The Landfill of History

Trade barriers have been coming down for the last 50 years. Worldwide, the weighted average tariff imposed by our top 31 trading partners is just 1.85%. Take out India, and it goes down to 1.6%.

President Elect John F. Kennedy Jr. meets with Harvard history professor Arthur Schlesinger on January 9th, 1961 in Cambridge, Massachusetts, Source: Getty Images

Wednesday, March 19^th, 2025

Bill Bonner, writing from Baltimore, Maryland

Yesterday came more evidence that you can’t protect your way to success. From the news wires:

China’s energy and auto giant BYD has announced an ultra fast EV charging system that it says is nearly as quick as a fill up at the pumps. BYD, China's largest EV maker, said Monday that its flash-chargers can provide a full charge for its latest EVs within five to eight minutes, similar to the amount of time needed to fill a fuel tank. It plans to build more than 4,000 of the new charging stations across China….Sales of battery powered and hybrid vehicles jumped 40% last year.

You can seal the borders…and tariff everything that crosses…but that won’t stop competitors from coming up with new and better products. WECB:

China Has Developed a Revolutionary Steel Production Method 3,600 Times Faster Without Using Coal

A breakthrough in steel production is reshaping the industry and bringing hope for a greener future. After more than a decade of research, a team of Chinese scientists has developed a new process that’s not only 3,600 times faster than traditional methods but also eliminates the need for coal. This innovation could transform the global steel industry while significantly reducing carbon emissions.

And here’s more…AutoJosh:

Ford CEO Claims That China Is Ten Years Ahead Of The US In Battery Manufacture

CoinTelegraph:

US tech exec warns China is ‘a decade ahead’ on quantum

AI Upload:

Ex-Google CEO warns that China is a decade ahead on AI

EV News:

[China’s] BYD dominates Brazilian EV auto market with 71.4% share

Electrek:

BYD is ‘just getting started’ in Europe with plans to triple its EV market share

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Team Trump can erect a high wall to keep the foreigners and their products out. But trade and innovation will go on around it.

The remarkable thing about Trump’s trade war is that there is no real enemy to have a war with. Trade barriers have been coming down for the last 50 years. Worldwide, the weighted average tariff imposed by our top 31 trading partners is just 1.85%. Take out India, and it goes down to 1.6%.

Donald Trump has regaled the nation with stories of the Canadians ‘ripping us off for years’ with tariffs of 300% on US dairy products. That is a provision of the trade agreement negotiated by the Trump administration itself in its last go-round in the White House.

But the high tariffs are only triggered if US exports rise to a threshold level…that they have never reached. Instead, most of America’s exports to Canada arrive duty free. Not exactly something to get worked up about.

Trade is a win-win deal… voluntary and cooperative. The idea is to trade your output for products that are cheaper and higher quality than you can make on your own. You come out ahead. So does the seller.

Tariffs are win-lose…they’re political, a way of taking something away from someone else. The goal is to make those better, cheaper products more expensive so local, crony enterprises can rip off consumers with inferior products at higher prices.

Trade wars make no sense for dynamic, growing, confident economies. But History has her own purposes....Late, degenerate empires must end up on the landfill of history. Wars – even trade wars -- help them get there.

Regards,

Bill Bonner

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Research Note, by Dan Denning

Today is Jerome Powell’s day. The Federal Reserve’s Open Market Committee meets and will decide whether to change its target interest rate. Wall Street would love a rate cut.

But what if it’s Powell that gets cut? Yesterday, President Trump fired two members of the Federal Trade Commission (FTC). Those members had been appointed by Democratic presidents. Franklin D. Roosevelt fired an FTC commissioner in 1935, an action which the US Supreme Court later found to be illegal. What now?

You wouldn’t call what’s happening in Washington a coup. That is, there is not a violent overthrow of civil power by a small cadre of military officers. And it’s not exactly a civil war either, in which non-state actors seek to overthrow or replace the State. It’s not an insurrection either, armed opposition to government authority with the attempt to overthrow (and not replace it).

In his June 30th, 1961 memo to President John F. Kennedy (CIA Reorganization), historian Arthur Schlesinger Jr. referred to ‘a state within a state’ in America. I was able to find the newly declassified memo last night, extract the text from the PDF file, and find the relevant section to quote for you. I’ve quoted it at length for reasons which will become clear. Here it is (emphasis added is mine):

The contemporary CIA possesses many of the characteristics of a state within a state. Though CIA's autonomy developed for historical reasons, it has been able to endure because there is no doctrine governing our conduct of clandestine operations. The problem of doctrine for CIA is the extent to which its various clandestine missions are compatible with a free and open society.

It is idle to argue that, because the Communists can do such-and-such, we are free to do it too. Communism is a creed nurtured in conspiracy and the whole point of Communist social and political organization is to make conspiracy effective. If 'fighting fire with fire' means contracting the freedoms traditionally enjoyed by Americans in order to give more freedom to CIA, no one seriously wishes to do that.

Yet I do not feel that we have tried rigorously to think through the limits which the maintenance of an open society places on secret activity. Until this is done, CIA's role will not be clearly defined and understood.

The problem which must be faced is what sort of secret activity is consistent with the preservation of a free social order? We must begin, I believe, by accepting the fact that the United States will continue to be a nation in which politicians will ask questions and make speeches, reporters will dig out stories, newspapers will publish editorials, individuals, driven by promptings of conscience, will blurt out things harmful to the state, and so on.

We do not wish to change these things and could not do so without violating the essence of our society. These things make up the framework in which CIA must operate. In short, they constitute the problems and, as General Marshall used to say, "There's no point in fighting the problem."

There follows from this, I would think, the conclusion that secret activities are permissible so long as they do not corrupt the principles and practices of our society, and that they cease to be permissible when their effect is to corrupt these principles and practices.

Kennedy was killed a little over two years after receiving this memo. It’s important to note the memo was written after the failed invasion of Cuba at the Bay of Pigs (a CIA operation which Kennedy did not support, at least with air cover). It’s also an interesting exercise to replace ‘CIA’ with ‘USAID’ when reading the memo and see if the conclusions are any different, or any less relevant.

In any case, this research suggests that elements of the American government are now openly in conflict with one another. In this century, 67% of injunctions issued by the nation’s nearly 700 Federal judges were issued to temporarily restrain Executive actions by Donald Trump (just in first term). Of those injunctions, 92% were imposed by judges appointed by Democratic Presidents.

Without going in depth into the concepts of judicial review or the separation of powers or a legal insurrection, suffice it to say we don’t think open legal conflict between two branches of the US federal government is ‘priced in’ to gold, US bonds, or the US dollar. Political risk for US assets has never been higher. I’ll have more on this in my Friday note to paid subscribers. Paid readers can look for Investment Director Tom Dyson’s note later this afternoon.