Okay fine. I will do a super short blog because I am waiting on an email and I have some time to kill. This one is going to set a record for brevity. I promise less than 800 words.
I know I said I would give everyone a week off and I really meant to, but with all the late breaking news this week, I thought it might be worth just revisiting some of the most relevant developments, especially since I know we are all waiting with bated breath for yet another showe to drop.
First off, let me say that the last day has been really bad for people with epic moustaches as John Bolton, the former Ambassador to the UN, mega-Republican, Iran War-hawk and Trump opposer and opposition profiteer saw his residence raided by the FBI in what appears to be part fishing expedition, part retribution, part hubristic come-uppance and part eating your own. Look, John Bolton is an opportunist and certainly doesn’t share my politics, especially as it relates to certain foreign entanglements so if there is anything legit, he deserves to reap what he sowed. But, politically motivated law enforcement actions are bad, no matter which “side” executes them. One leads to another and the end is bad. It remains to be seen what comes out of this but it feels a lot like a conveniently timed distraction.
Speaking of distractions, remember last week when we had the “peace in our time” confab between Messrs Trump and Putin in Alaska? Followed by the European leader love-in at the White House with Messrs Trump and Zelensky (sans Canada) on Monday to circle the wagons and show solidarity? Yeah well the cold shower didn’t take long to happen as the Russians indicated very clearly that there is to be no peace unless they get to exclusively set the terms both geographically and strategically. Security guarantees for Ukraine required a Russian veto and China was floated as an “honest broker” to make sure everything happens appropriately. Russia has proposed a land swap whereby they get the parts Ukraine they occupy and some strategic parts they don’t, a piece of Greenland, squatters rights to the Lincoln bedroom and early morning after workout access to Zelensky’s hottub. Ukraine gets nothing in exchange except a countdown clock to the next invasion. With enemies like these who needs friends.
Finally we got some movement on the tariff front. The infamous Europe/USA trade agreement appears to be taking shape and the shape, of course, is nothing like what was touted a mere 3-4 weeks ago including the most important bits, like the three year commitment to buy $750 billion worth of US energy is a pipe dream considering that the US has never exported more than a tenth of that per year to Europe, a continent that doesn’t even import that much annually from all sources. Then there’s the $600 billion investment that Mr. Trump assured markets was a blank cheque to him, as president, to invest anywhere he saw fit and to reap the benefits therefrom. Oops, sorry, that’s not actually a thing. It’s actually a vague statement saying that European companies will be encouraged to invest into the US for their own benefit, an amount that could go as high as $600 billon. Well at least European cars will have heaviy tariffs, right? Wrong. Some genius figured that the blanket 15% tariff on European car imports will still make them cheaper than US-built cars when the steel and aluminum tariffs are included.
Yeah. Some deal.
Speaking of deals, Canada announced today that we were going to roll back the Trudeau retaliatory tariffs on USMCA compliant imports, but that the retaliatory tariffs on steel, aluminum and automobiles would remain in place. I think this is a smart move on Mark Carney’s part. He is not backing down (much as people want to say he is), rather he is resetting the board to match the application of Canadian tariff logic (such as it is) to how the Americans are doing it as well as putting his personal stamp on things. All eyes now on the renewal/renegotiation of the USMCA into 2026. I appreciate the long game. Mr. Trump wants the media win, Canada wants time to fix what ails us. As long as we can get our shit together before USMCA gets tossed overboard we should be OK. Stunts like Quebec pouring out $300,000 worth of US liquor (presumably over curdled production quota milk) don’t help, but squeezing closer to what the US is doing and narrowing the points of contention is tactically smart.
Finally, the de minimis import rules into the US are set to be enforced starting shortly. As you may know/recall, these rules previously said that anything less than $800 was tariff free, not that will be gone to the detriment not only of online retailers and shoppers but also countless small businesses who relied on the deminimis rule to allow them to bring in small one-off items duty-free.
The scale of dest4ruction for US small businesses is going to be epic. Already bankruptcies have hit their highest level since June of COVID. Rememenr that time? When people were dying and we were all locked in our houses? Yeah, it’s not good.
And lest anyone think that businesses will just be able to adapt to the new tariff regime by filling out a few forms – the attached was prepared by a trade expert showing the levels and layers of tariff chaos that this discombobulated and shambolic roll-out of multiple tariffs on multiple countries on multiple industries on specific products has created (image and x-link below).
https://x.com/scottlincicome/status/1958918525717737720/photo/2
If the lack of business or increased costs don’t crush Main Street America, the paperwork will be there to finish the job.
At least we have the US Fed signalling a rate cut to send us home today with the asset bubble fully inflated.
Happy last week of summer.
980 words.
