Here is what the venerable old sage C Thomas Printer wrote on Feb. 2, 2025 regarding the 25% tariffs on Canada and the impact to the auto industry. “Legacy automakers have had 25 years of factory production, free trade agreements, and in 25 days decades of capital planning go out the window. If you think global companies are going to invest capital with this chaotic Trump/Biden/Trump/potentially Biden again political philosophy, think again. Companies are looking at a much longer time frame than 1-2 years. Why 1-2 years because of this from Jacob Lorinc, David Welch, and Amy Stillman at Bloomberg, “Car components can make their way back and forth across US borders as many as eight times during production, heaping duties onto a sprawling industry that relies on materials from all three countries. At the consumer end of the supply chain, the average price of a new car may climb by about $3,000, Wolfe Research analysts have said, further straining affordability with prices already close to all-time highs… “We’re talking about thousands and thousands of jobs being lost,” said John D’Agnolo, the president of a local union representing workers at Ford Motor Co.’s engine plant in Windsor… “We’d truly be a ghost town, here in Windsor, if we lost this type of business.”
Ontario Premier Doug Ford has warned that more than 500,000 jobs may be lost just in Canada’s most populous province, many of them in the auto sector.” Trump instituted those tariffs yesterday and took them back off today. I’m quickly losing my patience with amateur hour at the head of our government. There are millions of workers that don’t know whether they will have jobs or not depending on which side of the bed Donny boy wakes up on. Oh, the automakers called him yesterday and told him we are probably going to lay off a couple million people if this lasts a week, and Donny boy backpedals like Deion Sanders covering Randy Moss.
I get it, tariffs are Donny’s thing. He wants to make America great again, but one sure way to not make it great again is what he is doing. By that, I mean specifically two major things. First, he isn’t doing what he says. That only makes him look weak. Nobody on Wall Street believed these tariffs would be kept on and they were made to look smart, and Trump was made to look like a fool, again. This is becoming a pattern. Second, Trump wants to attract capital into the United States for long term investment. No company is going to want to invest long term without knowing what the business environment is going to be. We made that point with our Argentina series a couple years ago. If you can’t trust the government then capital will go somewhere else. So, a business that is doing well under Trump swings massively the other way if the Democrats repeal much of what he has done? That is what Trump has done to Biden, why would we expect any different under the alternative party? Companies are going to say, naah. We will pass on the US, they are just too unstable. Remember, that Trump is ripping up the trade agreement that he agreed to with Canada and Mexico during his first term. We aren’t backing Ukraine anymore which is breaking our word that we gave Ukraine when they gave up their nukes in 1991. Words and agreements are supposed to matter.
As the tariff wars escalate in Canada and the chance of getting affordable guacamole moves further and further out of sight, the real issue is starting to develop with China. Forget Ukraine, forget the Panama Canal, focus on China. Donny doubled the tariff on China to 20% and China has responded. This from Elisabeth Buchwald at CNN Business, “President Donald Trump’s blanket 25% tariffs on Mexico and Canada took effect on Tuesday, an extraordinary action aimed at bringing America’s top trading partners to heel. But it threatens to weaken the North American economy, including that of the United States, at a time of significant stress for inflation-weary consumers.
Trump also doubled the tariff on all Chinese imports to 20% from 10%. Those duties sit atop existing tariffs on hundreds of billions in Chinese goods… Beijing retaliated on Tuesday by announcing 15% tariffs on chicken, wheat, corn, and cotton imports from the US, according to a statement from the State Council Tariff Commission. Additionally, a 10% tariff on “sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables, and dairy products,” was also imposed, it said.”
So a large part of America is farms and much of Trump’s base is the heartland. If the heartland loses its largest buyer of their products what will happen to their loyalty to the real estate developer from Queens? Let’s look at some futures prices of commodities. Soybeans are down 20% since last June and down 40% since 2022. Do you think the farmer’s grocery bill, car insurance, rent or mortgage payment, and price of a new vehicle has went up or down since then? The price of corn is down 10% in the last 30 days. The price is down 80% since June 2022. When are the tractors going to drive into Washington to demand the tariffs to stop? Mark this date, because they will.
In Amity Shlaes book chronicling the Great Depression she writes about how FDR and his team of advisers including Harry Morgenthau experimented with the economy, “One morning, FDR, told his group he was thinking of raising the gold price by twenty-one cents. Why that figure? His entourage asked. “It’s a lucky number,” Roosevelt said. “ because it’s three times seven.” As Morgenthau later wrote, “If anybody knew how we really set the gold price through a combination of lucky numbers, etc. I think they would be frightened.” By the time of his inauguration back on March 4, everyone knew that Roosevelt would experiment with the economy. But no one knew to what extent. Now in his first year in office, Roosevelt was showing them. He would present it all in what came to be known as the hundred Day, that first frenzied period of legislative activity. Some of the projects were mere extensions of Hoover’s efforts, no matter what Hoover said. Roosevelt asked for war powers to handle the emergency, just as Hoover had suggested during the interregnum.”
Morgenthau was Roosevelt’s adviser and he played a fellow experimenter like Elon is today. The war powers emergency power grab that Hoover suggested to Roosevelt is what Trump is hiding behind with the fentanyl issue. The president has to invent an issue to get these emergency war powers and Trump is simply playing the same game that this country did almost 100 years ago. 21 cents and 25 % tariffs in 30 days… Potato Potatto.
The government meddling took what would have been a recession and extended into the Great Depression. The government of Roosevelt picked winning industries and losers, and Trump is doing the same with his asinine quote about picking certain cryptos for the crypto reserve. Central planning doesn’t work, it is called fascism and usually orchestrated by people with very big egos. I’m not being hyperbolic here.
It’s time for the word of the week, it’s been awhile.
Fascism- A system of government marked by centralization of authority under a dictator, a capitalist economy subject to stringent government controls, violent suppression of the opposition, and typically a policy of belligerent nationalism and racism.
Let’s try to be fair to Don here, is he a dictator, nope he was elected, but he seized war powers through a ruse like fentanyl. Let’s say a 3 on a 1-10 scale. A capitalist economy, check in theory, subject to stringent government controls, well changing the prices by 25% at a whim with threats of more, try building anything on your own land without a permit etc, I’d rate this a 7. Violent suppression of the opposition, considering we have the world’s biggest armed force, I think pulling military funding from Ukraine on a moment’s notice or threatening to take Greenland or the Panama Canal put this on the spectrum, let’s say a 6. Lastly, a policy of belligerent nationalism and racism, let’s skip the racism part but belligerent nationalism I’d say the renaming of the Gulf of America qualifies, and that gets us to an 8. So we are on the spectrum of fascism even if we can all disagree exactly where. This is important to note as this is the economy we must observe and act in. Where exactly we are is less important than the fact that we are. Biden was also acting the same way only with different goals like DEI, ESG, and supporting the war in Ukraine. America is on the fascist spectrum, long gone are the days of small government that existed when tariffs actually funded the American economy. This is very instructive to recognize.
Now lost in tariff talk and the price of imported oil from Canada and fruit from Mexico is a much more disturbing quote from Buchwald’s article, “Separately, China’s Ministry of Commerce said it added 15 American companies, including drone maker Skydio, to its export control list, which would bar Chinese companies from exporting dual-use equipment to them. Speaking at a regular briefing on Tuesday, Lin Jian, a spokesperson for China’s Foreign Ministry, said: “China will fight till the end” if the US “insists on waging a tariff war, trade war or any other kind of war.”
“I want to reiterate that the Chinese people have never feared evil or ghosts, nor have we ever bowed to hegemony or bullying. Pressure, coercion and threats are not the right ways to engage with China. Trying to exert maximum pressure on China is a miscalculation and a mistake,” he added.”
China is ready to fight a war all the way against America. That is explicit. The US Sun and Annabel Bate has America’s response the next day, “US DEFENCE Secretary Pete Hegseth declared that the US is “prepared” for war with China in response Beijing’s chilling World War Three threat… Hegseth slammed Beijing’s threat, warning “we’re prepared” and stressing the importance for the US to “be strong” as the tariff scrap continues to dramatically escalate.
The Defense Sec said on Fox News: “Those who long for peace must prepare for war.”
Well, I am glad the recent weekend Fox News host is ready to go to war with the world’s largest manufacturer of things. I seem to remember that didn’t work out for the whole world when it was last tried in the 1940’s. Let’s see what others think today. This from Dario Leone writing for the Aviation Geek Club asking the very same question, “Every simulation that has been conducted looking at the threat from China by 2030, and there have been various ones carried out, for example in the event of China invading Taiwan, have all ended up with the defeat of the US,” said Bonnie Glaser, director of the China power project at the Centre for Strategic and International Studies in Washington and a consultant for the US government on East Asia. “Taiwan is the most volatile issue because that could escalate to a war with the US, even to a nuclear war.
“In the Pentagon and state department and the White House, China is now seen without doubt as the biggest threat. We have been too passive in the past … Guam is now in range of their ballistic missiles, so the US would take a beating if there was a conflict… As already reported, Rear Admiral Lou Yuan, deputy head of the Chinese Academy of Military Sciences, told during the Military Industry List summit in Shenzhen on Dec. 20, 2018 that the ongoing disputes over the ownership of the East and South China Seas could be resolved by sinking two US Navy aircraft carriers. He declared in fact that China’s highly capable anti-ship ballistic and cruise missiles are more than capable of hitting U.S. Navy carriers, despite them being at the centre of a ‘bubble’ of defensive escorts.” So when I mentioned the hypothetical of Putin leaning in and telling Donny that he could sink all of his aircraft carriers in 15 min, I wasn’t exactly being glib.
This is from American Military News and Ryan Morgan, “American military strategists are actively gaming U.S. military response scenarios to a potential Chinese invasion of Taiwan by 2026. The wargames have already found that the U.S. would have to lose more than 900 fighter jets — up to half of its fighter jet fleet — and a large number of U.S. warships to turn back China… The unofficial simulations are being held by the Center for Strategic and International Studies (CSIS), a Washington D.C.-based security and foreign policy think tank. The war games are ongoing and will run through September, with retired U.S. generals, admirals and former Pentagon officials gaming out the still-hypothetical fight with China over Taiwan… As of Monday, the war gamers had studied the scenario 22 different times. In 18 of the 22 cases, Chinese missiles destroyed “a large part of” the U.S. and Japanese naval fleets and “hundreds of aircraft on the ground,” Mark Cancian, a senior adviser at CSIS, told Bloomberg News. He did not specify how many U.S. warships were lost in the cases.
“To get a sense of the scale of the losses, in our last game iteration, the United States lost over 900 fighter/attack aircraft in a four-week conflict,” he told Bloomberg News. “That’s about half the Navy and Air Force inventory.”
Half of our planes were gone in 4 weeks. The reason this knowledge is important for financial decisions making is because as Brent Johnson from Santiago Capital always says, the US dollar is ultimately backed by every warship on the high seas protecting free trade and the reserve currency of the US. The dollar has dropped 5% in two months. Long-term interest rates at the 10 year US Treasury bond have dropped 70 basis points in the same time. The markets are telling us that the recession is escalating. That is what I have been harping on for almost a year now.
Since America hasn’t won a war since 1945, it makes sense that we would lose a war to China. If it wasn’t for the Soviets in the east, we might not have won World War II, but we certainly act like we are stronger than we are. That is what bullies always think right before they get whipped. So when I see Trump back down on his tariff threat in less than 24 hours I know that he isn’t operating from a position of strength, but one of a bully pulpit. He had better not bite off more than he can chew. We aren’t 1945 America, and he isn’t FDR.
The former is a shame, but the latter is a good thing. If Trump wants to experiment our way out of this $37 trillion dilemma, he needs his word to mean something so he should stop giving it away so freely. His global credibility is a borderline joke right now. He better get it back quickly. Meanwhile all this hullabaloo is attempting to hide the fact that America is going into a recession at high speed. Act accordingly.
Sincerely Yours,
C Thomas Printer
Also born on this date… . Nobel prize winner and one of the fathers of behavioral economics Daniel Kahneman.
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.
The Forgotten Man by Amity Shlaes