Ambrose Evans-Pritchard: Trump's tariffs are the greatest act of economic and political self-harm in modern American History

Donald Trump has succeeded in forcing America’s democratic allies to their knees. His country must henceforth live with the invidious consequences of what he has done. 

“It may be dangerous to be America’s enemy, but to be America’s friend is fatal,” to borrow a line from Henry Kissinger.

Vladimir Putin has strung Trump along for six months without paying a price. China has turned the tables, forcing the White House to hand over Nvidia H20 chips in exchange for rare earth magnets that Trump should have thought about before launching his trade war. Didn’t the US treasury secretary, Scott Bessent, say China was playing with a “pair of twos”?

Trump’s full viciousness is reserved for Canada, a Five-Eye and core NATO loyalist, so dependable that America can leave its entire northern border undefended. It is punished with 35pc tariffs, hit harder because it dares to differ on the Middle East, though the effects will ricochet straight back into the US economy.

US-aligned Taiwan gets 20pc and a landing ban in New York for the country’s president as Trump curries favour with Xi Jinping. The Swiss get 39pc for failing to jump smartly to attention.

Brazil is outraged by 50pc tariffs explicitly intended to subvert the Brazilian judiciary and rule of law. Years of diplomatic effort to lure India into the Western camp are squandered by petulant 25pc tariffs plucked out of thin air and a burst of hectoring posts of Truth Social.

There is hardly a better way to keep the unnatural but menacing “BRICS” confederacy alive as the epicentre of a new global power structure dominated by China. Trump is achieving the near impossible. He makes the predatory communist dictatorship of China look almost attractive.

And if I sound angry, it is because I am. Nobody will forget this disgraceful abuse of American power.

The average US tariff rate will settle near 20pc. This is comparable in nominal terms to the Smoot-Hawley tariff act of 1930 but tariffs were already high before that infamous bill and the US was then a closed economy. Imports were just 5pc of GDP. They are 16.4pc today and include critical components that keep the productive machine going.

“We’re looking at a shock to the economy seven or eight times as big as Smoot-Hawley,” said Paul Krugman, a Nobel laureate for trade theory.

Euphoric markets are wishing away the reckless demolition of a global trade system built, led, and painstakingly nurtured by the US for 80 years. “People just keep wanting to believe that Trump is making sense, that he isn’t as ignorant and irresponsible as he seems. But he is,” said Prof Krugman.

US economic growth slowed to 1.1pc in the first half of the year. You have to combine the two quarters because tariff “front-running” distorted the GDP data. The relevant metric is that real final sales are the weakest since 2022.

“We estimate that real personal consumption has now stagnated on net for six months, which rarely happens outside of recession,” said Jan Hatzius, the chief economist at Goldman Sachs.

If you think America is booming right now, you are looking a) in the rear view mirror, and b) at the wrong data. The next year will see a drip-drip of accumulating damage as stagflation hits with the textbook delay.

Trump’s tariffs are a tax on the US consumer. Maury Obstveld, ex-chief economist at the International Monetary Fund, says the pass-through from the Trump 1.0 episode was total.

“Not only did the prices of tariffed goods rise, they rose by the full amount of the tariffs. American households and businesses bore the entire burden; none was shifted to foreign exporters,” he said.

The well-informed are watching the US bureau of labor’s monthly index of pre-tariff prices for imports. This rose in June. It is the smoking gun that tells us who is really paying the tab. The Yale Budget Lab says consumers will face price rises of 40pc for shoes and 38pc for clothes.

Read the rest here.

This needs to be read in its entirety. 

Trump Administration to Allow Proselytizing in Federal Work Place

WASHINGTON, July 28 (Reuters) - Federal employees may discuss and promote their religious beliefs in the workplace, the Trump administration said on Monday, citing religious freedoms protected by the U.S. Constitution.

Agency employees may seek to "persuade others of the correctness of their own religious views" in the office, wrote Scott Kupor, director of the Office of Personnel Management, the U.S. government's human resources agency.

Supervisors can attempt to recruit their employees to their religion, so long as the efforts aren’t “harassing in nature,” according to Kupor's statement. Agencies can't discipline their employees for declining to talk to their coworkers about their religious views.

The statement represents the latest effort of the six-month-old Republican Trump administration to expand the role of religion in the federal workplace.

Read the rest here.

Imperial Japan's last veterans are speaking out

As the 80th anniversary of the end of World War II approaches, only a few veterans of Japan’s brutal war remain. Some are talking.

Read the rest here.

A quiet mutiny is brewing in the Israeli Army

...Immense pressure has been building on Israel over the dire humanitarian conditions inside the strip, with aid agencies warning of mass malnutrition and widespread hunger. France on Thursday said it would move to recognise Palestine as a state. On Sunday, the IDF said it was introducing a ‘tactical pause’ in fighting in some areas of Gaza.

Mr Feiner’s opinion on the futility of the conflict appears to be shared by a rising number of serving and retired senior officers who are turning against Benjamin Netanyahu’s war.

Gen Assaf Orion, the former head of strategic planning at the IDF, said while there were clear strategic goals in the Israel campaigns against Iran and Hezbollah in Lebanon, there was no longer any clear military imperative for the continuation of military operations in Gaza.

He told The Telegraph: “In Gaza, I suspect that the strategic train of ends, ways and means was kidnapped by ulterior motives.

“I think the main reason for a prolonged war in Gaza is political expediency.”

Eran Etzion, a former deputy head of Israel’s national security council, was even blunter.

He said: “By now it has long been clear to most Israelis that the main reason the Gaza campaign lingers on is because of Netanyahu’s political, personal and judicial interests, and he needs the war to go on in order to sustain and even enhance his grip on power.”

Many believe Mr Netanyahu fears his government will collapse if the war ended as ultra-nationalist parties in his coalition would abandon him.

“That’s the main reason. It has nothing to do with Hamas and everything to do with Netanyahu.”

If even some of the spate of leaks from Israel’s security cabinet are to be believed, the scepticism is not confined to retired generals.

Read the rest here.

And now for something a little lighter

With Obama in His Sights; Trump's Revenge Agenda Gains Momentum

This is what Washington thought retribution would look like.

When President Trump started his second term, there were deep fears among current and former Justice Department officials, legal experts and Democrats that Mr. Trump would follow through on his repeated promises to “lock up” or otherwise pursue charges against high-profile figures like Liz Cheney, James B. Comey and former President Barack Obama.

Mr. Trump quickly went after perceived enemies — but not always the anticipated ones and often not in the anticipated ways.

Displaying a willingness to weaponize the federal government in ways that were as novel as they were audacious, he took on a wide variety of individuals and institutions — from law firms and universities to journalists and federal bureaucrats — that he felt had crossed him, failed to fall in line or embodied ideological values that he rejected.

But on Tuesday Mr. Trump reverted to earlier form, resurfacing — in a remarkably unfiltered and aggressive rant — his grievances against Mr. Obama, prominent figures in past administrations and others he associated with what he considers a long campaign of persecution dating back to the 2016 election.

Seeking to change the topic at a time when he is under bipartisan political pressure over his unwillingness to do more to release investigative files into Jeffrey Epstein, he said the time had come for his predecessors to face criminal charges.

“I let her off the hook, and I’m very happy I did, but it’s time to start after what they did to me,” Mr. Trump said of Hillary Clinton, adding: “Whether it’s right or wrong, it’s time to go after people. Obama’s been caught directly.”

“He’s guilty,” he added. “This was treason. This was every word you can think of.”

But if his enemies list was familiar, his capacity to pursue retribution appears to be expanding.

Repeatedly in his first term, Mr. Trump accused his perceived enemies of treason and tried to push the F.B.I. and Justice Department to indict them. He told his chief of staff that he wanted to “get the I.R.S.” on those who crossed him.

Read the rest here.

The Final Tally on Trump's Big Beautiful Bill

Congress’ nonpartisan scorekeeper released its final prediction Monday for how President Donald Trump’s signature legislative achievement will grow the national debt and affect U.S. households.

Over the next decade, the megabill Trump signed on July 4 would increase the federal deficit by $3.4 trillion and cause 10 million people to lose health insurance, the Congressional Budget Office forecasts. While the newly enacted legislation would save more than $1 trillion by cutting federal spending on health care — with the majority coming from Medicaid — CBO predicts that the package’s costs will far outweigh its savings.

The bulk of the red ink from the package comes from the GOP’s permanent extension of Trump’s 2017 tax cuts. The analysis finds that the Senate Finance Committee, which has jurisdiction over tax policy, enacted policies that would decrease the incoming federal cash flow from taxes by a total of $4.5 trillion. That sum includes the cost of tax cuts Republicans added during Senate floor debate of the package.

Read the rest here.

Foreign investors buy nearly 100 billion in euro zone debt

LONDON, July 21 (Reuters) - Euro zone debt saw nearly 100 billion euros ($116 billion) of buying from outside the bloc in May, Citi said citing European Central Bank data, the latest sign that euro assets are benefitting from a shift away from U.S. markets.

The 97 billion euros of net inflows into euro zone debt with maturities longer than one year was the largest on a monthly basis since at least 2014, Citi said, pointing to portfolio flow data from the ECB.

Read the rest here.

The New York Mayoral Election

Ok, we have five guys running. One of the contenders Jim Walden, has no chance of winning, but could collect maybe five percentage points worth of votes. Mamdani has a lock on the progressive vote, but it's unclear what percentage that will translate to in the general election. Then you have Cuomo and Adams, both of whom have tarnished reputations but who are likely to split the bulk of the moderate Democratic vote. And tempting as it might be to overlook them, around 1 in 5 New Yorkers are actually registered Republicans. Their candidate, Curtis Sliwa, actually got ~27% of the vote in the 2021 election. 

Right now, I don't see Cuomo or Adams winning. The former is deeply unpopular and seen as just plain creepy. Adams is tainted by credible allegations of corruption. My guess is that it will come down to how many New Yorkers are prepared to roll the dice on an avowed socialist as mayor of a city that is also the beating heart of global capitalism. And we also need to consider the Jewish vote, which typically breaks heavily Democratic. I just can't see Mamdani carrying anywhere near a majority of the Jewish vote with his pro-Palestine record. In a normal election I'd say Curtis Sliwa's odds of being elected mayor of New York City were slightly worse than winning the Powerball. But in a five way race, if he holds that 27%, he's got an outside shot. In last year's election Donald Trump actually got 30% of the vote in New York City. If Sliwa gets the Trump voters, he goes from long shot to credible candidate. If he can pick up another 5-10% from disaffected Democrats and independents, we could... maybe... just possibly see one of the biggest election upsets in the city's history. 

The MAGA Civil War Over a Conspiracy Theory

Last week President Trump’s Department of Justice delivered a blow to one of the foundational beliefs of the MAGA movement, one that helped carry him back to the White House.

In an unsigned memorandum, the department declared that there was no evidence that Jeffrey Epstein, the disgraced deceased convicted sexual predator, maintained a client list or that he blackmailed prominent individuals for various misdeeds. The memorandum also declared that Epstein committed suicide.

Most Americans saw this news (if they saw it at all) and barely raised an eyebrow. The Epstein story was part of the past; he died in 2019. But it detonated like a bomb in the MAGA universe. Pro-Trump influencers with vast audiences couldn’t believe what they were reading.

After all, they’d been told for years that there was an Epstein client list. Pam Bondi, Trump’s attorney general, told Fox News in February that the client list was “sitting on my desk right now to review.” (She later claimed that she was referring to the Epstein case file, not a specific client list.)

In October 2024, JD Vance, then a candidate for vice president, said, “Seriously, we need to release the Epstein list. That is an important thing.”

Before he was Trump’s director of the F.B.I., Kash Patel told Glenn Beck, a right-wing radio host, that the F.B.I. had Epstein’s “black book” and that it was “under direct control of the director of the F.B.I.” In 2023, Patel told Benny Johnson, a MAGA podcaster, that members of Congress should “put on your big-boy pants and let us know who the pedophiles are.”

In September 2024, Dan Bongino, now the deputy director of the F.B.I., told his listeners, “Folks, the Epstein client list is a huge deal” that would “rock the Democrat Party.”

Read the rest here.

When you spend years building a cult like mass movement based on fringe conspiracy theories and outright lies, eventually it's going to become difficult to hold it all together. That said, I think predictions of the collapse of the movement are highly premature. One of the traits of cult movements is that the true believers tend to reach a point where they become impervious to facts and reason, dismissing any claims that do not align with their beliefs as false. They typically live within an ideological exclusion zone that rejects and dismisses sources of information that do not reinforce their belief system. In this case many of the faithful would give far more credibility to Tucker Carlson, Glenn Beck and Alex Jones than the New York Times or CNN. Even in the face of glaring inconsistencies or revelations that cannot be simply ignored, members will go to extraordinary lengths to rationalize or explain away those facts and contradictions which do manage to penetrate their information bubble.

See also QAnon. 

Trump's Witch-hunt at the Federal Reserve

The president is desperately looking for a legal pretext that would allow him to fire Federal Reserve Chair Jerome Powell. Details here.

Various 07-09-25

Trump Hits Brazil With 50% Tariff Over Bolsanaro Trial

Trump sends more letters dictating high tariff rates around the world

Judge orders Jan. 6 rally organizer to pay $2K daily until compliance with subpoena

US sees record number of measles case

Abbott announces redistricting will be included in Texas special session

Greene says she’ll move to stop additional military aid to Israel

Trump's 50% copper tariff could raise the cost of appliances, EVs and other goods

FBI launches probes into former FBI, CIA directors

Senate GOP not happy with Trump beatdown of Tillis 

Life at St. Tikhon's Monastery

Happy 4th of July

Ambrose Evans-Pritchard: Trump has dropped a big, beautiful bomb on America’s economy

China’s leaders must be wondering whether they are hallucinating or whether America’s political class really has lost its mind, committing economic and geopolitical self-harm on a breathtaking scale.

Donald Trump’s “big beautiful bill” marks a wholesale retreat from swaths of advanced manufacturing and energy technology. It abandons a central front of the Sino-American superpower contest without a fight.

“Utterly insane and destructive. The bill will cause immense strategic harm to our country,” said Elon Musk, now the arch-apostate, perhaps soon to be punished, asset-stripped and deported.

The big bill is the latest in a series of Luddite measures that let China run away with the electro-tech revolution and much of the future global market for cars, trucks, short-haul aviation, home heating and cooling, smart grids, power storage and the products that deliver the cheapest energy ever known to man.

The think tank Ember says China is electrifying its economy at a rate of 10 percentage points a decade. It has already surpassed 30pc of final energy, well on its way to becoming the world’s first electro-superpower.

America has been stuck in the low 20s since 2008, lulled into complacency by its fracking boom. Europe has missed the boat too, without the same excuse. It talks big on electrons without delivering much, while clinging to imported molecules for its economic existence, failing to compete successfully on either.

The woke and the anti-woke are still arguing about renewables but we are past that developmental phase. The big trillions are going to be made in the ways we use electricity. The International Energy Agency thinks the vast electro-tech market will be eight times larger than renewables by 2035.

Trump’s America is betting that it can freeze time and stop this, doubling down on fossils and hoping to force others to go with them as a condition for military protection and market access. Trump is linking trade deals with Japan, South Korea and Europe to increased imports of US liquefied natural gas (LNG). He is even demanding that the EU changes its law and embraces the joy of methane emissions.

China is betting that you cannot halt a technological steamroller or force the world to act against its own economic self-interest.

Read the rest here.