Will The Fed Use The Excuse Of Tariffs For The Inflation They Create?

Authored by Daniel Lacalle,

Inflation is rising, but it has nothing to do with tariffs. It has everything to do with the Fed’s policy and the Treasury’s uncontrolled spending.

The Core PCE Price Index, which excludes food and energy, rose by 0.2% this month and remains stubbornly high at 2.8% annualized. The headline PCE Price Index increased by 0.3%, the first 0.3% monthly increase in eight months. This has pushed the annualized increase to 2.55%, the highest in seven months.

Obviously, this inflation trend has nothing to do with tariffs but with the fact that government spending soared 10% in 2024, and money supply growth is at a two-year-high.

The Federal Reserve created inflation in 2020 when money supply growth rose at its fastest pace in decades to finance the enormous increase in government spending and perpetuated inflation, keeping an ultra-loose policy for two more years. Furthermore, in 2024 the Fed panicked and delayed its balance sheet reduction in June only to cut rates in September. All these measures, designed to hide the increasing unsustainability of government spending, have perpetuated inflation, reaching an accumulative inflation measured by CPI of almost 25% in four years.

The M2 money supply saw an unprecedented increase in 2020, with a year-over-year growth rate hitting over 23% by August 2020. This was the highest growth rate since records began in 1981.

From February 2020 to November 2024, the United States M2 money supply has soared from $15.4 trillion to $21.45 trillion, which is a cumulative growth of about 39.3%.

In the same period, cumulative inflation measured by CPI rose almost 25%, with some essential goods like gas or food rising more than 40%. The entire inflationary spiral is caused by the historic accumulation of newly created money looking to finance the rising excess in government spending, which stood more than $2 trillion above the 2019 level by 2024.

Tariffs may have plenty of consequences, but they do not cause inflation. Inflation is the erosion of the currency’s purchasing power, and it can only occur when money supply growth, almost always driven by much higher spending, exceeds private sector demand. Furthermore, there has never been an instance in history in which the money supply did not soar alongside government spending.

Tariffs may lead to increases in some individual prices if the goods affected are entirely produced abroad and demand is inelastic, but they do not increase aggregate prices, let alone create an annualized and constant increase, as measured by CPI. Only aggressive fiscal and monetary policies cause inflation. Furthermore, if the quantity of money in the system remains unchanged, tariffs would make prices drop because the units of currency available to purchase the rest of the goods and services would be significantly smaller.

Tariffs, like oil prices, may have relevant implications on numerous trade factors, but they do not cause inflation. If the money supply is unchanged and oil prices rise, the rest of the goods and services decline. Same with tariffs. Oil prices and tariffs are inherently deflationary unless newly created currency and money supply growth rise faster. Furthermore, oil and tariffs may have an impact in the short term, but they do not make aggregate prices go up, consolidate the increase, and continue rising, which is what annualized CPI and PCE measure.

Why is this important? Keynesians want to continue imposing inflationism and blaming external factors for the erosion of the purchasing power of the currency.

This week, the Federal Open Market Committee (FOMC) talked about the possible implications of tariffs but refrained from making definitive statements on their immediate impact on interest rates.

Jerome Powell highlighted a “very, very wide range of possibilities” regarding the consequences of tariffs, indicating that the Fed is waiting to see what policies are enacted before assessing their impact on the economy. Powell emphasized that they need to see more data to evaluate how tariffs will affect consumers and the broader economic landscape, according to the FOMC minutes.

Thus, the narrative has already been created. If inflation continues to rise, the Federal Reserve will use the tariff excuse just as it used the “supply chain disruption” and “re-opening” fallacy in the past. However, the reality remains that an abrupt money surge always creates inflation, and the Fed is not fulfilling its mandate.

The excuse has been created. Governments will continue to spend and increase deficits and debt, central banks will continue to print, and they will blame tariffs just as they blamed supply chain disruptions.

The most important objective of Keynesians is to make you think that the consequences of inflation are the causes. Only rising money supply driven by soaring government spending, which makes money velocity increase, creates inflation.

Tyler Durden Mon, 02/03/2025 - 08:35

"The Market Wasn't Prepared For It": Futures Tumble, Dollar Soars As Trade War Starts

US equity futures tumbled as the market prepares for Trade War 2.0, with both tech and small-caps underperforming as the dollar soared more than 1% pre-mkt, trading near a two year high and the yield curve bear flattens after Trump announced tariffs on Canada, Mexico and China, and warned that European levies are coming. The Canadian dollar fell to its lowest since 2003 and the euro weakened. As of 8:00am ET, S&P futures are down 1.7%, but off session lows having tumbled as much as 2% earlier; Nasdaq futures slide 1.7% with the Mag7 all broadly lower (GOOGL -1.8%, AMZN -2%, AAPL -1.9%, MSFT -1%, META -2%, NVDA -3% and TSLA -3%). Pre-mkt, Mag7/Semis are providing no safety and Cyclicals ex-Energy are under pressure as the market analyzes whether "Trade War 2.0 ushers the end of US Exceptionalism" according to JPM. The 2Y yield is +7bps pre-mkt as the bond market forecasts an inflationary impulse from the tariffs, indicating the market is not selling off on growth but rather on inflationary fears. Trump is said to have calls scheduled with Canadian and Mexican leaders today but warns that tariffs will be implemented on Tuesday if no deal is achieved; sets EU as the next target. Today’s macro data focus will be on ISM-Mfg, Vehicle Sales, and Construction Spending.

In premarket trading, North American stocks most exposed to tariffs fall after President Trump followed through on pledges to impose tariffs on Canada, Mexico and China. Shares in automakers, chipmakers and energy companies decline (General Motors (GM) -7.3%, Ford Motor (F) -4.2%, Tesla -3%; Nvidia (NVDA) -3%,  Broadcom (AVGO) -3%; Constellation Energy (CEG) -4%, Oklo (OKLO) -8%). Companies exposed to manufacturing or imports from China are also down: (AAPL -1.9%, DELL -3%). Here are some other notable premarket mover:

• Becton Dickinson (BDX) climbs 2% the medical device maker is considering a potential separation of its life sciences segment, which could be valued at about $30 billion, according to people familiar with the matter.
• Aptiv (APTV US) shares drop 4.9% after Raymond James downgraded the auto parts company to market perform from outperform.
• Stratasys (SSYS) rises 10% after Fortissimo Capital agreed to buy 14% of the 3D printing company.
• Prologis (PLD US) shares fall 3.0% after Raymond James downgraded the real estate investment trust to market perform.
• Triumph Group (TGI) jumps 34% after private equity firms Warburg Pincus and Berkshire Partners agreed to take the aircraft parts and services supplier private for about $3 billion, including debt.

The impact of tariffs ricocheted across global markets. It wasn't just US stocks that got hit: European carmaker shares fell, with Volkswagen AG and Stellantis NV shedding more than 5%. Crypto was also hammered as Ether plunged 11% in a broad move away from risky assets. Meanwhile, oil prices climbed on worries about a disruption to supply.

Trump’s move is the most extensive act of protectionism taken by a US president in almost a century, with knock-on effects on everything from inflation to geopolitics and economic growth. Goldman Sachs strategists said there’s a risk of a 5% slump in US stocks because of the hit to corporate earnings, while RBC estimated the range at 5% to 10%.

"He seems to be like a poker player who’s betting his whole stash on the first hand,” Steven Englander, global head of G-10 FX research at Standard Chartered Plc, told Bloomberg TV on Monday. “The market just wasn’t prepared for it.”

The worry among investors is that US tariffs will force companies to raise prices in response, causing inflation to accelerate and consumers to pull back on spending. An analysis by Bloomberg Economics estimates the tariff impact may knock 1.2% off US economic growth and add 0.7% to the core personal consumption expenditures price index. “We doubt that many companies will be able to avoid the impact of tariffs,” said Kathleen Brooks, research director at XTB Ltd. “Their actual implementation and the retaliatory tariffs that followed felt like crossing the Rubicon.”

On the other hand, the market appears confident that the tariffs will be a short-term affair, with Polymarket giving 65% odds that the tariffs against Canada are removed before May.

European stocks also tumbled as investors brace for the region to be the next target of President Trump’s trade tariffs. The Stoxx 600 is down 1.3%, as automobile and technology shares are the worst-performing sectors, while telecommunications and utilities stocks are posting the smallest losses. Here are the most notable movers:

• Atoss Software rises as much as 5.4% after the workforce management software maker was upgraded by analysts at Hauck & Aufhaeuser following its recent results
• Gulf Keystone Petroleum, Genel Energy and DNO are all pushing higher on Monday after Iraq’s parliament passed a long-awaited plan to boost payments to oil companies
• European stocks most exposed to tariffs like automakers and miners decline on Monday after US President Donald Trump followed through on pledges to impose levies on Canada, Mexico and China
• Julius Baer shares fall as much as 12%, the most since November 2023, after the bank reported adjusted pre-tax profit that came in short of expectations and didn’t announce a new share buyback program
• Speedy Hire shares drop as much as 32%, slumping to levels not seen since 2011, after the equipment rental firm warned full-year profitability will be lower than anticipated due to the weaker economic environment and a downturn in performance at its joint venture in Kazakhstan

Earlier in the session, Asian equities fell across the board with the MSCI Asia Pacific Index tumbling as much as 2.8%, its biggest drop since Aug. 5. Some markets saw outsized moves following the Lunar New Year holiday, with Taiwan’s Taiex index briefly down more than 4%. Chinese stocks in Hong Kong trimmed some of their earlier declines, while trading remains shut on the mainland. Trump imposed a blanket 10% levy on China, and 25% duties on both Canada and Mexico. The weekend announcement poured cold water over hopes that there may be negotiations between the US and major economies. In addition to concern over tariffs slowing global and regional economic growth, traders worry the measures will spur inflation in the US, and limit the Federal Reserve’s easing room.

“The Asia weakness might be more of a worry around the US tariffs causing inflation to go up again in US, thus preventing the Fed from cutting rates, which also means dollar strength relative to Asian currencies,” said Xin-Yao Ng, an investment director at abrdn Plc in Singapore.

In FX, the Bloomberg Dollar Spot Index climbed 0.9%, paring some of its earlier advance after a report that China has prepared an initial proposal for trade talks with the Trump administration. The yen reversed an earlier fall to trade slightly higher against the greenback. The Mexican peso underperforms with a 2% fall. The South African rand dropped 1.5% after Trump said the US would halt all future funding to the country because of a new law that allows the state to seize private land in the public interest.

In rates, the Treasury curve flattens as shorter-dated US bonds fall on inflation concerns - US two-year yields rise 7 bps. Bunds and gilts rally meanwhile as traders boost their ECB and BOE interest rate-cut bets. German and UK 2-year yields fall 7 bps each.

In energy markets, tariffs on imports from Canada and Mexico threaten to disrupt North America’s tightly integrated oil market and push up gasoline prices for American motorists. West Texas Intermediate jumped 2.4% above $74 a barrell. Reflecting expectations that refiners will face higher costs, gasoline futures soared as much as 6.2% in New York. Spot gold is steady near $2,795/oz. Bitcoin falls 2% to below $96,000.

The US economic calendar includes January S&P Global US manufacturing PMI (9:45am), December construction spending and January ISM manufacturing (10am); ahead this week are JOLTs job openings, ADP employment change and January jobs report. Scheduled Fed speakers include Bostic (12:30pm) and Musalem (6:30pm)

Market Snapshot

• S&P 500 futures down 1.5% to 5,978.75
• STOXX Europe 600 down 1.4% to 532.23
• MXAP down 2.4% to 179.77
• MXAPJ down 2.2% to 564.23
• Nikkei down 2.7% to 38,520.09
• Topix down 2.4% to 2,720.39
• Hang Seng Index little changed at 20,217.26
• Shanghai Composite little changed at 3,250.60
• Sensex down 0.4% to 77,166.59
• Australia S&P/ASX 200 down 1.8% to 8,379.36
• Kospi down 2.5% to 2,453.95
• German 10Y yield little changed at 2.41%
• Euro down 1.1% to $1.0253
• Brent Futures up 1.0% to $76.44/bbl
• Gold spot up 0.0% to $2,799.47
• US Dollar Index up 0.96% to 109.41

Top Overnight News

• China is preparing a list of concessions to avoid an escalation in Trump’s trade war, including purchasing more American goods, investing more in the US, a commitment to avoid yuan devaluations, curbing fentanyl precursor exports, and agreeing to treat TikTok as a commercial (not a national security) issue. WSJ
• China’s Caixin manufacturing PMI for Jan comes in at 50.1 (down from 50.5 in Dec and below the Street’s 50.6 forecast). RTRS
• BOJ board members expressed concerns at their January meeting about the weakening yen and its impact on inflation, a summary shows. BBG
• Eurozone CPI for Jan runs a bit hot at +2.5% headline (up from +2.4% in Dec and vs. the Street +2.4%) and +2.7% core (flat vs. Dec and vs. the Street +2.6%) (Bloomberg); US home values to see a ~$1.5T drop in value over the next three decades as a result of climate change. WSJ
• Trump ramped up his tariff threats to the European Union while saying he would speak with the leaders of Canada and Mexico, as stock markets sank following a hectic weekend that saw prospects for a trade war turn into reality. Trump says will "definitely" slap tariffs on the EU "very soon.” BBG
• Trump suggested that the UK might escape punitive tariffs, although he said Britain was “way out of line” and that he was considering whether to target its exports. FT
• Mexican President Claudia Sheinbaum will announce details of her government’s “Plan B” response to tariffs today. Canada’s two biggest provinces will remove US products from government-run liquor stores. BBG
• House Republican leaders want committees to land deeper spending cuts in their party-line bill to enact President Donald Trump’s domestic agenda, as they scramble to address a rebellion from key Budget Committee members who think Speaker Mike Johnson’s initial plan falls short. Politico
• Elon Musk said his DOGE team is halting some Treasury payments to federal contractors as part of aggressive cuts to US spending. He’s also in the process of shutting down USAID after staff were denied access to its systems. BBG

Trade War News

• White House said US President Trump signed the tariff order effective February 4th which confirms 25% tariffs on all Mexican and Canadian imports to the US with the exception of a 10% tariff on Canadian energy products, while imports from China are subject to an additional 10% tariff on top of existing levies with no exclusions offered. The order stated the new tariffs don’t apply to goods loaded onto vessels or in transit before February 1st and stated the President can remove new Canadian tariffs if enough steps are taken to reduce the health crisis but also included a retaliation clause that calls for further action which would likely be increased tariffs.
• US President Trump said tariffs will definitely happen with the EU, while he added the UK is out of line and the EU is really out of line but also noted that he is getting along well with UK PM Starmer, while he stated there are tremendous deficits with Canada, Mexico, China and the EU. Furthermore, Trump said he will be speaking with Canadian PM Trudeau on Monday morning and will also be speaking with Mexico on Monday.
• Elon Musk’s team got access to the US Treasury Department’s payments system. It was separately reported that Elon Musk said they are in the process of shutting down the United States Agency for International Development and that it is beyond repair: NYT
• US Transport Secretary Duffy said the US pilot messaging system experienced a temporary outage on Sunday.
• Wall Street is concerned about Treasury Secretary Scott Bessent’s approach to government borrowing. Investors credit a 2023 strategy of relying on short-term Treasurys with stabilising markets, but Bessent has criticised this method amid fears of increased borrowing under Trump’s administration: WSJ
• Russia's Kremlin, on US President Trump, said talks and meetings are scheduled with Russia, apparently contacts are planned, "we have a planning process".
• Saudi Arabia could be seen as a possible venue for a Trump-Putin meeting, according to Russian sources: Reuters.
• The US House Budget Committee is unlikely to mark up a budget resolution this week, according to GOP leadership sources and lawmakers: Punchbowl.
• Canadian PM Trudeau said the new US tariffs violate the USMCA trade agreement and Canada will impose 25% tariffs on CAD 155bln of US goods with CAD 30bln in tariffs to take effect on February 4th and the rest starting in 21 days. Furthermore, Trudeau said they are considering several non-tariff measures including those relating to minerals and energy procurement, while he added that Canada and Mexico are working together to face the US tariffs.
• Canadian senior government official said the Canadian tariffs will not apply to goods in transit and that the actions of the US are a violation of the obligations of the free trade agreement, while the official added that Canada’s countermeasures will have an impact on the Canadian economy and the government has a plan to try to offset them.
• Canadian Ambassador said she is hopeful that the Trump tariffs don’t come into effect on Tuesday and that US consumers should know retaliatory tariffs are not actions Canada wants to do.
• Mexican President Sheinbaum ordered the start of a retaliatory tariff plan against the US and stated that tariffs will not fix problems but dialogue will, while it was separately reported that Mexico’s Economy Minister said ‘Plan B’ is underway in response to US tariffs. President Sheinbaum later commented that 25% tariffs will have a great impact on both the US and Mexico’s economies, while she added that they categorically reject the US statement that Mexico has ties to drug cartels and stated the US has done nothing to stop the illegal sale of drugs in its own country.
• China’s Commerce Ministry said China will take necessary countermeasures to new US tariffs and that Fentanyl is America’s problem. Furthermore, it said China will challenge the new US tariffs under WTO and that there are no winners in a trade war, while it urged the US to engage in frank dialogue and strengthen cooperation.
• Goldman Sachs believes US tariffs on Mexico and Canada are to be short-lived.
• JPMorgan said model estimates suggest that impact of a sustained 25% US tariff will be large enough to throw Mexican and Canadian economies into recession.
• China is to renew a pledge not to devalue the yuan to help its exporters and it is to offer to reinstate the 'Phase One' deal as part of its opening bid for trade negotiations, while it plans to include an offer to make more investments in the US and is to treat TikTok largely as a commercial matter in negotiations, according to WSJ.
• EU said it rejects US President Trump's decision to hit Canada, Mexico and China with tariffs and it would respond firmly if the US imposed tariffs on Europe, according to FT.
• Yale’s non-partisan policy research centre Budget Lab preliminary estimates project US PCE prices to increase by 0.76% and household purchasing power to be reduced by an average of USD 1250, while US real GDP is projected to contract by 0.2% in the medium run, as an impact from US President Trump’s tariffs.

Here is a more detailed look at global markets courtesy of Newsquawk

APAC stocks sold off as all focus was on US President Trump's latest tariff action over the weekend in which he signed a tariff order which confirms 25% tariffs on Mexico and Canada (with the exception of 10% on Canadian energy products) and 10% additional tariffs on top of existing levies for China. ASX 200 declined with all sectors suffering firm losses while mixed data did little to spur demand. Nikkei 225 slumped firmly beneath the 39,000 level with Japanese automakers notably spooked by tariff jitters. Hang Seng conformed to the negative mood on return from the Chinese New Year holiday with demand constrained after disappointing Chinese Caixin Manufacturing PMI and amid the continued absence of mainland participants.

Top Asian News

• BoJ January Meeting Summary of Opinions stated one member said Japan public's inflation expectations are heightening as inflation exceeds 2% for four straight years and a member said raising rates at this timing would be sufficiently neutral when compared with average market expectations. It was also stated that Japan's economy is resilient enough to absorb potential downside stress from the new US administration's policies and that BoJ's policy flexibility has increased as the Fed is likely to pause on rate hikes. Furthermore, a member said real interest rates remain deeply negative even after a rate hike and need to keep raising rates if the economy and prices are on track

European bourses (Stoxx 600 -1.5%) opened lower across the board following a dire APAC session as risk is hit by US President Trump's imposition of tariffs on Canada, Mexico, and China, whilst also keeping the EU in its sight. Broad-based losses are seen across the majors. Sentiment has attempted to improve in today's session but still reside firmly in the red. European sectors are entirely in the red, with a clear defensive bias; Autos are by far the clear underperformer today, with Tech and Basic Resources following behind - all of which are digesting the Trump tariffs. US equity futures are entirely in the red, with some underperformance in the economy-linked RTY (-2.1%) as traders weigh up the inflationary/economic impact on the US.

Top European News

• EU leaders to meet on Monday talk defence; no specific discussion on US tariffs expected but issue likely to be raised, according to an official cited by CNBC. "There’s a consensus in the European Union that one way to mitigate trade tensions with the US will be by increasing energy purchases." Source added "there’s a realization that a trade confrontation with the EU is approaching."
• ECB's Kazimir said last week's 25bps rate cut moved the bank closer to its destination but is not there yet. Forecasts, services inflation and wage developments will help navigate what will happen in April and beyond.
• ECB’s Knot expects US tariffs to lead to higher interest rates and a weaker euro, while he said the best response to US tariffs would be to do nothing although he expects retaliation.
• ECB's Villeroy said US President Trump's tariffs will increase economic uncertainty, "it is a very worrying development", "There will likely be further rate cuts". Tariffs are brutal and will hit the autos sector. Everyone loses in this kind of protectionist trade war. Should not rule out any riposte from EU if Trump does impose tariffs on the bloc.
• German Chancellor Scholz said EU can react with its own tariffs [against the US] but cooperation is more important.
• UK Govt. Spokesperson said the UK and US have a fair and balanced trading relationship which benefits both sides of the Atlantic.

FX

• USD is firmer vs. all peers after US President Trump announced 25% tariffs on Mexico and Canada (with the exception of 10% on Canadian energy products) and 10% additional tariffs on top of existing levies for China. The risk-aversion and potential ramifications for Fed policy are acting as the driving force for price action this morning. US ISM Manufacturing is due later.
• EUR/USD has been hit after comments from US President Trump that tariffs will definitely happen with the EU. EU said it rejects US President Trump's decision to hit Canada, Mexico and China with tariffs and it would respond firmly if the US imposed tariffs on Europe, according to FT. ECB's Villeroy noted that Trump's tariffs will increase economic uncertainty and there will likely be further rate cuts". Headline EZ HICP Y/Y printed just above expectations but had little impact on the Single-currency; currently around 1.0234.
• JPY is marginally firmer vs. the USD on account of its safe-haven appeal. Macro drivers for Japan are lacking and therefore, global risk dynamics are likely to remain a key driver in the near-term. USD/JPY is back above its 50DMA at 154.87 with a current session peak at 155.88.
• GBP is notably weaker vs. the USD but firmer vs. the EUR. US President Trump stated that the UK is also out of line but then suggested he is getting on well with PM Starmer. GBP is seeing shallower losses than some peers on account of its relatively smaller trade deficit.
• Antipodeans are both markedly hit by the global growth impulse from Trump's trade war as well as suffering from their direct exposure to the Chinese economy. Other macro drivers include mixed Australian data, disappointing Chinese Caixin Manufacturing PMI and wide expectations for cuts from both the RBA and RBNZ this month.
• The Canadian Dollar and Mexican Peso have both been hit hard by US President Trump's decision to impose 25% tariffs on Mexico and Canada (with the exception of 10% on Canadian energy products). Canadian PM Trudeau said the US tariffs violate the USMCA trade deal. Canada considering non-tariff measures, including minerals & energy procurement.

Fixed Income

• USTs are a little firmer today, with the main focus on US President Trump's announcement of 25% tariffs on Mexico and Canada. Seemingly the impact of inflation/economic headwinds has been outweighed by a flock to quality. The US curve is currently in bear-flattening mode with the 2s10spread narrowing by 6.9bps. The 10yr yield had been as low as 4.496% but has since stabilised around the 4.55% mark. Ahead, US ISM Manufacturing metrics.
• Bunds gapped notably higher at the open with traders wary of the negative growth impulse from the ratcheting up of trade tensions over the weekend. For the EU specifically, US President Trump that tariffs will definitely happen with the EU. ECB's Villeroy noted that Trump's tariffs will increase economic uncertainty and there will likely be further rate cut. Headline EZ HICP Y/Y printed just above expectations, but had little impact on Bunds; Mar'25 Bund has been as high as 133.26, stopping shy of the YTD peak at 133.48.
• Gilts are on a firmer footing, in-fitting with Bunds. US President Trump stated that the UK is also out of line but then suggested he is getting on well with PM Starmer. Mar'25 Gilt has hit a fresh YTD peak at 92.94. UK 10yr yield is just about holding above the 4.5% mark.

Commodities

• Choppy trade for crude prices thus far; the complex initially gapped higher when contracts opened, as traders digested a 10% tariff on Canadian energy products. Prices remain firmly in the green but have slipped off best levels, in-fitting with the risk-tone; action which continued into European morning. As it stands, WTI outperforms Brent by circa. USD 0.65/bbl - ING highlights that Canada is a key supplier of crude oil to the US and that many US refineries are configured to run on Canada's "heavier crude". WTI currently sits around USD 73.80/bbl within a USD 73.48-75.18/bbl range. OPEC+ JMMC Meeting is due at 13:00 GMT / 08:00 EST, but is unlikely to provide a meaningful recommendation.
• Spot gold is a little lower in today's session, and with price action fairly choppy; heading into the European morning, the yellow metal was considerably lower, but since pared in the European session, before falling back incrementally into the red. XAU/USD currently off by around USD 2.20/oz, trading in a USD 2772.20-2809.59/oz range.
• Base metals are entirely in the red, in reaction to the Trump tariffs on Canada, Mexico and China; latest tariff offensive and potential retaliation pose a risk to the global economy, while the red metal's largest buyer also remained absent from the market for the Spring Festival. 3M LME copper resides in a USD 8,922.20-8,992.13/t range this morning - off worst levels seen in APAC hours.
• OPEC+ JMMC meeting to be held at 13:00 GMT / 08:00 EST, according to Kepler's Bakr.
• Several OPEC+ sources suggested the group will not adjust its output plans for now since the crude market remains fragile and amid waning demand in China, according to Bloomberg sources.
• Gas processing plant in Russia's Astrakhan region suspended operation before drone attack, according to a Governor.
• Russian oil product exports from Black sea port of Tuapse planned at 0.799mln T in Feb, vs 0.789mln T scheduled for Jan, according to Traders cited by Reuters.
• Iraq’s parliament approved the compensation plan to resolve the Kurdistan oil dispute and seeks to expedite northern exports. It was separately reported that Iraq’s northern Khor Gas field was targeted by a drone attack although no damage was reported and production remained unaffected.
• Alberta’s Premier called for an immediate effort to build oil and gas pipelines to Canada’s coast and stated that Trump’s tariffs will harm people and strain US-Canada ties.
• Goldman Sachs said a potential tariff-driven decline in US natural gas imports from Canada is too small to significantly raise natural gas prices, while medium-run risks to oil prices are skewed downside because persistent broad tariffs would weigh and it expects limited near-term additional effects on global, Canadian, and Mexican crude prices.
• Vitol said it expects global oil demand to peak at almost 110mln BPD at the end of the decade and then retreat to around the current levels of about 105mln BPD in 2040, according to FT.
• JPMorgan said US tariffs keep them near-term bearish on base metals and reinforce their bullish gold view, while it added that LME base metals prices are likely to face stiff near-term bearish pressure on growth concerns, macro risk-off, and USD strength.
• US President Trump's advisers reportedly concede that US frackers won’t pump much more oil, according to WSJ sources. Trump's best level to bring down oil prices would might be to persuade OPEC to add more barrels, but Saudi has told former US officials that it is unwilling to augment global oil supplies. Advisers told some oil-and-gas donors they understand the president can’t rely on US frackers to boost production in the short term. On Iranian sanctions, Trump’s team has estimated Iran’s exports could be reduced by 500-750k BPD from sanctions under consideration, sources added. Iranian sanctions discussed include targeting Chinese ports that import Iran’s oil, Iraqi oil deals with Iran and other places used to facilitate the transfer of Iranian oil.

Geopolitics: Middle East

• "Hamas leader told Al-Sharq: According to the ceasefire agreement, negotiations on the second phase are supposed to begin today ", according to Asharq News.
• "Iranian Foreign Ministry: We have not seen any sign of negotiation by the US government", according to Sky News Arabia.
• Israeli PM Netanyahu spoke on Saturday with US special envoy Steve Witkoff and then travelled to the US on Sunday for a meeting with US President Trump, while Witkoff will speak with Qatar’s PM and Egyptian representatives.
• Israel’s military said its aircraft fired to repel a suspicious vehicle moving towards northern Gaza without passing through the inspection route, in violation of ceasefire terms, while it was separately reported that four Palestinians were wounded in an Israeli strike on a car on Gaza’s coastline.
• ICRC announced 3 hostages were transferred out of Gaza to Israel and 175 Palestinian detainees were transferred from Israeli detention centres to Gaza and the West Bank.
• Qatar’s PM called on Israel and Hamas to immediately begin negotiations on the second phase of the Gaza ceasefire and said that Qatar is prepared to host released Palestinian prisoners if they choose to come but added there is no clear plan for when negotiations towards the second phase will begin.
• US President Trump and Egyptian President Sisi discussed complicated issues and crises in the Middle East during a phone call, as well as discussed the need to strengthen economic and investment relations.
• Hamas political bureau’s deputy head is to visit Moscow on Monday for talks scheduled at the Russian Foreign Ministry, according to RIA.

Geopolitics: Ukraine

• Ukrainian President Zelensky said a Russian aerial bomb destroyed a boarding school in Russia’s Kursk region even though dozens of civilians were there, while Ukraine’s military later stated that four died and dozens were injured in the Russian strike on the boarding school.
• Ukrainian President Zelensky’s aide said calls by US President Trump’s aide for a truce followed by an election is a failed plan if that is all it consists of.
• Ukrainian Air Force said on Sunday morning that 40 drones were launched by Russia during an overnight strike, while Russia’s Defence Ministry said Russia shot down a HIMARS projectile and 44 Ukrainian drones over the prior 24 hours and that Russia hit military airfields and fuel storage facilities in Ukraine, according to TASS. It was also reported that Russia launched 165 missiles and drones at Ukraine during an attack on Saturday.
• Russian aviation watchdog said it suspended flights at several airports to ensure safety and Russian officials said several Russian regions are under the threat of drone attacks. Furthermore, it was later reported that a Ukrainian drone attack sparked a fire at an oil refinery in Russia's Volgograd region although the fire has since been contained.

Geopolitics: Other

• North Korea said US Secretary of State Rubio’s comments do not help US interests and it warned that North Korea will respond strongly to hostile US provocations, while it noted that the US new missile defence system plan makes it necessary for North Korea to progress its nuclear deterrence, according to KCNA.
• US President Trump ordered precision military air strikes on the senior ISIS planner and other terrorists he recruited and led in Somalia.
• US President Trump said Venezuela has agreed to receive all illegal migrants captured in the US, while it was later reported that the Trump administration moved to terminate protected status for hundreds of thousands of Venezuelans in the US, according to NYT.
• US President Trump said South Africa is treating certain classes of people very badly and he will be cutting off all future funding to South Africa until a full investigation of this situation has been completed.
• US Secretary of State Rubio called Chinese presence at the Panama Canal unacceptable and told Panamanian leaders that the US would protect its rights under the Panama Canal Treaty if Panama didn’t move to oust Chinese-connected companies near the canal, according to Bloomberg. Furthermore, Panama’s President Mulino said the meeting with Rubio was highly respectful and cordial, while Mulino added sovereignty over the Panama Canal is not up for discussion and that he will not renew the Panama-China agreement over the silk route.
• Taiwan's President said they welcome healthy exchanges with China and that there should be dialogue between Taiwan and China, with the aim of peace.

Us Event Calendar

• 09:45: Jan. S&P Global US Manufacturing PM, est. 50.1, prior 50.1
• 10:00: Dec. Construction Spending MoM, est. 0.2%, prior 0%
• 10:00: Jan. ISM Manufacturing, est. 49.9, prior 49.3, revised 49.2

DB's Jim Reid concludes the overnight wrap

Standby for a manic Monday as the world tries to come to terms with the “shock” tariff announcements from Mr Trump’s administration on Saturday night. I say shock but all Trump did was follow through on exactly what he’s been saying he’s going to do since November. The market has refused to take that threat seriously though, completely under-pricing the risks. So, this leaves the weekend news as a severe shock.

You have probably all seen the details by now so we’ll only briefly recap the story and focus on some of the implications. The US announced 25% additional tariffs on imports from Canada (ex-energy imports at 10%) and Mexico, and a 10% additional tariff on China. These will start on February 4th and will be implemented under the International Emergency Economic Powers Act (IEEPA), citing a national emergency due to “the extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl”. In response, Canada has retaliated by announcing 25% tariffs on CAD155bn of US goods, of which CAD30bn start on Tuesday and the remainder in three weeks' time. Mexico’s President said that she’d instructed the Economy Minister to “implement the Plan B” they’d been working on and has signaled that the details of this plan will come today. China have said they would “take necessary countermeasures to defend its rights and interests”. The Commerce Ministry also said they’d file legal proceedings at the WTO.

These three countries make up around 40% of imported US goods, at around $1.35tn. To put this is some perspective, in the first Trump administration, the US targeted around $350bn of Chinese goods. So this is huge versus anything seen for decades with regards global trade and at face value takes us back to the protectionist period between the two world wars in terms of scale of tariffs. The average duty rate on US imports would move from 2.3% to around 10% assuming no trade redirection.

Before we look at the implications, we should say that it’s still possible these tariffs get negotiated away within hours, days or weeks. It’s also possible there are legal challenges which reverse their implementation. It will be interesting how the US courts respond. Trump doubled down on social media yesterday saying “This will be the golden age of America! Will there be some pain? Yes, maybe (and maybe not!). But we will make America great again, and it will all be worth the price that must be paid. We are a country that is now being run with common sense - and the results will be spectacular!!!” Last night, Trump did say that we would hold separate calls with the leaders of both Canada and Mexico on Monday morning, but added that “I don’t expect anything very dramatic” from these. So while we can’t rule out a last-minute deal, there is no sign that he is about to enter into a grand bargain and his “pain” comments are a warning to those who think he'll backtrack if US equity markets fall. Separately, last night, Trump also renewed the threat of tariffs against the EU, saying they “will definitely happen” and “it’s going to be pretty soon.”

In terms of implications, if implemented and prolonged, Canada and Mexico would likely go into an imminent recession and potentially see a bigger shock than Brexit was for the UK. It should ensure US core PCE hovers around (or above) 3% rather than dip below 2.5%. It would make it more likely that our view that the Fed won't cut this year proves correct and if growth holds up it could encourage a hike. The US is less exposed to the retaliatory tariffs announced so far in terms of size relative to their economy, but you would still expect several tenths of a percent to be shaved off GDP although how much the raised tariff revenue allows for more tax cuts provides uncertainty. Of course, the dollar should initially be higher.

Although tariffs have not been levied on the EU, this is still a serious blow given what will now probably lay ahead. Aside from direct tariffs, many German automakers serve the US market via Mexico, where they produce final and/or intermediate goods. If the EU has to endure 10% tariffs, our economists' analysis has previously suggested it would be worth 0.5-0.9% off GDP all other things being equal. We have budgeted 0.5pp in our current assumptions. The weekend news does makes it more likely our 1.5% terminal rate call on ECB rates by December will materialise. Markets have been hovering comfortably above 2% this year.

In terms of the reaction of markets in Asia, Taiwan’s Taiex (-3.80%) is the biggest underperformer after falling -4.4% at the open, led by a plunge in semiconductor heavyweight TSMC. Elsewhere, the KOSPI (-3.12%) is also tumbling with the Nikkei (-2.42%), the S&P/ASX 200 (-1.83%) and the Hang Seng (-1.25%) also seeing sharp losses in early trade. Meanwhile, Chinese markets remain closed for the Lunar New year holiday and are going to reopen on Wednesday.

US and European equity futures are lower with those on the S&P 500 -2.04%. Stoxx 50 and DAX futures are -2.78% and -2.45% lower as I type. 2yr Treasuries are +4.1bps higher at 4.24% while yields on 10yr USTs are -3.2bps lower trading at 4.51%. In terms of market pricing, money markets have reduced the amount of Fed rate cuts priced by the December meeting by -4.7bps to 42bps.

In FX markets, the Canadian dollar is -1.50% lower, at 1.4762 against the dollar, its lowest since 2003 while the Mexican peso (-2.77%) is also weakening, trading at 21.27 against the dollar, touching its lowest since March 2022.

Early morning data showed that China’s factory activity grew at a slower pace in January amid US tariff fears. The Caixin manufacturing PMI grew 50.1 in January (v/s 50.6 expected) down from 50.5. The Caixin data comes just a week after the official PMI data, which showed manufacturing sector activity unexpectedly shrinking in January.

A preview of the week ahead feels a little parochial now given the weekend news but we’ll plough ahead. In the US, we have the jobs report on Friday, and the ISM indices (today and Wednesday) leading the way. Elsewhere, the focus will be on the BoE decision in the UK (Thursday) and Alphabet (Tuesday) and Amazon (Thursday) earnings as part of 124 S&P 500 and 77 Stoxx 600 companies reporting.

Looking first at payrolls, our economists look for a moderation in the headline (175k vs. +256k previously) and private (150k vs. +223k) release but with higher uncertainty than usual around this. Firstly, the LA wildfires occurred during the survey week, which our economists estimate could reduce payrolls by -20k based on historical comparisons. Secondly, January's gains have been large over the last two years with the low layoff rates perhaps colliding with aggressively seasonal adjustments, although it could have been warm weather that was not prevalent this January. Thirdly, there are BLS benchmark revisions to deal with after last August's preliminary estimates. This could also influence the unemployment rate and make the data discreet from the December release which would now have a different population control to January's with the new revisions.
Staying in the US, other notable US data includes the University of Michigan's consumer sentiment on Friday (DB forecast 73.1 vs 71.1) including the inflation expectations series which has seen some extreme partisan differences in expectations since the election. See my CoTD here on this for a fascinating chart. There will also be the US Treasury borrowing estimates (today) and the quarterly refunding announcement (Wednesday) with our strategists' preview of this here. There are also lots of Fed speakers this week and this will give them their first chance to opine on possible policy implications of the Trump tariff news. We have a selection of these highlighted in the day-by-day week ahead calendar at the end.

For the Bank of England, our UK economist expects the MPC to deliver its third rate cut of the cycle, taking Bank Rate to 4.5% (75bps below its peak) with a 8-1 vote tally. There will also be new economic projections from the MPC as well as a supply projections update from the Bank. See more in our economist's preview here. We’ll also see January CPI for the Eurozone today with the regional numbers already out. In China, notable releases feature the Caixin PMIs (services on Wednesday after manufacturing earlier today) after the official gauges released last week came in below forecasts. Remember China is on holiday until Wednesday.

Looking back at last week now, assuming you’re still here after a lengthy edition this morning. It was a week bookended by equity sell-offs, with a surprisingly blissful calm in-between. The first came with major US tech sell-off on Monday, as the release of DeepSeek’s new AI model led to major questions about their valuations. And while US equities rebounded from that, the S&P 500 then fell by more than 1% in the latter part of Friday’s session after comments from the White House press secretary and then Trump himself confirming the February 1st tariff plans that we heard more about on Saturday. Ultimately, the S&P 500 ended the week down -1.00% (-0.50% Friday). Tech stocks were overall underperformers, with the NASDAQ down -1.64% over the week (-0.28% Friday) as some of the most affected stocks struggled to recover, with Nvidia’s share price down -15.81% (-3.67% Friday). But the equity softness broadened on the tariff news, with the equal-weighted S&P 500 falling -0.77% on Friday (and -0.54% over the week). By contrast, European markets, which closed before the headlines from the White House, saw a stronger performance, with the STOXX 600 up +1.78% (+0.13% Friday) to reach a new record high, in what also marked its 6th consecutive weekly gain.

Meanwhile, sovereign bonds rallied, with the 10yr Treasury yield falling -8.1bps over the week to 4.54% despite a +2.4bp increase on Friday on the tariff headlines. The bulk of the decline took place on Monday, as investors priced in more Fed rate cuts amidst the sharp equity decline. Yields also declined in Europe, with 10yr bund yields down -11.0bps to 2.46%. This mostly took place towards the end of the week, including -5.9bps on Friday, following growth and inflation data that was softer than expected. In particular, the Euro Area economy was stagnant in Q4, contrary to expectations for +0.1% growth. Then on Friday, France’s flash CPI prints for January surprised on the downside, with EU-harmonised CPI at +1.8% (vs. +1.9% expected), while Germany’s was in line with expectations at +2.8%.

Elsewhere in markets, gold prices closed at a record high of $2,798/oz, having risen +1.00% last week (+0.10% Friday) in their 5th consecutive weekly gain. But several other commodities lost ground, with Brent crude oil down -2.22% (-0.14% Friday) to $76.76/bbl, whilst copper fell -0.97% (-0.66% Friday). In the meantime, Euro IG credit spreads closed at their tightest in three years, at 91bps. However, US credit spreads widened, with IG spreads up +1bps, and HY spreads up +5bps.

Tyler Durden Mon, 02/03/2025 - 08:21

The Secret Tariff Code Is Buried In 'Section 2, Item (h)' Of The Executive Order

Authored by 'sundance' via TheConservativeTreehouse.com,

Remember when President Trump established the “External Revenue Service?” … It’s all connected and sequential...

Almost everyone will miss, in part because outcomes appear in a sequence that few care to follow, but buried in the Trump tariff Executive Order {SEE HERE} you will discover something.  As the unofficial Deep State strategist, and the self-appointed misfit explainer of stuff, lol, we will explain:

[Sec 2, SubSection (h)]: Sec. 2. (a) All articles that are products of Canada as defined by the Federal Register notice described in subsection (e) of this section (Federal Register notice), and except for those products described in subsection (b) of this section, shall be, consistent with law, subject to an additional 25 percent ad valorem rate of duty. Such rate of duty shall apply with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern time on February 4, 2025, except that goods entered for consumption, or withdrawn from warehouse for consumption, after such time that were loaded onto a vessel at the port of loading or in transit on the final mode of transport prior to entry into the United States before 12:01 a.m. eastern time on February 1, 2025, shall not be subject to such additional duty, only if the importer certifies to CBP as specified in the Federal Register notice.

[…] (h) For avoidance of doubt, duty-free de minimis treatment under 19 U.S.C. 1321 shall not be available for the articles described in subsection (a) and subsection (b) of this section. {link}

So, Canada and Mexico get 25% tariffs, but China only 10%. 

Why? 

The secret is in that subsection “(h)” when it talks about de minimis treatment.

Essentially, what President Trump is doing is levying a much more massive import tax, and possible confiscation impact on the core source of fentanyl (and other illegal) substances.

(Bloomberg) — President Donald Trump’s new trade levies against China, Canada and Mexico include a broadside against e-commerce, with apparent plans to extinguish a long-held tariff exemption for packages worth less than $800.

Trump’s executive orders directing 25% levies on Canada and Mexico — plus a 10% duty on China — specify that the “de minimis” exemption for small packages no longer applies. Under the exemption, products below that dollar amount are able to enter the US without tariffs — a boon for China’s e-commerce retailers who ship often cheaper wares directly to consumers in the US.

The full scope of the de minimis changes — whether they apply just to the new tariffs issued Saturday or to older existing trade levies — was not clear. A White House spokesman did not respond to questions about its reach.

However, trade lawyers said Trump’s language cracking down on the de minimis exemption could apply broadly, even to existing duties against China, Canada and Mexico.

Regardless, the impact of the change threatens to fall most squarely on China, affecting retailers including Alibaba, JD.com Inc., PDD Holdings Inc.’s Temu and fashion-focused Shein. American shoppers and companies imported about $48 billion worth of shipments from the world under that loophole in the first nine months of last year, according to US Customs and Border Protection estimates. (read more)

Approximately a billion packages are estimated to enter the USA under the cover of the de minimis exemption. 

This is where the enforcement mechanism of the “External Revenue Service” combines with the tariff approach and the “state of emergency.”  President Trump imposed the tariffs under the International Emergency Economic Powers Act, a nearly 50-year law that gives the president sweeping power to impose sanctions after declaring an emergency.

Now the billion packages, mostly from China, Mexico and Canada are going to be subjected to review and interception.

The de minimis loophole comes from back in the 1930s. The idea back then was, say you went on a vacation to Paris, you shouldn’t have to file customs paperwork or pay taxes if you decided to ship some little Eiffel Tower statues to your friends back home.

Congress in 2015 then raised the de minimis threshold from $200 to $800.  However, the e-commerce world exploded, and Chinese companies began using the de minimis loophole to ship cheap goods (ex. Temu and Shein) into the USA direct to consumers without paying any customs duty.

It was reported last year that the U.S. was on track to receive a billion packages through the de minimis loophole that aren’t taxed and don’t have customs slips saying what they are.  Making matters worse, illegal items are slipping through the cracks, including, knockoffs, unsafe items and even chemicals used to make fentanyl.  The worst abuser that exploits this de minimis loophole is, by far, China.

President Trump can require a customs and duty declaration stating what is in every package and subsequently collect tariffs and duties.

Put it all together and President Trump is executing an Emergency Act executive order, plus the imposition of a tariff review, and simultaneous interception of de minimis packages previously unchecked as the enforcement mechanism. 

All executed by the External Revenue Service.

President Trump has got them surrounded, and the scope of it has the media so overwhelmed they cannot quite put it together.

Almost too much winning...

... Almost!

Tyler Durden Sun, 02/02/2025 - 22:10

How Trump's Dismantling Of USAID Marks A Seismic, Historic Shift In America's Role In The World

The most consequential decision and executive order which came within the opening days of President Donald Trump's administration has without doubt been his "reevaluating and realigning US foreign aid" — which sent shockwaves through Washington especially given federal funding has been cut to USAID in a shock blow to the agency. But it is also having a massive ripple effect throughout the world. Some foreign powers will welcome the news, while many allies as well as an assortment of US-backed 'opposition groups' will feel completely abandoned.

This has meant that pro-Western media outlets, NGOs, and 'soft power' organizations are in panic mode. This has basically overnight shutdown a multi-billion dollar regime change apparatus which pushed or often imposed American interests throughout the globe, especially in the very vulnerable Third World, as well as former Soviet satellite regions. The way this works on a practical, on the ground level is detailed in the well-known book Confessions Of An Economic Hit Man. As for Trump's apparent efforts to dismantle the powerful USAID agency, we compiled some of the best current analysis from around the web outlining the huge significance of this move, which is nothing less than a historic reset (and we say a very welcome reset) of Washington's relations with the rest of the world.

Getty Images

We're looking at a seismic shift in the US's relationship with the world, via Arnaud Bertrand:

1) The US is dismantling its foreign interference apparatuses (like USAID )

2) Marco Rubio stating that we're now in a multipolar world with "multi-great powers in different parts of the planet" and that "the postwar global order is not just obsolete; it is now a weapon being used against us."

3) The tariffs on supposed "allies" like Mexico, Canada or the EU: This is the US effectively saying "our attempt at running the world is over, to each his own, we're now just another great power, not the 'indispensable nation'." It looks "dumb" (as the WSJ just wrote) if you are still mentally in the old paradigm but it's always a mistake to think that what the US (or any country) does is dumb.

Hegemony was going to end sooner or later, and now the U.S. is basically choosing to end it on its own terms. It is the post-American world order - brought to you by America itself. Even the tariffs on allies, viewed under this angle, make sense, as it redefines the concept of "allies": they don't want - or maybe rather can't afford - vassals anymore, but rather relationships that evolve based on current interests.

You can either view it as decline - because it does unquestionably look like the end of the American empire - or as avoiding further decline: controlled withdrawal from imperial commitments in order to focus resources on core national interests rather than being forced into an even messier retreat at a later stage. In any case it is the end of an era and, while the Trump administration looks like chaos to many observers, they're probably much more attuned to the changing realities of the world and their own country's predicament than their predecessors.

Acknowledging the existence of a multipolar world and choosing to operate within it rather than trying to maintain an increasingly costly global hegemony couldn't be delayed much further. It looks messy but it is probably better than maintaining the fiction of American primacy until it eventually collapses under its own weight. This is not to say that the U.S. won't continue to wreak havoc on the world, and in fact we might be seeing it become even more aggressive than before. Because when it previously was (badly, and very hypocritically) trying to maintain some semblance of self-proclaimed "rules-based order", it now doesn't even have to pretend it is under any constraint, not even the constraint of playing nice with allies.

BREAKING: USAID security chiefs placed on leave after they refused to turn over classified material to Elon Musk's government-inspection teams, officials say. https://t.co/vqdPmJBs1q

— The Associated Press (@AP) February 2, 2025

It's the end of the U.S. empire, but definitely not the end of the U.S. as a major disruptive force in world affairs. All in all this transformation may mark one of the most significant shifts in international relations since the fall of the Soviet Union. And those most unprepared for it, as is already painfully obvious, are America's vassals caught completely flat-footed by the realization that the patron they've relied on for decades is now treating them as just another set of countries to negotiate with.

* * *

How the Biden administration weaponized USAID, via @DefiyantlyFree

1. Abortion: One of the first things that Joe Biden did after assuming office was to revoke the Mexico City policy, which was supposed to prevent the federal government from using our tax dollars to fund overseas abortions. He did this, even though 73% of Americans strongly oppose using taxpayer funding to support overseas abortion. That includes 59% of people that are actually pro-choice. He resumed funding to the United Nations population fund and dramatically expanded the scope of programs that are authorized to pay for abortion services. Joe Biden tied taxpayer funded abortion services internationally to the United States efforts to advance, gender quality globally and respond to gender based violence and to confront challenges such as HIV aids, tuberculosis and malaria. That means that grants given through ID that go towards malaria or other diseases include paying for abortions on demand in those countries. As a result of these abortion driven objectives in 2022 the US Department of state and USA ID budget was 12% higher than previous years and totaled 70 Billion dollars.

2. Identity Ideology: In 2021 the national gender strategy was implemented for foreign aid and started using an intersectional approach that considers barriers and challenges faced by those who have intersecting in compounding forms of discrimination. That’s a fancy way of saying Marxist victimhood in order of priority. In the Biden administration intersectionality dictated the manner in which US AI ID designed its programs and designed who received its funding.

3.Global DEI: Representatives of the UN who discussed for an aid frequently mentioned the 1619 project and said that slavery is an original sin of America. The Biden administration made accepting and requiring communities of color to adopt to DEI a condition of receiving foreign aide.

4. Global Climate Change: By reentering the Paris climate accords USAID was mobilized into action to fight climate change across the country and force the United States of America to underwrite this climate change overseas. In 2021 USAID announced that it would mobilize $150 billion in public and private climate finance by 2030 with the majority of funding coming from private service actors in collaboration with the United States Taxpayer dollars. There was an integration with the WHO‘s initiative on climate, resilient health systems and sustainable, low carbon health systems and the US national oceanic atmosphere administration. When they say malaria, they mean through climate change hysteria, and green energy policies. For instance, South America needs $26 billion to transform its power system and the United States and Europe under Joe Biden committed to $8.5 billion each to help the country make that transition. That money would be facilitated through USAID.

5. Perpetual need for foreign aid: There is no better example of the insidious relationship between foreign aid and nation building then that of Afghanistan. Even after we pulled out of Afghanistan, USA ID was used to continuously fund the nation.

6. UNRWA and terrorism: The moment President Trump left office and Biden restored to this organization and removed the Houthi rebels in Yemen from a US list of designated terrorists. Removing them from this designation meant that funds flowed to them in foreign aid and were misappropriated to attack and occupy the US Embassy in Sana.

More than 30 Iranian opposition orgs and media outlets have lost funding due to the pause in USAID programs (via Middle East Eye) pic.twitter.com/1p30I94bcD

— Dave DeCamp (@DecampDave) February 2, 2025

7. USAID has been used to fund leftist progressive causes exclusively: If you look at 50 USAID employees chosen at random, which the heritage foundation did 48 of them donated to Democratic candidates and causes, and only two of them donated to Republicans. Following the Floyd riots, 1000 USAID employees demanded the agency make a public statement, affirming Black Lives Matter and accused USAID of structural racism by not designing plans to combat systemic racism, injustice, colonialism, and police brutality, all around the world. The Rockefeller Center, one of the most leftist organizations signed an agreement to be in a strategic partnership with USAID and all of the individual political contributions went to progressive campaigns. The international rescue committee received hundreds of millions of dollars of taxpayer money to fund its highly partisan causes. The former cochair of this committee was Obama’s treasury secretary.

The Board of Directors has every single one of the founders of the Democratic Party and support progressive policy goals. Another major recipient of foreign aid is CARE international. This is probably one of the most partisan groups who has people like Valerie Jared, Nancy Pelosi, and Hilary Clinton carve out its policy. What once started out as an agency that was about helping to end global poverty in world, and hunger and has become an organization that is solely aligned with radical progressive Democrat agendas. And that is not even touching the vast censorship arm that USAID controls and funds. If anyone is curious about the rabbit hole that exists as it relates to censorship from USAID, I would suggest that you subscribe to Mike Benz on X.

* * *

Nayib Bukele, the President of El Salvador, says more often there's a hidden nefarious agenda...

Most governments don’t want USAID funds flowing into their countries because they understand where much of that money actually ends up. While marketed as support for development, democracy, and human rights, the majority of these funds are funneled into opposition groups, NGOs with political agendas, and destabilizing movements.

At best, maybe 10% of the money reaches real projects that help people in need (there are such cases), but the rest is used to fuel dissent, finance protests, and undermine administrations that refuse to align with the globalist agenda. Cutting this so-called aid isn’t just beneficial for the United States; it’s also a big win for the rest of the world.

USAID, like the National Endowment for Democracy, are well-documented CIA fronts that are designed to manipulate other countries' internal politics for the benefits of DC elites and nobody else in the US.

Both agencies have wrought destruction and can't die soon enough: https://t.co/NoDxJDtht7

— Glenn Greenwald (@ggreenwald) February 2, 2025

And here's journalist Glenn Greenwald: "USAID, like the National Endowment for Democracy, are well-documented CIA fronts that are designed to manipulate other countries' internal politics for the benefits of DC elites and nobody else in the US. Both agencies have wrought destruction and can't die soon enough."

Tyler Durden Sun, 02/02/2025 - 21:35

Rounding Up The Usual Suspects: Grassley Releases Familiar Name In The Origins Of The Trump Investigation

Authored by Jonathan Turley,

For Senate Judiciary Committee Chairman Chuck Grassley (R-IA), the weaponization of the criminal justice system has always followed a certain Casablanca pattern. Like Claude Rains as the venerable Captain Louis Renault, it is simply a matter of “rounding up the usual suspects.”

Grassley released FBI whistleblower records on Thursday showing that an anti-Trump figure, former FBI Assistant Special Agent in Charge Timothy Thibault, previously found to have violated the Hatch Act was a key factor in pushing the election charges brought by former Special Counsel Jack Smith.

Grassley suggested that Thibault violated protocol in opening and advancing the FBI’s initial probe into the 2020 election without sufficient predication. The investigation, called Operation Arctic Frost, was opened on April 13, 2022.

Years later, “Of all the gin joints in all the towns in all the world, [Thibault] walked” into Grassley’s.

Whistleblowers alleged that Thibault’s alleged “partisanship” likely impacted investigations involving President Trump and Hunter Biden.

Thibault was previously named as the agent who effectively scuttled the investigation into Hunter Biden and his laptop.

Fox News reported that a February 14, 2022 email revealed Thibault communicating with a subordinate agent on the foundations for an investigation of Trump.

In another email ten days later to John Crabb, a prosecutor in the U.S. Attorney’s Office for the District of Columbia, Thibault states:

“I had a discussion with the case team and we believe there to be predication to include former President of the United States Donald J. Trump as a predicated subject.”

The emails, and others detailed in the report, show Thibault pushing the investigation - in sharp contrast to his role in the Biden investigations.

Grassley and others are citing the evidence as supporting the need to “clean house” at the FBI and root out those who actively participated in the politicization of the criminal justice process.

For those of us familiar with Thibault from the Hunter Biden investigation, his role in the origins of the Smith investigation is deeply concerning.

Whistleblowers previously accused Thibault of “circumventing normal process and procedure to open full field investigations.” 

He was later found by the Inspector General to be violating the Hatch Act, which prohibits federal employees from engaging in certain political activities.

The violations included Thibault retweeting social media posts by the Lincoln Project, a vehemently anti-Trump group.

Tyler Durden Sun, 02/02/2025 - 21:00

Illegal Migrant Protests Ramp Up In US Cities In Response To Trump Deportations

Civil actions from the political left are notoriously seasonal and the winter cold usually keeps fragile progressives indoors.  However, in southern states where temps are warming up we're getting an early glimpse of what larger US cities will probably look like with the arrival of spring.  Illegal migrants and their leftist "allies" are up in arms this week and they're feeling bold - Donald Trump's mass deportation initiatives, which have so far focused on criminal gangs and violent offenders, are unacceptable they say.

     

Protest groups of hundreds and in some cases thousands of people have erupted in San Diego, LA, San Fransisco, Dallas, Atlanta, Phoenix and a handful of other cities.  The events have remained generally peaceful, though in some cases protesters have blocked traffic and attacked vehicles trying to get through.  

CLOSED BORDER: Illegals blocking traffic to protest deportation. Winning hearts and minds? pic.twitter.com/0RLd1ENB0K

— @amuse (@amuse) February 2, 2025

Mass deportations have received wide support, with 66% of US citizens backing the policy in light of the border crisis created by the Biden Administration.  Current projections indicate 16 million to 20 million illegals currently reside in the US, with up to 10 million entering the country in the past four years alone (DHS has admitted that 85% of migrants caught at the border were allowed to enter under amnesty rules during the Biden Administration).  Official government statistics have proven to be faulty, reporting only half the actual number of migrants entering the US at any given time.

NOW: Anti-ICE protesters have shut down both sides of the 101 Freeway in downtown Los Angeles.

After Biden’s record-breaking border crisis, most Americans now support mass deportation—and blocking traffic won’t change that.pic.twitter.com/62cw1FftNy

— KanekoaTheGreat (@KanekoaTheGreat) February 2, 2025

It's hard to imagine many countries outside the US (or Europe) where illegal migrants are so entitled that they're willing demand access by taking to the streets, but here it is.  Imagine if a foreign army marched up to the southern border and then threw a temper tantrum because the US wouldn't let them invade?  This is essentially what's happening now.

A common mantra among protesters is that "no human is illegal on stolen land".  It's actually conquered land, and the conquerors get to make the rules.    

The more diplomatic illegal alien position is that "migrant rights are human rights", but human rights do not give foreigners license to invade another country or break that country's laws.  It's rather convenient to use "human rights" as a social justice shield when the majority of illegals are actively siphoning welfare handouts and other subsidies paid for by legal citizens. 

What about the human rights of native born Americans? 

Another argument from migrants is that "they make America great" by gracing the US with their presence.  But one might notice that at most of these rallies there is hardly an American flag in sight.  In fact, every march is canvassed in the red, white and green of the Mexican flag.  This would suggest that migrants have far more loyalty to Mexico than to the US and that their presence in the states is not part of some "immigrant dream" to assimilate into American culture.

Rather, it is common for illegals to see the US as a cash cow; a place to sneak in, grab as many handouts and as much money as possible and then wire that wealth back to Mexico (or any number of countries) where they plan to retire.  This ongoing international scam has become a kind of institution; certain US businesses and industries get labor for 30% less while migrants get to comfortably feed off system that US taxpayers support.   

The scam is treated as a tradition.  It is so entrenched that illegals are shocked and enraged that it might actually come to an end.  It's a cultural phenomenon that most westerners just don't understand, but in the third world empathy and charity are often seen as signs of weakness.  If you give them an inch they will take a mile because this is how people learn to survive in places where corruption is the cultural norm.     

It's hard to say what could possibly come from these protests other than making it easy for ICE to round up hundreds of migrants at one time.  The notion that illegals have a right to protest at all is absurd, but if they want to serve themselves up on a platter for deportation it's probably not going to bother Tom Homan.

Tyler Durden Sun, 02/02/2025 - 20:25

Some Hospitals Stop Transgender Surgeries On Children After Trump's Order

Authored by Zachary Stieber via The Epoch Times,

Hospitals in Colorado, Virginia, and the nation’s capital said on Jan. 30 they have stopped transgender procedures for minors as they evaluate President Donald Trump’s new executive order.

Denver Health in Colorado has stopped providing transgender surgeries such as breast removal for people under the age of 19, a spokesperson said, in order to comply with the executive order and continue receiving federal funding. It’s not clear whether the hospital will continue providing other transgender procedures and medicine for youth, such as puberty blockers.

In Virginia, VCU Health and Children’s Hospital of Richmond said it has suspended transgender medication and surgical procedures for those under 19 years old.

Children’s National Hospital in Washington said the hospital had “paused prescriptions of puberty blockers and hormone therapy to comply with the directives while we assess the situation further.”

The hospital already did not perform transgender surgeries on minors, according to a spokesperson.

Trump on Tuesday signed an order titled “Protecting Children From Chemical and Surgical Mutilation.”

The order says it is now U.S. policy not to fund, sponsor, promote, assist, or support “the so-called ’transition' of a child from one sex to another.” It says the U.S. government “will rigorously enforce all laws that prohibit or limit these destructive and life-altering procedures.”

The order directs the heads of agencies that provide grants to medical institutions to “immediately take appropriate steps to ensure that institutions receiving Federal research or education grants end the chemical and surgical mutilation of children.”

Other hospitals, including Lurie Children’s Hospital of Chicago, said after the order was signed that its current practices would continue.

“Our team will continue to advocate for access to medically necessary care, grounded in science and compassion for the patient-families we are so privileged to serve,” the hospital said.

The order targets World Professional Association for Transgender Health (WPATH) guidance, which describes procedures such as hormone therapy, puberty blockers, and surgeries such as breast removal for children as “gender-affirming care” that “can be effective and helpful for many transgender adolescents.” The order says agencies shall rescind or amend all policies that rely on the association’s guidance.

WPATH said in a statement that restrictions and bans on “access to necessary medical care for transgender youth are harmful to patients and their families.”

The order also directed the U.S. health secretary to take steps to end child sex surgeries, including through Medicare, and Defense Secretary Pete Hegseth to exclude child sex surgeries from the military-run TRICARE health insurance program.

Tyler Durden Sun, 02/02/2025 - 11:40

Trade Wars Begin: Trump Slaps Tariffs On Canada, Mexico And China; Triggers Immediate Retaliation

Update (10:20pm ET): Just hours after Trump unveiled double-digit tariffs on the three largest US trading partners, Canada and Mexico announced their own plans for retaliatory tariffs on the US.  Outgoing Canadian Prime Minister Justin Trudeau said late on Saturday that Canada will respond by placing 25% counter-tariffs on C$155 billion ($107 billion) worth of American-made products, with items including beer, wine, bourbon, fruits, fruit juices, vegetables, clothes, perfume, household appliances, plastic, and lumber subject to tariffs. Hilariously, Canada is going especially hard after alcohol produced in Republican states...

Canadians are targeting American red states pic.twitter.com/cusGfDjemm

— The_Real_Fly (@The_Real_Fly) February 2, 2025

... although at least for now they haven't gone ape with the previously suggested 100% tariffs on Teslas.

Meanwhile, Mexico’s President Claudia Sheinbaum said she also instructed the economy minister to kick off a response plan that includes retaliatory tariffs against the levies.

But since Trump’s orders also included retaliation clauses that would increase US tariffs if the countries respond in kind, that means we are now locked in tit-for-tat escalating prisoner's dilemma, one where it progressively gets worse before it gets much worse. The new measures will be on top of existing trade levies on those countries.

* * *

And just like that, the Trump trade wars have officially (re)started.

As was widely previewed yesterday, President Trump unleashed the first salvo of his latest trade war with tariffs of 25% on Canada and Mexico and 10% on China, the start of a wave of promised trade barrages against both foreign adversaries and allies.

President Trump has officially signed orders implementing 25% tariffs on Canada and Mexico and 10% tariffs on China. pic.twitter.com/wU3KjAZFmc

— Martin Walsh (@martinwalsh__) February 1, 2025

Trump signed orders for the tariffs around 5pm ET on Saturday; they will go into effect on Tuesday, at which point they will likely escalate in tit-for-tat fashion until something breaks.

pic.twitter.com/SWZtSm6NMX

— Donald J. Trump (@realDonaldTrump) February 1, 2025

According to a fact sheet published by the White House, the tariffs are in response to the "extraordinary threat posed by illegal aliens and drugs" such as fentanyl, which constitute a national emergency under the International Emergency Economic Powers Act.

WH fact sheet on the new tariffs pic.twitter.com/Dqq30iWn5x

— Olga Nesterova (@onestpress) February 1, 2025

Perhaps the only difference from what was previously leaked is that energy imports from Canada will be spared from the full 25% levy and will face a 10% tariff. The White House officials said that was intended to minimize upward pressure on gasoline and home-heating oil prices.

The orders also include retaliation clauses that would increase US tariffs if the countries respond in kind. The tariffs issued on Saturday will be on top of existing trade levies on those countries.

White House Officials say there is a high bar for China, Canada, and Mexico to get tariffs removed. They say in President Trumps golden age it’s only legal immigration and no Americans dying of fentanyl. #Tariffs #Mexico #Canada #China

— Edward Lawrence (@EdwardLawrence) February 1, 2025

White House Officials say the Executive Orders signed adding tariffs on Canada, Mexico, and China have a retaliation clause. That means if the country retaliates, then there would be consequences. The Officials say likely increased tariffs. #Tariffs #Canada #Mexico #China

— Edward Lawrence (@EdwardLawrence) February 1, 2025

The order also revoked the so-called de minimis exemption for small parcels and packages, one official said, which will apply tariffs more widely to small shipments and impact e-commerce and online retailing. The US loses a tremendous amount of tariff revenue by using the exemption, one official said.

The three targeted countries are the largest three sources of US imports, accounting for almost half of total volume.

The decision is intended to have sharp economic impacts for the nations targeted; it will likely also impact the US depending on how much of the tariff-related price increases are passed through.

Parts of the US, including the Pacific Northwest and Northeast US, are deeply reliant on electricity or gas flows from Canada. And oil industry advocates have warned against even a 10% increase in the cost of crude inputs into Midwestern refineries that have few near-term options to substitute with US supplies.

For context, over 60% of US crude imports comes from Canada, so a 10% tariff on oil imports will lead to a prompt increase in the price of diesel which is the backbone of the US economy. Depending on the mood of the Fed on any given day, that may be seen as inflationary and lead to rate hikes in the near future.

CHART:

President Trump has chosen to tariff the biggest by far exporter of crude oil into his country… over 4m barrels per day (blue line) of Canadian crude fuel almost exclusively the midwestern refineries…. number 2 is… Mexico… pic.twitter.com/Y6dMLA3erT

— Faisal Islam (@faisalislam) February 1, 2025

Markets have been gripped by uncertainty as they awaited Trump’s decision on the tariffs and there are looming questions about how the levies will impact stocks.

In the 10 days since Trump’s initial tariff threat on his first full day in office, the S&P 500 Index was essentially flat while equity benchmarks in Europe, Canada and Mexico were all higher. The Nasdaq Golden Dragon Index — comprised of companies that do business in China but trade in the US — jumped more than 4%.

According to Bloomberg, automakers such as General Motors Co., Ford Motor Co. and Stellantis NV, which have global supply chains and massive exposure to Mexico and Canada, could see significant swings.

Needless to say, Trump's political opponents such as Jason Furman were quick to conclude that the market will punish what the Democrat economic advisor sees as bad economic and foreign policy.

Less than 2 weeks in and 25% tariffs our close allies + 10% on China.

Plus a (credible) promise that they will go even higher when there is (inevitable) retaliation.

It’s hard to decide if this is worse economic policy or foreign policy.

We’ll see if Trump caves to the market.

— Jason Furman (@jasonfurman) February 1, 2025

Citing sources, Bloomberg writes that officials on the call Saturday justified the tariffs by citing the flow of fentanyl and other illegal drugs across the border, as well as illegal immigration. Sources added that Canada had been officially informed that the tariffs would be implemented on their goods on Tuesday.

Prime Minister Justin Trudeau is expected to speak on the tariffs after they are implemented on Saturday. Canada is set to impose retaliatory countertariffs, the nation’s natural resources minister said in an interview on Friday.

“We will focus on tariffing American good that actually are sold in significant quantities in Canada, and especially those for which there are readily available alternatives for Canadians,” Jonathan Wilkinson said.

Former Canadian Finance Minister Chrystia Freeland, who is among the candidates to succeed Justin Trudeau as prime minister, suggested hitting Trump ally Elon Musk directly by applying a 100% tariff on Tesla cars. That will hardly help de-escalate what is now officially the first trade war of Trump's second (technically third) term.

Tyler Durden Sun, 02/02/2025 - 10:11

Five Takeaways From Trump's Plans To Build An Iron Dome For America

Authored by Andrew Korybko via substack,

Trump signed an Executive Order to build an Iron Dome for America, which aims to defend the homeland “against ballistic, hypersonic, advanced cruise missiles, and other next-generation aerial attacks.”

It’ll also importantly include space-based monitoring and interception systems. Some of the latter will have “non-kinetic capabilities” too, likely referring to directed-energy weapons (DEWs), but it’s unclear whether they’ll be deployed on the ground and/or in space.

Here are five takeaways from this monumental move:

*  *  *

1. Strategic Stability Will Never Look The Same

Bush Jr.’s unilateral withdrawal from the Anti-Ballistic Missile Treaty in 2002 prompted Russia to develop hypersonic technology so as to prevent the US from feeling comfortable enough with its missile defense shield that it one day plots a first strike after thinking that it could intercept Russia’s second one. Trump’s Iron Dome plans mean that there’s no going back to the era of mutual restrictions on missile defense, which was already dubious after what Bush Jr. did, thus worsening the Russian-US security dilemma.

2. The US Just Sped Up The Second Space Race

The second Space Race has already been underway since Trump created the Space Force in 2019, but his latest Executive Order sped it up by compelling Russia and China to further prioritize their space-based defense plans, which will inevitably result in the hyper-militarization of space. There’s no way that those two won’t suit through the deployment of their own defensive systems there that could also disguise offensive weapons just like the US might secretly be plotting to do under this pretext.

3. “Rods From God” Are The Next Superweapon

Whichever country is the first to position itself to carry out kinetic bombardments against others, which refers to dropping space-based projectiles onto their opponent, will obtain dominance. These weapons are popularly known as “rods from God” and are poised to become the next superweapon since they might be impossible to intercept and can promptly strike opponents due to menacingly orbiting above their targets or in close enough proximity to them at all times. This makes them a military game-changer.

4. This Is An Unprecedented Power Play By The US

The preceding points prove that Trump’s Iron Dome plans are an unprecedented power play against Russia and China. The unofficial “rods from God” offensive element raises the chances that the US can destroy their land-based second-strike capability in a first strike while the official missile defense one is meant to neutralize their remaining (submarine-based) capabilities. The combined effect is intended to place them in positions of nuclear blackmail from which concessions can then be perpetually extracted.

5. Space-Based Arms Control Should Be A Priority

Russia and China will work to counteract the US’ aforesaid power play and then unveil their own such systems so as to try to place it in the same position of nuclear blackmail that it wants to place them. This is a dangerous dynamic since one of these three might feel like time is running out before they’re placed in such a position and that they must thus launch a first strike without delay. The only way to reduce this risk is through a space-based arms control pact with credible monitoring and enforcement mechanisms.

*  *  *

Trump’s plans to build an Iron Dome for America are a game-changer in the New Cold War since they’ll take the US’ rivalry with Russia and China to a qualitatively more dangerous level.

The consequent hyper-militarization of space that’ll occur as a result of him wanting to deploy interceptors there, which could disguise offensive arms like “rods from God”, spikes the risk of war by miscalculation.

A space-based arms control pact between them is unlikely anytime soon, but it’s the only way to reduce this risk.

Tyler Durden Sun, 02/02/2025 - 09:20

Lawsuit Alleges FAA Denied 1,000 People Air Traffic Controller Jobs To Meet Diversity Hiring Targets

Just as multiple air travel related tragedies have taken place, it’s been reported that the FAA is fighting a class action lawsuit alleging it denied 1,000 people air traffic controller jobs based on diversity hiring targets, according to the New York Post.

The lawsuit, originally filed in 2015, resurfaced following a fatal midair collision in Washington, DC, that claimed 67 lives—the deadliest U.S. aviation disaster in nearly 25 years. Hours later, a small private plane crashed in Northeast Philadelphia, putting emphasis on the role of air traffic control.

At the time of the blackhawk helicopter incident, staffing levels were reportedly “not normal.” Andrew Brigida, the lead plaintiff in the lawsuit, criticized the FAA’s focus on diversity and inclusion, suggesting it contributed to the likelihood of such an accident.

The New York Post report says that the lawsuit claims the FAA, under the Obama administration, replaced a skill-based hiring system with a “biographical assessment” to increase minority hires.

Andrew Brigida, a white applicant, alleges racial discrimination after being rejected despite scoring 100% on his training exam at Arizona State University’s aviation program in 2013.

The FAA faces growing criticism over its hiring policies, with some, including former President Trump, blaming diversity programs for understaffing and lower air traffic control standards.

Lead plaintiff Andrew Brigida suggested diversity-focused hiring made an aviation accident inevitable. He pointed to the FAA’s preliminary report, which revealed the controller on duty during the fatal plane-helicopter crash was handling two roles due to staffing shortages. The report also noted that Ronald Reagan National Airport had fewer controllers than recommended.

Brigida, now an FAA program manager, hopes Trump will address the staffing crisis if re-elected. Meanwhile, the FAA continues struggling with shortages since 2020’s pandemic layoffs.

The lawsuit, which the FAA and the Department of Transportation are contesting, is set for trial next year. Government lawyers argue that expanding hiring eligibility doesn’t constitute discrimination under Title VII, as it ensures equal access rather than preserving prior advantages.

Tyler Durden Sun, 02/02/2025 - 08:45

Biden Must Explain What The Ukraine War Was For

Authored by Ted Snider via TheAmericanConservative.com,

It is no longer easy to tell what the Ukraine War was for. Very early on, U.S. goals got grafted onto Ukrainian goals, and the hybrid braid became hard to disentangle. “This is a war that is in many ways… bigger than Ukraine,” the State Department announced in the first weeks of the war. But, whatever those goals, few of them remain: There will be no NATO membership for Ukraine, there will be no recovery of all of its territory, and there will be no weakening of Russia.

Former President Joe Biden has a lot of explaining to do, as does Ukrainian President Volodymyr Zelensky.

Zelensky will need to explain to his exhausted nation why choosing the path of war over the path of diplomacy after the Istanbul talks in March and April of 2022 was worth the cost. At that time, what still seemed to be the Ukrainian goals—continued sovereignty and the withdrawal of Russian troops to pre-war boundaries—might have been met. Zelensky must explain why he succumbed to Western pressure to pursue wider ones.

He is going to have to explain why pursuing those wider goals was worth the loss of so much life, limb and land. And, if he is to survive politically and, perhaps, even physically, he is going to have to find someone to blame.

He already fired Valery Zaluzhny, who served as Ukraine’s military commander-in-chief until last year. Now, Ukraine’s security service has arrested two generals and a colonel on the charge of failing to protect Ukrainian territory from Russian advances. 

But blaming the generals won’t be enough to acquit Zelensky. The war went on after Zaluzhny and continued to worsen. And no one will buy the blaming of field commanders. “We were defending a huge swath of the border, we fought to the death in the first hours of the attack,” said soldiers in one brigade after their former commander was arrested. “We were short of people, ammunition and support but we fought, we fought under the leadership of our commander!”

Ukraine no longer has the capacity to field the men nor the weapons to hold off the Russian advance. More land will be lost the longer the war goes on, and more men and weapons are not on their way. “The problem with Ukraine is not that they’re running out of money,” Marco Rubio said at his confirmation hearing for his nomination as secretary of state, “but that they’re running out of Ukrainians.”

Zelensky will need to blame someone higher up than the field commanders. In recent weeks, he’s laid some of that blame on Biden, complaining of insufficient support. “With all due respect to the United States and the administration,” Zelensky said in a podcast interview, “I don’t want the same situation like we had with Biden.”

One day, Zelensky will need to explain to Ukrainians his part in the tragedy. He will have to defend his decision to yield to the West’s pressure not to sign anything with Russia but to “just fight,” as then-British Prime Minister Boris Johnson reportedly put it. As American President Donald Trump said in his first Oval Office interview, "Zelensky... shouldn’t have allowed this to happen either. He’s no angel. Zelensky decided that 'I want to fight.’”

But that does not exonerate the U.S. or mean that Zelensky is unjustified in blaming Biden. Biden, too, is one day going to have to explain what the war in Ukraine was for subsequent to the promising talks in Istanbul. 

The Biden administration repeatedly promised Ukraine whatever they needed for as long as it takes. But that promise evolved into whatever we agree to for as long as convenient. And a clear answer to the question “Whatever they need to do what?” was never provided.

According to Biden National Security Council official Eric Green, U.S. support for Ukraine was never intended to push Russia out of its territory, recover its lost land, and reassert its territorial integrity.

“We were deliberately not talking about the territorial parameters,” Green said in an interview with Time. “The more important objective,” he explained, “was for Ukraine to survive as a sovereign, democratic country free to pursue integration with the West.” 

But reclaiming territory was all that was left for the Ukrainians after the West pressured them to keep fighting rather than abandon aspirations to join NATO. Neutrality for Kiev was “the key point” for Russian negotiators, according to one Ukrainian lawmaker who participated in peace talks. If an agreement had been made, a still-sovereign Ukraine would remain free to pursue economic and cultural—but not military—integration with the West.

Green’s assertion, at first, seems unlikely. The U.S. pushed Ukraine to carry out a counteroffensive in the Donbas and endorsed strikes on military targets in Crimea.

But that was for public consumption. Privately, they knew that Ukraine’s counteroffensive likely couldn’t succeed, that Kiev didn’t have the training or weapons needed to expel Russian forces from the Donbas. And, according to a report from early 2023, they knew it was not “a wise move” to recapture Crimea and were not “actively encouraging Ukraine” to do so.

If Biden was not prepared to give Ukraine whatever it needed to reclaim its territory, and if he was not prepared to offer Ukraine NATO membership, then what was American support for the war all about? Was it really just about weakening Russia or asserting NATO’s unchallenged right to expand wherever it wants, including right up to Russia’s borders? If so, then the people of Ukraine have been cruelly used by America. 

In the first weeks of the war, there was a plausible hope worth exploring that Ukraine might retain much of its territory while avoiding catastrophic bloodshed and destruction of lives. Washington chose a different path, and it is incumbent on Biden to explain why.

Tyler Durden Sun, 02/02/2025 - 08:10

Trump Orders First Airstrikes On Foreign Soil Since Taking Office

In apparent continuity with the GWOT era of the prior two decades, the Trump White House has announced the president ordered a wave of airstrikes on Islamic State cells in Somalia on Saturday, in the very first US strikes abroad since Donald Trump entered his second term.

The Pentagon announced that "multiple" terrorists were killed and that it further assessed no civilians were harmed. Defense Secretary Pete Hegseth said US Africa Command carried out the strikes as directed by Trump as Commander-in-Chief. Trump on social media hailed that the attacks destroyed the "caves" that ISIS terrorists live in.

"The strikes destroyed the caves they live in, and killed many terrorists without, in any way, harming civilians. Our Military has targeted this ISIS Attack Planner for years, but Biden and his cronies wouldn’t act quickly enough to get the job done. I did!" Trump wrote.

US DOD file image

"The message to ISIS and all others who would attack Americans is that “WE WILL FIND YOU, AND WE WILL KILL YOU!" - he added in caps.

But specifics haven't been offered, such as the identities of those targeted and killed, or the precise location. However the government of Somalia confirmed the operation was done with its approval and coordination.

"Our initial assessment is that multiple operatives were killed in the airstrikes and no civilians were harmed," Defense Secretary Hegseth said. "This action further degrades ISIS’s ability to plot and conduct terrorist attacks threatening U.S. citizens, our partners, and innocent civilians and sends a clear signal that the United States always stands ready to find and eliminate terrorists who threaten the United States and our allies."

The office of Somalia’s president announced that the operation "reinforces the strong security partnership" between the two countries in "combating extremist threats." Somalia "remains resolute in working with its allies to eliminate international terrorism and ensure regional stability," it said on X.

Past presidents have also targeted Somalia with similar such sporadic strikes against Islamist militants. It's part of the dangerous and ongoing post-9/11 trend of ordering acts of war on foreign soil but without any Congressional debate, review, or authorization whatsoever.

Libertarian and former Independent Congressman from Michigan Justin Amash complained about this lack of Congressional input:

Congress hasn’t authorized war in Somalia—even against ISIS. The separation of powers exists to protect both the liberty and safety of Americans. Offensive missile strikes are acts of war and can’t be justified without the express approval of Congress for the specific conflict.

...Presidents can’t declare war. No congressional authorization grants the power to target “terrorists” as a general grouping.

Continuing the decades-old tradition of bombing Somalia https://t.co/6YOG1zw0B9

— Dave DeCamp (@DecampDave) February 1, 2025

But hawks will look to the law enacted just days after 9/11, the Authorization for Use of Military Force (AUMF), as providing legal cover and grounds for the president to do that. It has remained an extremely controversial law and position, granting wide and ambiguous powers to the Executive Branch.

Tyler Durden Sun, 02/02/2025 - 07:35

Escobar: The Chihuahua Energy Policy - It's A Gas, Gas, Gas

Authored by Pepe Escobar,

Let’s start with the tale of an Empire bragging to the wind.

Mr. Disco Inferno orders OPEC and OPEC+ to lower the price of oil, because, in his mind, that may solve the war in Ukraine – as in forcing Moscow to the table because of dwindling energy revenues.

That in itself summarizes the level of garbage being fed to POTUS by his cornucopia of acronyms passing for intel.

Trump at Davos:

“I’m going to ask Saudi Arabia and OPEC to bring down the cost of oil (…) If the price came down, the Russia-Ukraine war would end immediately. Right now, the price is high enough that that war will continue (…) With oil prices going down, I’ll demand that interest rates drop immediately. And, likewise, they should be dropping all over the world. Interest rates should follow us.”

Quite predictably, OPEC+ – basically run by Saudi Arabia and Russia – said Nyet. Apart from the fact they don’t care much about interest rates, on the energy front they’ll keep doing what they have planned to do, including soon decreasing production, but at acceptable levels.

Standard Chartered, a major player, noted that OPEC has limited power to end the war immediately by reducing the oil price, with OPEC ministers considering this attempt at “strategy” as very inefficient and costly.

So much for imperial diktats.

The Chihuahua Strategic Victory Plan

As highlighted before, the U.S. – via fracking – has enough gas for domestic consumption, but not enough to export en masse to the EU, because of liquification problems. That explains why even buying more American energy for exorbitant prices, the EU de facto remains largely dependent on Russian LNG – and non-U.S. sources – since the sabotage of the Nord Streams, unveiled in detail by Sy Hersh.

Even at full capacity, the Empire of Chaos simply cannot deliver all the gas the EU needs; add to it virtually no investment in both badly needed extra exploration plus the infrastructure necessary to meet increased EU demand.

On the domestic U.S. oil market, things do get positively Kafkaesque. U.S. trucking – a massive service industry – is dependent on imported Russian diesel, which needs to be mixed with Made in America oil in order to be suitable for trucks.

Now cut again to Davos, which came and went barely registering a blip. Toxic EC Medusa von der Leyen told Davos that Europe had “substantially reduced”, and “in record time”, its dependency on Russian fossil fuels.

Nonsense. Europe’s energy reality is bleak. Russian LNG from Novatek is currently priced at around $4.5–$4.7 per MMBtu. That’s more expensive than pipeline gas but still much (italics mine) cheaper than American LNG.

Every industry pro from the Persian Gulf to Antwerp knows that Europe is now importing Russian LNG like it never did before. That’s it – or a dry death. In parallel, Russia will triple its LNG supply capacity by 2035. End result: whatever those “energy commissioners” in Brussels may come up with, Russia will remain essential when it comes to European energy security.

There are no limits – even stratospheric – for Eurocracy stupidity, which corrodes the system like a plague. The Europeans not only have managed to shut off their own gas pipelines but are still “investigating” the Nord Stream de facto terror attack.

End result: they are now importing more (italics mine) Russian gas, but by different means, from third-party suppliers, and paying a fortune.

This is what can be described as the Chihuahua Strategic Victory Plan.

U.S. Treasury sanctions Mr. Disco Inferno

Russia’s LNG exports hit a record high last year, growing by 4% – and delivering 33.6 million tons. The monthly record was 3.25 million tons in December 2024 – 13.7% more than November.

The largest Russian exporter is Yamal LNG: 21.1 million tons, 6% more than in 2023.

Now cut to proverbial American rumble, in the form of Assistant Secretary of State for Energy Resources Geoffrey Pyatt ordering the “full termination” of Russian gas exported to Europe.

To hell with what nations like Hungary, Austria and Slovakia may think – and do need.

Pyatt told the Atlantic Council, “Today we are the largest LNG exporter in the world, and by the end of the Trump administration, we will have doubled what we’re doing today […] The decision has clearly been made in Brussels to get to zero [gas supplies from Russia] by 2027…and the United States strongly supports that goal.”

Oh dear. Do these people even read the basic headlines?

As reported by Politico, the EU is “devouring” Russian gas at unprecedented levels since the start of 2025, importing 837,300 metric tons of LNG just in the first two weeks of the year.

The Ukraine transit deal was shut off for good – at least for now – starting on January 1st. The action now is on the maritime routes.

Enter the U.S. Treasury with a new – what else – sanctions package against Russian oil trade, targeting up to 5.8 million barrels a day shipped by sea.

As it stands, the global oil market is experiencing a surplus of about 0.8 million barrels a day. Oil prices for 2025 should remain at around $71 for a barrel of Brent crude (as it stands, it’s $76.2). Not exactly what Mr. Disco Inferno wants.

So let’s assume these 5.8 million barrels of Russian oil – under stiff sanctions – would vanish from the global market. In this case we would have oil prices skyrocketing to an average of $150 to $160 a barrel. Once again, not what Mr. Disco Inferno wants: he vociferously promised – and keeps promising – a MAGA oil superpower, while lowering oil prices to max $50 a barrel.

According to Russia’s 2025 budget, oil is priced at $65.9 a barrel.

If the U.S. Treasury manages to work its magic and “disappear” with those 5.8 million barrels, Russian revenues would go up to around $88.2 billion, even considering much lower exports.

High oil prices hurt American competitiveness. So somebody should tell Mr. Disco Inferno this U.S. Treasury gambit is actually more negative to Trumpian dreams than to Russia.

Across Eurasia, Russia is sitting pretty, especially with its BRICS partners. Power of Siberia to China is on a roll, and Power of Siberia II should start operating by 2030. A boost on LNG exports to Iran is a done deal – especially after the signing of the strategic partnership earlier this month.

This year a deal will also be signed in Russia to transport LNG to Afghanistan via tanker convoys. Next step will be Pipelineistan: perhaps, finally, the necessary steps to build a variant of TAPI (the Turkmenistan-Afghanistan-Pakistan-India) pipeline, but with gas coming from Russia.

The biggest customer for Russian LNG, apart from China, is of course BRICS partner India. It’s in the interests of Russia, Iran, Afghanistan and India to have a stabilized Pakistan – not an Islamabad remote-controlled by Washington, as in the current setup – for the final opening of Russian LNG routes to India. That will happen, in time.

As for the European chihuahuas, enjoy your “strategic defeat” fantasies. Keep yapping – and buying Russian LNG.

Tyler Durden Sat, 02/01/2025 - 23:20

Widely Used Chinese-Made Health Monitor Using 'Backdoor' To Send Patient Data To Chinese IP Address

They've hacked everything else in the U.S., so why would we be surprised to find out that patient health data collected by Chinese-made health monitors was being sent, via 'backdoor' to China. 

Now China has access to Janet Yellen's photos (god we hope there's no nudes) and your blood pressure on a random Tuesday. 

The U.S. Cybersecurity and Infrastructure Security Agency (CISA) warns that Contec CMS8000, a widely used patient monitoring device, contains a backdoor that transmits patient data to a remote IP and downloads executable files, according to BleepingComputer.

Contec, a China-based healthcare tech company, produces various medical devices. CISA was alerted by an external researcher and, after testing the device’s firmware, found unusual network traffic linking to a hard-coded external IP tied to a university, not the company.

CISA discovered a backdoor in Contec CMS8000 firmware, enabling remote execution and full control of patient monitors. The device also secretly transmits patient data to a hard-coded IP upon startup, with no logs to alert administrators.

Though CISA withheld details, BleepingComputer linked the IP to a Chinese university, and the same address appears in other medical devices, including a pregnancy monitor. The FDA confirmed the backdoor also exists in Epsimed MN-120 monitors, rebranded versions of Contec CMS8000.

The BleepingComputer report says:

On analyzing the firmware, CISA found that one of the device's executables, 'monitor,' contains a backdoor that issues a series of Linux commands that enable the device's network adapter (eth0) and then attempts to mount a remote NFS share at the hard-coded IP address belonging to the university.

The NFS share is mounted at /mnt/ and the backdoor recursively copies the files from the /mnt/ folder to the /opt/bin folder.

The backdoor will continue to copy files from /opt/bin to the /opt folder and, when done, unmount the remote NFS share.

"Though the /opt/bin directory is not part of default Linux installations, it is nonetheless a common Linux directory structure," explains CISA's advisory.

CISA warned: "Generally, Linux stores third-party software installations in the /opt directory and thirdparty binaries in the /opt/bin directory. The ability to overwrite files within the /opt/bin directory provides a powerful primitive for remotely taking over the device and remotely altering the device configuration."

"Additionally, the use of symbolic links could provide a primitive to overwrite files anywhere on the device filesystem. When executed, this function offers a formidable primitive allowing for a third-party operating at the hard-coded IP address to potentially take full control of the device remotely."

You can read more of the technicals on the backdoor here. Oh, and go ahead and keep plugging your personal data into Deepseek, we're sure that's just fine. 

Tyler Durden Sat, 02/01/2025 - 22:45

Former Federal Reserve Adviser Arrested For Allegedly Passing US Trade Secrets To China

Authored by Eva Fu via The Epoch Times,

Prosecutors on Jan. 31 arrested a former senior Federal Reserve advisor, accusing him of stealing trade secrets from the agency that could allow China to manipulate the U.S. market.

John Harold Rogers, 63, worked for 11 years as a senior advisor for the international finance division of the Federal Reserve Board of Governors, the main governing body for the U.S. central bank.

A federal indictment alleged that Rogers began working with Chinese conspirators since at least 2018. The Chinese handlers worked for the Chinese intelligence and security apparatus and posed as graduate students at a Chinese university, according to the filing.

Rogers, in the collaboration, allegedly solicited trade-secret information that included proprietary economic data sets, China tariff deliberations, and briefing books for specific board governors. He also allegedly solicited internal discussions and forthcoming announcements from the Federal Open Market Committee (FOMC), a 12-member body consisting of the seven Federal Reserve board of governors, the New York Federal Reserve Bank president, and four of the remaining 11 Reserve Bank presidents that rotate on an annual basis.

Such confidential information is economically valuable, prosecutors noted. By knowing in advance U.S. economic policy, such as federal funds rate changes, China can gain an advantage in selling or buying U.S. bonds and securities in a manner not unlike insider trading, prosecutors said in a Department of Justice (DOJ) statement.

The Federal Reserve’s international finance division is in charge of basic research, policy analysis, and reporting of areas such as foreign economic activity, U.S. trade and capital outflow, and developments in international financial markets and institutions, the agency’s website states.

Rogers is charged with conspiracy to commit economic espionage and with making false statements. A judge ordered Rogers to be held until a detention hearing on Feb. 4, a spokesperson from the U.S. Attorney’s Office in Washington told The Epoch Times. The charges carry a total of 20 years in prison on top of up to $5 million in fines.

“Let this indictment serve as a warning to all who seek to betray or exploit the United States: law enforcement will find you and hold you accountable,” said interim U.S. Attorney for the District of Columbia Edward Martin, who President Donald Trump appointed minutes after taking office on Jan. 20.

FBI assistant director in charge, David Sundberg, said his agency aims to protect U.S. national security interests.

“The Chinese Communist Party has expanded its economic espionage campaign to target U.S. government financial policies and trade secrets in an effort to undermine the U.S. and become the sole superpower,” he said in the DOJ statement.

Ed Martin speaks at an event in Washington on June 13, 2023. Martin is the current U.S. attorney for the District of Columbia. Amanda Andrade-Rhoades/AP Photo

Meetings Under Another Purpose

One of the Chinese handlers, identified in the indictment as co-conspirator 1, presented himself as a graduate student at China’s Shandong University of Finance and Economics who was interested in learning about sensitive U.S. fiscal policy to benefit the eastern Chinese province. He approached Rogers in May 2013 after creating an email that he used almost exclusively with Rogers and a handful of Rogers’s associates, according to the document. When Rogers shared that he was beginning a new project with a Chinese co-author on monetary policy, the co-conspirator allegedly invited Rogers to visit his research institute, offering to cover his airfare and hotel on the trip.

Court documents allege that Rogers took up the offer and visited China twice in 2017, telling the co-conspirator, on his second trip, that he wanted to stay in the same hotel, saying “That place was great!”

The co-conspirator purported to be working on an essay around May 2018 and requested information about the Federal Reserve’s policy measures and timetable, including its responses to China-related issues, the indictment alleges.

Rogers emailed his colleagues for input, including U.S.–China trade issues, Federal Reserve staff’s thinking on exchange rates, and views on the market-clearing price of the Chinese currency, prosecutors said. He boarded a Shanghai-bound flight days after. On May 10, 2018, Rogers emailed one document his colleague sent him to the co-conspirator, the indictment shows.

That September, the two began to discuss their meetings in more veiled terms, according to prosecutors.

At Rogers’s request, they allegedly described those activities as classes so they would appear “legitimate in the eyes of the Fed,” prosecutors noted.

Between then and February 2022, they discussed hosting about a dozen such classes in Chinese hotel rooms, according to message records the investigators intercepted.

Some of these meetings focused on forecasting Federal Reserve policy trends. One of them, initiated in late November 2018, was titled “the trend of U.S. monetary policy in 2019,” according to the indictment. The Chinese co-conspirator, the filing said, asked for an “official fed statement and presentation from current FOMC members.”

The “topic is perfect,” Rogers allegedly responded. He emailed a colleague for the “most straightforward way of accessing” Federal Reserve’s forecast data, as far back as 1994, the prosecutors said.

Rogers allegedly held the said “class” on Dec. 10, 2018, with a man identified as “Jack,” before meeting the Chinese co-conspirator for dinner. On Dec. 20, 2018, a day after a Fed interest rate hike, Rogers allegedly wrote to the co-conspirator alerting him to the change.

The Chinese co-conspirator’s response indicates Rogers had discussed the issue during the earlier meeting.

“Aha, just like what we talked about at dinner,” the co-conspirator wrote, according to the court document.

The pair talked about setting up three more “classes” in Shanghai and Beijing to cover “how the Fed will shrink the balance-sheet in 2019” and the U.S. economic situation in the first half of 2019 in the following months, according to the federal filing.

On June 19, 2019, five days after Rogers flew to Beijing for one of the meetings, the Federal Reserve announced it wouldn’t cut rates but cut the word “patient” in describing the monetary policy outlook, a hint for future actions.

“Same as you predicted!” the co-conspirator allegedly wrote to Rogers.

Rogers allegedly obtained or attempted to access at least six trade secrets for Chinese officials, according to the indictment. Among them were a briefing book dated October 2018 titled “International Economic Topics”; summary and assessment of a European Central Bank announcement dated March 7, 2019, labeled sensitive; a sensitive June 6, 2019 document that contains briefing notes to the Federal Reserve board, and spreadsheets containing proprietary information from the board, according to prosecutors.

The filing alleged that Rogers obtained the board governor’s briefing book, which contained a bold red warning “do not disseminate,” from a colleague by stating it was for his personal use as a “concrete example of ‘information flow.’”

Against his colleague’s request, Rogers allegedly forwarded the document to his personal account, court documents note. Rogers, in October 2018, also allegedly sent internal files on trade policy uncertainty and U.S. investment to the Chinese co-conspirator.

Rogers denied his China ties when the Federal Reserve Board Office of Inspector General investigated in February 2020. Asked in a recorded interview whether he had shared restricted board information with anyone outside of the board, Rogers allegedly responded, “Never.”

He insisted that he had refused money from the Chinese co-conspirator, according to the indictment.

“I set them straight. Don’t put this money in front of me,” he was quoted as saying.

The pair’s connection apparently continued after that, prosecutors say.

In February 2022, the co-conspirator messaged Rogers, inviting him and his wife to Shandong’s Qingdao City for a “class,” the court filing said.

“All related expenses will be covered by us, and we can pay for the class,” the co-conspirator allegedly said.

It’s unclear how or if Rogers responded to the message. But in August 2023, investigators said, Rogers emailed his former colleagues still with the Federal Reserve Board and asked for two internal Excel spreadsheets.

In 2023, Rogers was paid approximately $450,000 as a part-time professor at a Chinese university, according to the DOJ.

Tyler Durden Sat, 02/01/2025 - 22:10

One 21-Year-Old Who Worked A "Mass Scamming Call Center" In Dubai Blows The Whistle

Ever wonder who the sociopaths are you see in Netflix documentaries, catfishing people from the internet using dating apps?

Well, look no further. Australia's News.com.au profiled one such person this week, a young worker inside of a "mass scamming call center". 

The person, named "Beard", said that he "fled war-torn Syria for Dubai" and was desperately looking for work. Thinking he landed an advertising role, he told news.com.au he found himself at a "bizarre office location in the middle of the Dubai desert where those inside tried to confiscate his passport".

He was eventually held captive and forced to scam people for a living, the report says. 

Then he became part of a large-scale “pig butchering” romance scam operation, designed to swindle unsuspecting victims out of their money. News.com.au said this type of fraud devastates thousands of Australians annually.

Beard worked night shifts, 12 hours a day, six days a week, pretending to be a woman named Annie to deceive victims. The scam center housed over 1,000 workers, mostly foreign migrants from Africa and India, all controlled by a Chinese-run syndicate. Workers were confined to the premises, only leaving to buy food from vendors serving the scammers.

Victims, already catfished on dating apps, believed they were chatting with a woman who led a glamorous lifestyle. Beard’s job was to extract financial information and convince them to invest in cryptocurrency.

“It’s not the important information I give them,” he explained. “It’s the important information I got out of them.”

A real woman, half-Turkish, half-Ukrainian, was employed to take brief video calls to reassure victims they weren’t being scammed. “She had a line of people waiting for her to also talk to other victims.”

Beard typically juggled 12 victims at once before handing them over to another team that finalized the scam, the report said.

Despite working inside the operation, Beard never scammed anyone. Instead, he deliberately stalled conversations and warned victims about the risks of crypto investments.

Inspired by YouTube scam-buster Jim Browning, he secretly sent videos and photos from inside the scam center. When he finally decided to leave, he tricked the scammers into letting him go by claiming he needed to return home.

After he left, the scam center eventually shut down.

“The joke is that these scams gave me an incentive to work for them,” he concluded. “Like I had a bed, Wi-Fi, electricity, and water all covered. If someone gets a legal job with worse conditions, they’d be incentivized to go back to the scam centers.”

Tyler Durden Sat, 02/01/2025 - 21:35

Trump's Big-Stick Strategy Will Make America Respected Again

Authored by Connor Vasile via RealClearPolitics.com,

Despite his best efforts at saber-rattling, Colombia’s socialist president Gustavo Petro bent the knee and agreed to take in American deportation flights carrying Colombian nationals, after only a day of receiving tariff threats from President Donald Trump.

While America and Colombia have been long-time partners in coordinating anti-narcotics efforts, newly elected President Trump hit a sore spot this past Sunday after he commenced deportation flights to the South American country. While world leaders reasonably expected Trump to execute his immigration policy the moment he stepped back into the Oval Office, this knee-jerk resistance from Petro only exposes the corrupt and unbalanced relationship the United States has had with Colombia for the past four years under the Biden-Harris administration.

Under Biden, South and Central American countries had a free pass to send their citizens, freed criminals, and other migrants to America’s doorstep without repercussions. For the past four years, the Biden administration wrote a blank check to allow any and all migrants into our nation, without even a background check. This has led to a swelling of migrant gangs such as Venezuela’s Tren de Aragua, which has been busy at work committing violent crime – including murders and rapes – on American soil. Thanks to Biden’s “humanitarian policy,” countries like Venezuela have emptied their prisons and have encouraged migrants to pass through with the promise of attaining the “American dream” in the form of free cell phones, food, and even housing at the expense of the American taxpayer. There’s one issue: Trump is back.

With U.S. Immigration and Customs Enforcement (ICE) ramping up deportation efforts of violent illegal aliens, the countries which for so long have benefited from the Democrats’ open-border approach are now forced to address the migrant crisis and take back the citizens they’ve abandoned time and time again. Colombia’s Petro is one of the first to actively resist Trump’s efforts to repatriate Colombian citizens, announcing: “From today on, Colombia is open to the entire world, with open arms.” Petro also tweeted out: “The U.S. cannot treat Colombian migrants as criminals,” and “We are the opposite of the Nazis.”

Trump responded, declaring that an immediate 25% tariff on “all goods” coming into the States from Colombia will be enacted; in one week’s time, the tariff would be raised to 50%. Petro responded in the like, announcing his own 25% tax on American goods, if Trump keeps to his word: “Your blockade does not scare me, because Colombia, besides being the country of beauty, is the heart of the world.”

The Inconvenient Truth: Tariffs Are Effective

Despite Petro’s poetic declarations, it appears he is all bark and no bite; within 24 hours of sparring with President Trump, Petro bent the knee and agreed to take in America’s deportation flights, ensuring that Colombia will, “facilitate the dignified return of the compatriots who were to arrive in the country this morning from deportation flights … [th]is measure responds to the Government's commitment to guarantee decent conditions.”

In fact, Trump’s tariff threat was so effective, Petro quickly agreed to all of Trump’s terms regarding facilitating deportation efforts; so much for being “open to the entire world.”

Petro even offered his own presidential plane to pick up migrants in Honduras in a good faith effort not to disrespect American sovereignty again.

This nimble victory on migration policy isn’t just a nod to how effective Trump’s diplomatic strategy is on the world’s stage. It also highlights a fear establishment politicians and the legacy media have been dreading: Protectionism works.

While the talking heads of CNN, CNBC, NBC and others are quick to fear-monger and forecast the potential price hikes associated with hypothetical tariffs on foreign goods, they conveniently ignore one important aspect of announcing tariffs: leverage.

For the past four years, America has been the world’s laughing-stock. Under Biden, we have experienced war in Ukraine, renewed Chinese efforts to invade Taiwan, the funding of Islamic terrorism in the Middle East, a Taliban takeover of Afghanistan, and blatant spying on American soil. The world has taken American for granted, betting on a weak and ineffective commander in chief to do their bidding and continuously fund their morally questionable policies.

Protectionism Will Be a Diplomatic Strategy, Not an Economic One

With Trump back in the picture, the threat of tariffs shows that America means business after four long years of inept (and absent) leadership. While academics, “classical liberals,” and politicians decry Trump’s use of tariffs as “anti-democratic,” they fail to address tariffs in action. Trump needed only to voice the possibility of tariffs if Colombia did not take back its own citizens. Petro knows better than to spar head-to-head with Trump, as do most other world leaders; the threat of tariffs is sufficient to get countries to step in line. No actual tariffs need to be put in place if American foreign policy is respected. Colombia is the textbook case: Trump rescinded his order after Petro conceded.

In short, tariffs signal to allies and adversaries alike that we are serious about our policies and expect others to pay their fair share. Where have we heard this before?

China seems to already be following suit, having recently agreed to take back illegal immigrants in the wake of potential Trump tariffs.

Protectionism is back, but in a different way: It will be used to remind the world that it should respect America for the billions of taxpayer dollars the federal government disperses every year to subsidize foreign industries. Countries can no longer profit carte blanche off of an American welfare state. If they want fair and free trade relations with the United States, they must do their part to collaborate on important foreign policy matters like the repatriation of their own citizens. They should look to El Salvador’s President Nayib Bukele and his success for inspiration.

Play fairly, or pay the price, it’s as simple as that. It’s what’s equitable in the end, anyway.

Tyler Durden Sat, 02/01/2025 - 21:00

Mexico's President Claims She Has 'Plan A, Plan B, Plan C' In Response To Trump Tariffs

Only a few days ago the president of Mexico, Claudia Sheinbaum, was questioning with some skepticism whether or not Donald Trump would actually follow through on his threats of 25% tariffs on most Mexican-made goods.  "We don't think it's going to happen," Sheinbaum said at her regular morning press conference. "And if it does happen, we also have our plan."

As of the 1st of February it appears that her doubts have been put to rest.  Donald Trump has reiterated that he is going to stick to his tariff plan and that it will not be incremental.  Around 80% of all Mexican exports go to the US, which means that the majority of their manufacturing base will be immediately hit with a drop in US retail demand.  Mexican business leaders say this will trigger a number of bankruptcies and higher unemployment in border cities.  

Sheinbam claims in a recent press conference that she has a 'Plan A, Plan B and Plan C' in the face of high tariffs, but what does she really mean?  What would Mexico's response be, specifically?

First and foremost, Sheinbaum has threatened retaliatory tariffs on US exports to Mexico, her "Plan A".  Around 15% of US exports end up south of the border, however, Mexico is far more export dependent than the US.  Only 10% of the US economy is based on exports while 43% of Mexico's economy relies on exports according to the World Bank.  In other words, tariffs will hurt them a lot more than they'll hurt America.  

Like most establishment media economists, Mexico also argues that the US consumer will have to eat the inflation in prices that comes with tariffs.  This is assuming, though, that there are no alternatives to the Mexican goods being imported.  Car parts, electrical equipment, oil and gas, fruits and vegetables are a few of the biggest markets for Mexican goods.  The US produces close to 90% of the food that Americans purchase and Trump has indicated that energy may be exempt from tariffs.

The Mexican President's Plan B and Plan C are not so clear.  It is likely that Sheinbaum will seek aid from other Latin American governments, either to establish economic agreements to help lessen the pain of US tariffs, or as a means to put pressure on Trump through organized geopolitical sparring.  Most of these countries also have favorable trade imbalances with the US and none of them hold much international weight. 

The real leverage that Mexico has in harming the US is through mass immigration, which siphons hundreds of billions in taxpayer dollars, untold billions in untaxed wages, untold billions in subsidies, hundreds of millions in foreign aid each year that's meant to stop immigration - The list goes on and on.  Then there's the inflation in housing and goods caused by the extra demand of tens-of-millions of illegals, along with the wage depletion caused by foreign workers taking around 30% less pay than the average American worker.

Of course, Mexico has already been allowing illegal immigrants to flood into the US for decades, so it's not much of a threat anymore.

Mexico's response to Trump's tariffs will be to capitulate, the only question is how long will it take them to realize that this is their only option.  Sheinbaum behaves like most leftists/socialists in that she is often sarcastic, petulant and unruly in her rhetoric, but it's all a show.  Once Mexico understands that their prosperity is entirely contingent on US benevolence, they will fold and then act like victims.  

Victims of normal trade restrictions and normal border laws that they have violated for years while feeding parasitically off the US.     

Tyler Durden Sat, 02/01/2025 - 20:25

John Brennan's Protests To President Trump Lifting His Security Clearances Are Absurd

Authored by Fred Fleitz via American Greatness,

Former CIA Director John Brennan is angry that President Trump signed an executive order last week lifting his security clearances.

The president took this action because Brennan was one of 51 former intelligence officers who meddled in the 2020 presidential election by signing a letter they knew falsely claimed a damaging press story about a laptop owned by President Biden’s son Hunter was Russian disinformation.

Brennan indignantly asserted in an MSNBC interview that President Trump’s action was “bizarre” and said he misrepresented the laptop letter, claiming that based on their intelligence experience, the signatories were “deeply suspicious that the Russian government played a significant role in this case.”

Brennan also said he needs to hold security clearances as a former intelligence officer so administration officials can consult with him on national security matters.

Brennan’s objections are absurd and justify the President’s executive order.

Brennan’s claims defending the laptop letter are patently false. The 51 former intelligence officers did not sign the letter as a well-intentioned initiative to warn the American people about a possible Russian attempt to influence the outcome of the 2020 presidential election. They knew this wasn’t true.

We know this because one of the principal organizers of the letter, former acting CIA Director Michael Morell, testified during an investigation by the House Judiciary and Intelligence Committees about the letter’s purpose:

“There were two intents. One intent was to share our concern with the American people that the Russians were playing on this issue, and two, it was to help Vice President Biden.”

The House investigation also found that the letter signers were informed “of the intent of the statement prior to its publication, writing that the statement was meant to insulate Vice President Biden from serious electoral vulnerabilities created by his family’s influence peddling activities.”

This means there can be no doubt the laptop letter was an attempt by the 51 former intelligence officers to misuse their intelligence careers to provide political cover for Biden from damaging information that could have cost him the election.

They knowingly misled the American people to give Biden a talking point to discredit the laptop story during the final presidential debate, held on October 22, 2020.

There can be no doubt John Brennan knew about all of this.

Brennan also made the preposterous argument that he only held security clearances as a former CIA officer so he could be a resource for the U.S. government. He said in an MSNBC interview:

“The only reason I still had a clearance, as I have had for years since leaving government service, was for the benefit of the government. It was to facilitate classified discussions, should the CIA or any agency need to consult with me or other former directors and members of the intelligence community.”

I don’t doubt that the deeply incompetent Biden administration sought counsel on classified national security matters from disgraced former intelligence officers like John Brennan. However, there is zero chance that anyone in the second Trump administration will ever consult someone like Brennan on any issue.

Brennan omitted the real reason he and most other laptop letter signers held security clearances after they left their intelligence jobs—to make money.

High-level security clearances can be very lucrative for former U.S. government employees because they enable them to obtain highly paid contracts and jobs with defense firms and Beltway consulting companies that do business with intelligence and defense agencies. After intelligence officers retire, many retain their security clearances and return to their old offices as highly paid contractors.

Since resigning as CIA director in January 2017, John Brennan has worked for or advised several defense and intelligence contractors.

He served as Chairman of the Intelligence and National Security Alliance (INSA) and CEO of The Analysis Corporation (TAC).

In addition, at least two signers of the Hunter Biden laptop letter, Michael Morell and Jeremy Bash, reportedly have made vast amounts of money working with “special purpose acquisition companies” (SPACs) created to cash in on surging investments by U.S. intelligence agencies in emerging technologies.

Holding a U.S. government security clearance after an intelligence officer resigns is not an entitlement, as John Brennan has implied. It is a privilege that should only be extended when it is in the interest of the U.S. government. Former intelligence officers who use their profession to meddle in elections and mislead the American people undermine our democracy and the U.S. Intelligence Community. They do not deserve the privilege of holding post-employment security clearances.

The Hunter Biden laptop letter scandal also has shed light on the corrupt practice of senior intelligence officers maneuvering to keep their security clearances to enrich themselves after they leave government service and not to promote the security of the United States. The Trump administration must investigate and reform this corrupt practice to ensure that only a limited number of former intelligence officers are permitted to retain their security clearances for urgent national security reasons and on a time-limited basis.

Former CIA Director John Brennan and the other signers of the Hunter Biden laptop letter betrayed their country and their professions by misleading the American people to affect the outcome of the 2020 presidential election. They should not only be stripped of their security clearances but also barred access to all U.S. government national security buildings and facilities.

CIA employees should never again bump into John Brennan in the agency cafeteria.

Tyler Durden Sat, 02/01/2025 - 19:50

Australian Spy Agency Collected "Signals Intelligence" On China COVID Origins: Former State Department Investigator

David Asher, a Senior Fellow at the Hudson Institute and the lead investigator of the State Department's Covid-19 origins investigation during President Trump's first term, appeared on Sky News on Tuesday. Asher disclosed that Australian spy agencies had previously collected signals intelligence concerning the origins of the virus in Wuhan, China. 

What Asher means by signals intelligence is the interception of voice, text, and other communications (e.g., phone calls, emails, and radio transmissions). Australian spy agencies conducted much of this in Asia, which the CIA later obtained. 

"I never thought the intel picture based on human intelligence, which is what the CIA has, but it was reasonably clear based on the reactions of senior Chinese leaders that something terrible had gone wrong inside Wuhan, specifically inside the Wuhan Institute of Urology and perhaps also the Wuhan University and the CDC ... they shared certain programs together," Asher told Sky News host Sharri Markson. 

He said, "I think there will be much more coming out - with CIA Director John Ratcliffe - who you interviewed previously - is adamant about declassifying information or releasing information that is already declassified. There is going to be signals intelligence and how much of that makes its way out - just trust me - there was a lot of it." 

Sky News Markson asked Asher: "What do you mean by signals intelligence that hasn't come out yet?" 

"Just picking up phone calls, picking up the emails, things like that ... just messages between different people, I can't comment on what they are, but it's no secret we do this. Much of our collection is actually done in Australia, as you know," Asher responded. 

He continued: "So your government is fully aware, which is another reason why they are really puzzled and dismayed that the Australian government, which has the same information ... as we do, has been so passive, especially given the fact that your Prime Minister originally came out and said that we had to have an investigation."

"It's just sort of pathetic if you ask me," Asher noted, who was referring to Western governments burying the Covid lab leak theory during the Biden-Harris administration. 

Asher's interview with the Australian media outlet came shortly after the CIA released an assessment identifying the Wuhan lab as the most likely origin of Covid. It only took a change in administration for this conclusion to be made public. Our view is that the CIA knew all along - with high confidence - about lab origins. Meanwhile, former FBI Director Christopher Wray stated in 2023 that the virus "most likely" originated from the Wuhan lab.

Yet during President Biden's first term, the radical leftists in the administration deployed the taxpayer-funded censorship blob to combat lab origins and maintain the official gov't narrative that Covid originated naturally. 

Recall Zero Hedge was temporarily banned from Twitter, Facebook, and Google over 'Covid conspiracy theories' (when we first suggested in January 2020 that the fact there was a Level 4 virus lab in Wuhan.

Plus this.

And this. 

FAUCI DECRIES POLITICAL POLARIZATION IMPEDING U.S. COVID-19 RESPONSE: MEDIA pic.twitter.com/OIMiNbpNVA

— zerohedge (@zerohedge) August 26, 2022

Asher also noted in the interview that Biden's failure to disclose the true origin of Covid to the American people "is another indication how much Biden was in the pocket of the Chinese government." 

Biden's "financial interests with the Chinese are far greater than anyone ever understood. I think there's going to be some sort of Department of Justice investigation related to that and as well as there is a congressional investigation going on," Asher said. (hence the pardons)...

This is what federal investigators are looking at... 

Was Biden China's Manchurian Candidate The Entire Time? https://t.co/NdxEXldOXt

— zerohedge (@zerohedge) January 21, 2025

Asher's full interview: 

A mandate the American people gave Trump is transparency. Hopefully, that extends to Covid origins, ensuring accountability for those who funded and caused the pandemic so the world can move forward. Perhaps that's why Trump is reportedly preparing to sign an executive order banning federal funding of gain-of-function research. 

This is a dark day in American history — at the State Department we knew something very bad was happening with an emerging pandemic in China, which the Chinese Communist Government refused to even discuss with us. However in retrospect, it is shocking that our own government… https://t.co/CC9h3A1rpm

— David Asher (@dasher8090) February 1, 2025

. . . 

Tyler Durden Sat, 02/01/2025 - 19:15