The Social World

Tag: Economy

  • Howard’s beginning: the luck of Lutnick

    With Elon Musk no longer sleeping in a cot in Washington, only one member of the White House inner circle comes close to matching Donald Trump’s net worth: Commerce Secretary Howard Lutnick. Commerce is usually a mid-tier cabinet post; even fervent political observers would be hard-pressed to name previous officeholders. But Lutnick has been one of Trump’s most impactful advisors in this second term. His ideas about tariffs have greatly affected the world’s economy, and have influenced Trump’s mercurial tariff pronouncements. Plus, he’s worth about $3 billion himself. Even Treasury Secretary Scott Bessent, himself a billionaire, is only worth about half as much.

    Lutnick made his name as CEO of Cantor Fitzgerald, a major New York financial services company. After hundreds of Cantor employees, including Lutnick’s brother, died in the 9/11 attacks, Lutnick rebuilt the company and provided support to the families of the victims, which amounted to two-thirds of the company’s workforce. Trump later called Lutnick “the embodiment of resilience in the face of unspeakable tragedy.”

    The two met in 2008, when Lutnick appeared on an episode of Trump’s TV show The Apprentice, but Lutnick wasn’t part of the conversation during the Donald’s first term. By the end of that term, he’d become a major Trump donor, and he stuck by Trump during the years of impeachment, the January 6 rebellion and exile. Lutnick is credited with raising $75 million for Trump’s 2024 capaign – and Trump rewarded Lutnick by making him co-chair of the presidential transition team.

    Trump’s nomination of Lutnick for Commerce met with controversy and resistance. One critic called it “totally sketchy” and others said that Cantor Fitzgerald’s vast interconnected business ties made it impossible for Lutnick to be an impartial bureaucrat. “Howard has gotten out way over his fucking skis on this,” a senior Republican official told Politico.

    The ballooning cryptocurrency industry was a particular space of concern, given Cantor Fitzgerald’s relationship with the controversial crypto company Tether, which issues a stablecoin tied to the value of the US dollar. Trump, who himself was about to make a vast fortune in crypto, hardly seemed to care, vowing to turn the US into “the crypto capital of the planet.” Who better to do that than Lutnick? “There’s nobody more loyal and capable than Howard,” Trump said.

    Given that tariffs are the shining centerpiece of Trump 2.0’s economic program, it’s not surprising that Lutnick supports them wholeheartedly. For him, tariffs are not just economic tools, but weapons that the government can use to affect national security and industrial policy. In an April interview with CNBC, he touted tariffs as the key element in transforming the American economy and was thrilled that a president, for once, was listening to him.

    “When I say to him we want fair trade, we want to be treated the way we deserve to be treated, that’s what’s happening now,” Lutnick said. “Finally, someone is behind the desk who is going to protect America. It feels great.”

    On tariffs, trade and industrial policy, Lutnick sounds so much like Trump it’s hard to tell where one man’s monologue ends and the other’s begins. “The rest of the world’s markets have been taking advantage of the trading policy,” he told CNBC. “Our policies were designed to make you rich and make us poor.” It’s been a non-stop tariff blitz for months. Back in April, Lutnick said on CBS’s Face the Nation, “The tariffs are coming. [Trump] announced it – and he wasn’t kidding. The tariffs are coming. Of course they are.” On Newsmax around the same time, he said “tariffs are not inflation. It is outrageous that people think tariffs are inflation.”

    In an economy run by two of America’s richest men, it’s hard to focus on, say, Lutnick’s efforts to onshore US semiconductor production. Tariffs take up all the oxygen. “Trump wants the people of America to appreciate these tariffs,” Lutnick said on Fox Business in November, “If he puts money into their pockets, they’ll better understand how important this is for America.” And there’s a literal plan to put money into the pockets of Americans, with the administration proposing a “tariff dividend” of $2,000. Why, with that, Americans could buy nearly 1/20th of a Bitcoin! “Yes, it’s going to make the country stronger,” Lutnick said.

    Then there’s the matter of Lutnick’s sons. In May, he transferred his ownership shares in Cantor Fitzgerald to his four children. His “economic benefits” have ceased but the family still runs the firm – and Bloomberg said, “the grip on his businesses is bolted tight.” Lutnick’s son Brandon is CEO and chairman and another Kyle, is executive vice-chairman. They’ve out-Successionedeven the Trump family. Brandon Lutnick is leaning hard into special-purpose acquisition companies, or SPACs, for crypto, even while his father pushes the President to establish a national crypto reserve.

    “President Trump’s billionaire Commerce Secretary has been playing the ultimate Washington insider game to pad his family’s riches,” left-wing watchdog site Accountable.US said earlier this year. While it’s true the Lutnicks won’t be qualifying for a $2,000 tariff dividend check, it remains to be seen whether or not all boats rise with theirs.

    Once upon a time, Kyle Lutnick was an aspiring rapper who performed under the name “Kxtz.” Though it appears he’s moved on, one residual lyric still seems relevant: “Until I run the game, I’ve got everything to gain.” But now Kxtz has put aside childish things. In November, Bloomberg reported that Cantor Fitzgerald was about to post a 2025 annual revenue of $2.5 billion, an all-time high and 25 percent more than the previous reporting period. “When you have a titan of industry and an indomitable personality like Howard, who was here for 40 years and ran the firm for 30 years, it can leave a significant vacuum when he leaves,” a Cantor official said. “The whole firm stepped up… and that’s because of Brandon. That’s because of Kyle as well.” The rich, it seems, are getting richer.

    This article was originally published in The Spectator’s December 8, 2025 World edition.

  • It’s the cost of living, stupid

    It’s the cost of living, stupid

    Earlier this month, the Republicans lost their first set of elections after Donald Trump’s victory last year, proving once again that without Trump, the GOP is cooked. Because yes – it really is all about him. Are you a narcissist if the world actually does revolve around you? Or are you just right? The problem for the GOP is that they need Trump to win, but Trump loves watching them lose without him. OK, maybe he is a narcissist.

    What’s clear is that the 2024 election was not the final boss. It didn’t destroy wokeism. You have to picture the spider in The Lord of the Rings, Shelob, crawling back into her cave after being stabbed by Samwise. Is she injured? Yes. Dead? No. She will probably be back to kill you.

    Republicans and pundits and podcasters will come up with all sorts of reasons for the latest losses (including blaming the Jews), but it comes down to fundamentals. Ground game. Optics. And of course, “It’s the economy, stupid!”

    The GOP has no ground game in part because it depends on cultural momentum, in part because many of the biggest voices in conservatism right now are more concerned with grabbing market share in the attention economy than they are about winning elections. All of this underlines the tragic loss of Charlie Kirk. It appears Charlie really was the glue holding the entire conservative movement together. He was phenomenal at mobilizing and organizing Republican “get out the vote” efforts.

    Charlie knew that politics was about changing hearts and minds. He also understood that the only way to win an election is to do the hard work and compete on the ground. Knock on doors. Register people to vote. Encourage them to get to the polls or mail in their ballot.

    Zohran Mamdani won in New York because he focused on fundamentals. He ran a great ground game. He came up with creative ways to engage voters. He knocked on doors. He relentlessly spoke to the anxiety people feel about the cost of living.

    It appears Trump may have overestimated his mandate, his popularity and just how far the average American is willing to go to correct some of the problems we face, such as immigration.

    Americans are happy with the borders being secured. But the Trump administration’s attempt to bring back deterrence by turning ICE into a dystopian reality show is wildly unpopular with independents. I don’t think the average person is cool with masked men zip-tying abuela and throwing her into an unmarked van while tasing her grandson for trying to interfere. Obama deported more people than Trump has. But he did it the way Americans like: out of sight.

    For a media genius, Trump doesn’t seem to get that optics matter. Building a gilded ballroom while the government is shut down and people are cut off from food stamps and aren’t receiving paychecks and flights are being canceled does not suggest that he cares about the struggles of the average American.

    People are still poor (and getting poorer). AI is taking jobs. Grocery prices are high. Healthcare costs just increased astronomically. My groceries continue to go up in price. My electricity bill jumped 25 percent. Our healthcare premium went up a whopping 43 percent. All our insurances have increased in cost. Gas prices are down so that saves me about… $10 a month. In my podcasting business, I’ve also been giving work to talented freelance writers and designers who have been replaced with AI at big companies, just to help keep them afloat.

    Recovering investment banker and best-selling author of You Will Own Nothing, Carol Roth, has been warning everyone about the K-shaped economy for years.

    “A K-shaped economy describes an economy (or recovery or trend) where there is stark divergence in the experience or outcome of different groups – like the visual of the letter K,” Roth says. “Part of the country is experiencing an upward economic trajectory (you can think of that as the asset holders, with portfolios, 401(k)s, homes, etc.) that have been doing great (at least on nominal terms, meaning not inflation-adjusted). Others are experiencing a downward economic trajectory, dealing with a more expensive cost of living across [many] categories, as well as job losses or underemployment and wage stagnation.”

    I think a big problem with our K-shaped economy is that those at the top have zero idea how bad it is for those sliding down. They assume that the people whining about the fact that the average age of a first-time home buyer is 40 must just be bad with money. And lots of boomers have no empathy. Yes, young people have some bad habits, but the game is very different for them.

    Fielding questions from reporters and getting defensive about the economy, Trump says: “I don’t want to hear about affordability.” He doesn’t seem to understand that people can be pro-tax breaks and still think bananas are too expensive. (And thanks to his tariffs, banana prices happen to be up about 8 percent since April.)

    Americans will put up with a lot of crap from their leaders, but this administration should have learned from Joe Biden that we won’t put up with being gaslit about rising prices. We know. We are the ones buying things. We are the ones choosing to get this instead of that. We are the ones who go to bed with crippling financial anxiety, wondering how we are going to pay for childcare and utilities and insurance and kids’ activities and student loans. We are the ones worrying about what the future will look like for our children if it’s already this unsustainable for us. I said it before when Trump won and I’ll repeat it: if Americans don’t feel real material relief, the right-wing vibe shift will be a one-hit wonder.

    This article was originally published in The Spectator’s November 24, 2025 World edition.

  • Is Trump’s $2,000 tariff dividend plan loopy?

    Is Trump’s $2,000 tariff dividend plan loopy?

    It’s becoming increasingly taxing for Donald Trump to defend his tariff policy. His latest gambit is to float the prospect of a $2,000 rebate to Americans from the tens of billions that the federal government has collected in tariffs. But will this prove any more successful than his previous attempts to justify his loopy tariffs?

    With the Supreme Court apparently poised to strike down his tariffs as a form of revenue collection designed to perform an end-run around Congress, Trump is scrambling. As usual, bravado prevails. On Sunday, he declared, “A dividend of at $2000 a person (not including high income people!) will be paid to everyone,” the president said on Truth Social.” Trump also dismissed his detractors as “FOOLS!” In his view, “We are taking in Trillions of Dollars and will soon begin paying down our ENORMOUS DEBT, $37 Trillion. Record Investment in the USA, plants and factories going up all over the place.”

    What specific factories Trump meant was left unsaid. The truth is that a small coterie of tech firms is driving the American economy by building AI centers. To fund them, companies are relying on exotic debt-financed options. If that bubble pops, it could be 2008 all over again – or worse.

    Speculation about a 1929 redux is on the rise. Former Securities and Exchange Commission official William A. Birdthistle notes that Trump has been “has been firing regulators and vigorously tearing down the guardrails that have kept our markets thriving for nine decades.” As he bellows about the efficacy of high tariffs, Trump himself seems intent on replicating the 1930 Smoot-Hawley tariff which ensured that America tumbled even deeper into the Great Depression. At least Smoot-Hawley was passed by Congress. Trump is doing it singlehandedly while Republican lawmakers cower in fear at the consequences.

    The difficulty for Trump is that in promising an economic boom, he has highlighted his responsibility for inflation and unemployment. Voters, as the recent election showed, remain as unhappy about the economy as they were during the Biden era, when the White House also issued a steady stream of happy talk. In July 2021 Biden dismissed the notion that inflation would prove to be a persistent problem: “Our experts believe, and the data shows, that most of the price increases we’ve seen are expected to be temporary.”

    Speaking at the American Business Forum in Miami this past Wednesday, Trump insisted that nothing less than an ”economic miracle” was taking place under his leadership. He also invoked his favorite adverb, tremendously, to state that “Americans are doing tremendously now.” A day later, he said, “I don’t want to hear about affordability” – a line that is certain to feature in Democratic campaign ads. Trump is also touting a new Walmart Thanksgiving meal as 25 percent cheaper than last year, but it also has six fewer items than the 2024 basket. The most recent consumer price index shows that grocery prices were up 2.7 percent in September compared to a year ago. So much for whipping inflation now.

    Then there is the government shutdown. Disrupting air travel, terminating SNAP benefits and allowing health insurance premiums to soar even as Trump sends billions to Argentina is hardly a recipe for promoting economic growth. Some Republicans are getting antsy. “We need to deal with [health care] now because, number one, it’s the right thing to do, just morally,” New Jersey Congressman Jeff Van Drew said on Fox this past Wednesday.” “Number two, we’re going to get killed” in the 2026 midterm elections.

    But Trump has other concerns. On Friday night, he threw another opulent gala event for his chums at Mar-a-Lago, complete with opera singers and ice sculptures. As Republican lawmakers fret about their futures, Trump continues to party on.

  • Trump is not to blame for the crypto crash

    Hundreds of billions have been wiped off the value of the crypto currencies. A prominent Ukrainian blogger and influencer on digital coins has been found dead. This will likely be a rocky day for traders. We will have to see whether it develops into a full-blown crash or not. And yet, all the major equity indices were already wildly overvalued, and a correction was always inevitable – it was just a question of when it would start. 

    Investors will also see a few days of turbulence. An estimated $400 billion was wiped off the value of the main crypto currencies on Friday evening, while the Nasdaq dropped by more than 800 points, or 3.5 percent, before the New York stock exchange closed, with the S&P 500, the benchmark for US stocks, not far behind. When markets open in Asia and then Europe they are expected to fall heavily as well. 

    The trigger for the fall in prices was the resumption of the tariff wars. President Trump slapped 100 percent tariffs on China in a row over exports of “rare earths,” critical to much high tech manufacturing. In reality, however, the markets were already wildly overvalued. Over the summer, the price of every major asset has been soaring. The Nasdaq is up by over 30 percent over the last six months. The chip market Nvidia is up by 65 percent. OpenAI, the owner of ChatGPT, reached a value of $500 billion, a record for a private company. Gold went over $4,000 an ounce, and Bitcoin went over $120,000 a unit. Even Britain’s index, the FTSE 100, managed to rise by 15 percent despite a stagnant economy. After the collapse that followed the first round of tariffs in the spring, every major index has been on an epic bull run, and had been hitting all-time highs. 

    October is often a difficult month for the market. The Great Crash of 1929 started on 28 October. The Black Monday crash of 1987 was on 19 October. The financial crisis of 2008 was more drawn out, but is generally dated as starting on 6 October that year. No one quite knows why, but the historical evidence is clear enough: October is a bad month. We will have to see whether the latest round of nervous trading develops into a full-scale collapse. With little sign of a global recession, and with the Federal Reserve in the United States, still cutting interest rates, it still seems relatively unlikely. But a correction of 10 to 20 percent in asset prices is long overdue after the exuberance of the last six months – and it looks as if that has now arrived. 

  • Trump’s new pharma tariffs will punish Americans

    Trump’s new pharma tariffs will punish Americans

    Donald Trump has punished European pharmaceutical companies by imposing 100 percent tariffs on their branded products unless they are prepared to set up a manufacturing plants in the US. That is one way of putting it, but why is the issue of tariffs so often seen from the point of view of the producers and so rarely seen from the position of the consumers? Besides punishing drugs companies, the President has also whacked the American public – or at least that section of the population which relies on patented medicines made outside the US. The cost of treatment for many of these patients will soar as a result. Does Trump think that people will somehow fail to realize this?

    If he had imposed punitive tariffs on imports of generic medicines – those whose patents have expired and can be manufactured by any company, anywhere in the world – while leaving branded medicines alone, it would have made some kind of sense. It wouldn’t have left consumers untouched, because they would no longer be able to source medicines so cheaply from India, where many generic drugs are made, but US producers would be able to step up production of generic medicines and hope to compete with overseas competition. It wouldn’t cause mass upheaval for consumers. But instead Trump has done the opposite: he has left generic medicines untouched, while whacking tariffs on patented medicines. Patented medicines can only be manufactured by the company which holds the patent, or by anyone who is licensed by that company.

    Will drugs companies which currently make patented drugs overseas shift production to the US, as Trump intends? Maybe some will, but it is almost certain that some will not, forcing Americans who are seriously unwell to pay a punitive tax to the US government for the right to continue to use life-saving drugs. Some drugs companies will make the calculation that Americans are a captive market for their products and that consumers will simply have to pay whatever it costs to obtain them – so why go to the expense of building a manufacturing plant in the US to sidestep the 100 percent tariffs? In any case, Trump has shown himself to be so inconsistent on tariffs – and other policies for that matter – that deciding to invest in the US in response to this week’s announcement would present a serious commercial risk: Trump might well have changed his mind by the time you get your plant open, making your investment pointless.

    The same is true of all the tariffs which Trump has announced since “Liberation Day” in April. They are good news for some producers, who are now better able to fend off foreign competition. But that only comes at the price of punishing consumers, who face less choice and more expensive goods as a result. And it is not just end-of-the-line consumers who suffer, either – many manufacturers rely on imported components, tariffs on which drive up their costs.

    We might appreciate the double-sided effects of tariffs a bit more if we started calling them by what they really are: import taxes. That would refocus minds on their effect on the consumer, and make it harder for Trump, or any other protectionist, to present them as a win-win solution to a country’s economic malaise. 

  • Why J.D. Vance is right about Germany

    Why J.D. Vance is right about Germany

    This week, US Vice President J.D. Vance leveled a blistering critique at Europe, accusing it of “committing civilizational suicide,” and Germany in particular of bringing about its own demise, saying:

    “If you have a country like Germany, where you have another few million immigrants come in from countries that are totally culturally incompatible with Germany, then it doesn’t matter what I think about Europe… Germany will have killed itself, and I hope they don’t do that, because I love Germany and I want Germany to thrive.”

    While some dismissed his remarks as yet another post-Munich Security Conference jab, Vance insisted his concerns for Germany were sincere. And he seems to have a point.

    While the US watches these developments from afar, the German mainstream media continues to push the narrative that the country needs 400,000 “skilled workers” annually. This is despite the fact that nearly four million able-bodied people of working age already receive benefits, almost half of whom are non-German citizens. When you include those with German passports who were born overseas, the number rises to around 64 percent. So, where did it all go wrong for Germany on migration and refugee policy?

    It began with the Gastarbeiter (“guest workers”) invited during the post-war economic boom under Chancellor Konrad Adenauer and his minister for economic affairs (and future Chancellor) Ludwig Erhard. Starting in 1955, Germany recruited labour from Greece, Italy, Spain, and Turkey. What began with 300,000 workers in the 1960s ballooned to 2.6 million by 1973. The introduction of family reunification turned these guests into permanent residents. Although there were efforts to curb immigration and encourage return migration as late as the 1990s, they met with little success. Germany is simply a nicer place to live than Turkey, even if Germans of Turkish origin set off fireworks to celebrate Erdogan’s election victories.

    The floodgates were fully thrown open in 2015 by then-Chancellor Angela Merkel, when she allowed Syrian migrants to enter Europe. Millions of asylum seekers and economic migrants made their way across Europe with little to no vetting. Even though the Syrian civil war has come to an end, almost none want to return home, and a combination of family reunion and lax borders means that asylum seekers keep coming in large numbers.

    In contrast to the Netherlands and Denmark, Germany has not produced a comprehensive recent cost-benefit analysis of migration. No official lifetime cost estimates exist. Yet the consequences are increasingly visible: rising violent crime, public schools where students of migrant backgrounds make up 42 percent of the pupils (with some schools reaching 90 percent), cultural fragmentation, and an overburdened welfare and healthcare system. Even Germany’s once-abundant tax revenues are no longer enough. A €172 billion (approximately $119 billion) budget shortfall looms, worsened by promises such as a special pension for mothers. Meanwhile, the government is floating the idea of a “Boomer-Soli,” a new tax on “big pensions” above €1,000 ($1,158) per month.  

    The warning lights are flashing, but the government continues to kick the can down the road. Painful, necessary reforms to the welfare state, pensions, and immigration policy are endlessly postponed or even ignored.

    Instead, policymakers debate introducing migrant quotas in public schools, some of which already serve only halal food and have reportedly abandoned Christmas celebrations in favor of mandatory Ramadan events.

    Meanwhile, thousands of individuals in Germany have faced lawsuits for sharing memes, voicing criticism, or insulting politicians. Most of these cases were brought by politicians from the left: the Green party, the Free democrats (FDP) and the Social Democratic party (SPD).  In one case, a pensioner was subjected to a police search and later sentenced simply for sharing a meme. A journalist from a right-wing populist publication received a suspended prison sentence and a fine for posting an image of former Interior Minister Nancy Faeser edited so that she was holding a sign that read: “I hate freedom of speech.”

    Economically, things look equally bleak. After a disastrous trade deal between the EU and the Trump administration, Germany’s once-mighty automotive industry faces another blow amid already collapsing revenues. Even the unions seem more focused on climate activism and class struggle than job security. Well-paid industrial jobs, they hope, will be preserved by the “green economy.” Some hope.

    After five years without significant economic growth, any rational politician should be deeply alarmed. Instead, Chancellor Friedrich Merz touts vague promises that 61 companies are ready to invest €631 billion ($730 billion) in Germany. He seems to hold the misguided view that subsidies alone can salvage what remains of Germany’s crumbling economic model.

    It is a sobering reality when the Vice President of a foreign country appears more concerned with Germany’s future and problems than its own political class.

  • Trump has gained the upper hand over China

    Stockholm

    This week, the fate of the global economy could have been decided over a Mongolian barbecue in a Stockholm tourist trap. On Tuesday, just 50 yards from Sweden’s seat of government, Rosenbad – where the US Treasury Secretary Scott Bessent and the Chinese Vice Premier He Lifeng had been wrangling over trade negotiations – the Chinese delegation suddenly exited the talks and headed for lunch near the Mongolian buffet place, where they had eaten the day before. Its windows were covered up and a sign announced it would be closed for three days for a “private event.” The Americans stayed behind, making do with salad.

    China, still the factory of the world, remains the biggest test of Donald Trump’s resolve

    The Chinese had left to “report back to the mothership,” as Bessent later put it. But the mothership apparently did not budge. After talks resumed, it soon became clear that no breakthrough agreement had been struck.

    China wanted another extension to its tariff truce with America, which expires on August 12. Bessent said that was a call for his mothership, Donald Trump. The Treasury Secretary seemed to hint that Trump would approve such an extension. “Just to tamp down that rhetoric, the meetings were very constructive. We just haven’t given that sign-off,” he said, diplomatically.

    The problem is that two major issues haven’t been resolved: fentanyl, and the Chinese support for Russia and Iran. On fentanyl, “we seem to have a sequencing problem,” said Bessent, delicately. The Chinese want Trump’s tariffs to be reduced before they take action to prevent the manufacture of the chemicals that make the drug, which killed 50,000 Americans last year. The US side wants things to happen the other way round.

    Moving on to Iran and Russia, Bessent said: “One thing we are not pleased with, I’m sure the President won’t be, but it’s no secret: the Chinese buying 90 percent of Iranian oil. They’ve contributed $15 billion in dual use technology to the Russian war machine.”

    Insiders and Chinese officials kept a nervous eye on Trump’s Truth Social media account for signs of an angry orange eruption. But Trump, returning from Scotland on Tuesday night, sounded sanguine. “They had a very good meeting with China, and it seems that they’re going to brief me tomorrow,” he told reporters on Air Force One. The President appears to be in a better mood than he was in February, when he seemed hellbent on exploding trade relations with the world and especially China.

    On rare earth metals and magnets, Bessent and his Chinese counterparts appear to have made progress, building on previous meetings in London. Other key topics that didn’t make it to the negotiating table were the future of TikTok and a possible meeting between Trump and Xi – “that’s at the leaders’ level”, the Americans said.

    Officials inside the room told me that most of that time was spent playing a civil but pointed game of “My economy’s bigger than yours”. 

    “We had a big exchange – a very long exchange – and briefings on the economies of both countries,” Bessent reported. The Chinese, he added, “believe that their economy is in good shape.”

    America’s aim is to rebalance China’s financial model – which Bessent calls “the most unbalanced economy in modern times,” the likes of which we haven’t “seen since the British Empire” – away from mass manufacturing and toward internal consumerism. This isn’t just about dollar dominance or bringing in an estimated $300 billion to the US economy from tariffs: it’s about changing China. “They believe that they have a robust consumer economy, and they do not believe that they have a manufacturing surplus that is making its way into the rest of the world. Which I disagree with,” said Bessent.

    Outside the nearby Sheraton and Diplomat hotels, bored police officers milled about. Anyone searching for drama had to look to the press corps, which consisted mostly of Chinese journalists. Trade talks are bigger news in Beijing.

    There was some fretting about “optics” from US officials. Representatives of the US Treasury were concerned about the white-walled room the Swedes provided for Bessent’s television appearance – “hostage vibes,” muttered one aide. A spat over the positioning of the Chinese and American flags outside Rosenbad was also rumoured.

    What’s clear is that Trump has gained the upper hand in the trade war. When he unleashed his tariffs on what he called “liberation day,” the global expert consensus was clear: disaster. The tariffs, we were told, would amount to the largest tax hike on Americans since the 1910s. Inflation would soar. Growth would stall. Businesses and capital would flee.

    But the orthodoxy has, so far at least, been proved wrong. The numbers have come in better than expected. Inflation has stayed close to the 2 percent target. Almost 800,000 jobs have been created this year. Second-quarter GDP is expected to grow at a healthy rate of 2.4 percent. The stock market has rebounded sharply and is up nearly 10 percent since Trump’s re-election. The forecasts were pessimistic.

    America has won in Europe too. Europe has agreed to invest some $1.4 trillion into American energy and infrastructure in exchange for a reduced yet still significant tariff rate of 15 percent. The French Prime Minister called it “submission”.

    America has won in Europe too

    America has effectively challenged Europe to pick a side, Washington or Beijing, and for now Europe has chosen Washington. “I don’t know if they have our back,” said Bessent, “but clearly, the European relationship with the Chinese had a substantial deterioration.” As the US put up the tariff wall, the door opened for increased trade flows between Europe and China.

    According to Bessent, however, the EU has decided that being flooded with more cheap Chinese goods – while Beijing continued to protect its manufacturing at every turn – is not an economic blessing.

    “I had told them: this is what’s going to happen,” says Bessent. “There is now much more unity between the US and the allies. They’re now seeing the downside [of China] the US has seen.”

    The tariff regime, then, has frightened the world away from its dependence on a frequently malevolent Chinese superpower. Trump’s madman tactic makes everyone crazy, but it appears to have worked. The fear that Trump really might go all the way with his threat of 100 percent-plus tariffs, never backing down, has enabled him to walk things back toward normality while achieving his objectives.

    China, still the factory of the world, remains the biggest test of Trump’s resolve. But all sides know that, as America settles its trade disagreements with the rest of the world, it is Xi Jinping who now most needs the tariff pause to continue.