hotel (Chicago), West Side railroad yard option, the Plaza Hotel, his Atlantic City casino and hotel properties, and the DC Old Post Office.
In 1986, Trump‘s tax returns recorded income from his core businesses as a negative $68.7M, and he carried over another loss of $42.4M in losses from prior years. In 1987, his core businesses reported negative income of $45.4M. In 1989, his tax records reported losses of $185M from his core businesses. In 1990, tax documents reported $263.7M in losses for his core businesses. He carried over $154M in losses from prior years. His overall reported total adjusted income was a negative $400.3M.
Trump’s 2008 tax return declared his Chicago Trump Tower venture to be worthless, and his total losses from businesses he ran to be $678,005,977. His Atlantic City casinos went into bankruptcy in 2009. For tax years 2008 and 2009, Trump declared losses totaling more than $1.5B.
In June 1990, Trump owed $3.4B, nearly all in high interest debt. In about a year, he had taken on almost $1.7 B in new debt for the Taj Mahal, Plaza Hotel, Trump Shuttle, and Trump Palace. None were producing enough profit to cover his interest payments. He went into bankruptcy for the fourth time in late 1992 because he was unable to make payments on the Plaza Hotel debt. He sold the Plaza Hotel for 100,000,000 less than he borrowed to buy it, losing a $20M investment and millions more on renovation and planning. In 2016, Deutsche Bank’s annual review said that Trump “had reported negative cash flow for four of the last five years.”
The deals and numbers set out above are from Russ Buettner & Susanne Craig, Lucky Loser (2024).
Trump’s business success was that his losses were far less than those of the banks and junk bond purchasers who funded his folly. Now he is playing with our money.
For those who commented on how much thought the author has put in, his organization signed the commitment to Project 2025.
If “flipping the board” is a good idea, then why not a full on embargo? Businesses, and not just the highest donating few, should ALL pitch in and feel the pain, not just the US middle and lower income classes who primarily bear the brunt of rising costs. And tariffs should not be looked on as just a synonym for embargo.
Are you going to comment on Scott Bessent's giving the keys to the Treasury to Elon Musk? He's unelected, unconfirmed, head of a non-existent government department. What right does a private citizen have to have access to the Treasury data and expenditures. And -- as for shutting down USAID -- his moves are beyond anything we ever expected or can believe. I would love to hear your thoughts on this.
I believe that's the (checks notes)... "commitment to the principles and legal framework of democratic capitalism" piece that Mr. Cass wrote about.
This is disturbing
Veryy thoughtful!
Hmm, pardons for coup plotting felons came on the first day, tariffs did not. But yes, not nearly as thoughtful as a president publicly bragging about “acing” a dementia test:). Or fingering his sexual assault accuser as his wife during a deposition, shortly after announcing to us that he couldn’t have assaulted her because she “wasn’t his type”. Person, woman, man, camera, tv…. Y’all keep on believing in the addled, aging Don. Good luck America.
I’m sure the self proclaimed “very stable genius” has something clever in mind that puts the national interest over his personal interest:). That is, if history doesn’t repeat itself…We all know the truth, these are shakedown tools, hence the parade of tech bros. Who could possibly believe he has a strategy?
"THIS WILL BE THE GOLDEN AGE" Apart from Ceaușescu and Trump are there other leaders who promoted their own age as golden?
+1 for not using WWII references.