Trump Just Bet the Farm
Donald Trump is not known for doing his homework — he's more of a go-with-my-gut kind of guy. What I find most terrifying about what Trump is doing today is that he seems to be largely relying on his gut to bet that he can radically overturn how America's institutions have operated and the way the nation relates to both its allies and enemies — and get it all right. As in, America will become stronger and more prosperous, while the rest of the world will just adjust. Next question.
Well, what are the odds that Trump can get all of these complex issues right — based on trusting his gut — when on the same day that he was announcing his huge tariff increases on imports from the world over, he invited into the Oval Office Laura Loomer, a conspiracy theorist who believes that Sept. 11 was an 'inside' job. She was there, my Times colleagues reported, to lecture Trump about how disloyal key members of the National Security Council staff were. Trump subsequently fired at least six of them. (No wonder so many Chinese asked me in Beijing last week if we were having a Mao-like 'cultural revolution.' More on that later.)
Yes, what are the odds that such a president, seemingly ready to act on foreign policy on the advice of a conspiracy theorist, got all this trade theory right? I'd say they're long.
What is it that Trump, with his grievance-filled gut, doesn't understand? The time we live in today, though far from perfect or equal, is nevertheless widely viewed by historians as one of the most relatively peaceful and prosperous in history. We are benefiting from this pacific era in large part because of a tightening web of globalization and trade, and also because of the world's domination by a uniquely benign and generous hegemon called the United States of America that is at peace and economically interwoven with its biggest rival, China.
In other words, the world has been the way the world has been these past 80 years because America was the way America was: a superpower ready to let other countries take some advantage of it in trade, because previous presidents understood that if the world grew steadily richer and more peaceful, and if the United States just continued to get the same slice of global G.D.P. — about 25 percent — it would still prosper handsomely because the total pie would grow steadily larger. Which is exactly what happened.
The world has been the way the world has been because China brought more people out of poverty faster than any other country in history, largely on the back of a giant, relentless export engine that took advantage of the U.S.-engineered global free trade system.
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Chicago Tribune
an hour ago
- Chicago Tribune
The Tribune's Quotes of the Week quiz for June 21
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CNN
an hour ago
- CNN
The kings of Queens: Andrew Cuomo seeks restoration months after Donald Trump's
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A few weeks later, Trump was dangling the threat to send troops into more cities. Cuomo called him and told him not to. Trump told him to stop criticizing him publicly. Cuomo backed off. The troops never came. The relationship dissolved again later that summer, when Trump was furious about Cuomo's recorded speech to the Democratic National Convention. Far from the famous rallying keynote Mario Cuomo delivered against Ronald Reagan in 1984, it was still a call to action, and a call to kick out 'a dysfunctional and incompetent' Trump. The president spent the night tweeting furiously about 'the horrible governor.' Since Trump moved troops into Los Angeles two weeks ago to quell protests over immigration enforcement, Cuomo has repeatedly said that Trump didn't do that when he was governor and wouldn't do it if he were mayor. Trump aides question both claims, but Cuomo does have the 2020 parallel to point to. 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Yahoo
an hour ago
- Yahoo
Canadians snapped up U.S. debt in April despite Trump's tariffs, but the bond selloff tanked its value
April's massive bond selloff didn't stop Canadians from buying Treasuries, but it weighed heavily on the value of their holdings. Higher interest rates in the U.S., where the Federal Reserve has been much more patient to cut interest rates than other central banks, have likely spurred demand. Canadians have been ditching all-things American after having enough of U.S. President Donald Trump's threats about tariffs and making their country the '51st state.' Boycotts of U.S. products from whiskey to dog food to Teslas—and a huge pullback in travel across the border—haven't stopped Canadian investors from buying Uncle Sam's debt, though. Trump's chaotic tariff rollout in April marked the high point of the 'Sell America' trade as stocks, bonds, and the dollar all sank. But despite the turmoil in fixed-income markets, Canadians purchased a net $9.2 billion of U.S. government bonds in April, the biggest monthly surge since November 2023. This embedded content is not available in your region. However, the value of Canada's overall holdings fell by roughly $58 billion that same month, according to the most recent data from the Treasury, by far the biggest swing for any of the top 20 foreign owners of U.S. debt. The drop likely reflects that month's massive bond selloff, which may have forced Trump to back off on his so-called reciprocal tariffs. Long-term yields, which spike when bond prices fall, have remained stubbornly elevated with the Federal Reserve—unlike other central banks around the world—patient to cut interest rates. 'You've got this gap emerging with the Fed on hold and the Bank of Canada cutting rates, along with everyone else,' Rob Haworth, a senior vice president and investment strategist at U.S. Bank, told Fortune. The Bank of Canada has slashed rates by 225 basis points over the past nine months, including 25-point cuts in January and March. The Fed, meanwhile, reduced rates by 100 points from September to December last year but has held rates steady so far in 2025. As a result, the 10-year U.S. Treasury yield was 4.38% as markets closed on Friday, while Canada's was at 3.30%. Higher interest rates in the U.S. can make Treasuries appealing to Canadians and other foreign investors, Haworth said, provided they can effectively hedge the risk presented by a weakening U.S. dollar. At the end of January, Canada's private and public sector held a combined $351 billion worth of Treasury securities. That number surged to $426 billion at the end of March before falling to $368 billion in April, the most recent data available. As Federal Reserve economists explained last year, this type of data has long been used as a gauge of foreign demand for Treasuries, particularly among the top three holders: Japan, the U.K., and China. The example of Canada, the seventh-largest owner of U.S. debt, illustrates why this approach is shortsighted, however. After all, Canadian investors bought more Treasuries in April, even as the total value of their holdings declined after revaluing the bonds at current market prices. The big drop suggests America's northern neighbor has heavy exposure to long-dated Treasury notes and bonds, which are much more volatile than short-term Treasury bills. 'Valuation changes often move in the opposite direction of net U.S. sales/purchases and are often large enough to drive overall changes in holdings,' Fed economists wrote last year. 'As such, changes in holdings alone are an unreliable measure of cross-border demand for U.S. or foreign securities.' Foreign investors account for roughly 30% of the U.S. Treasury market, according to Apollo chief economist Torsten Sløk, and their behavior is being closely monitored as the Trump administration pushes for big shifts in global trade and international finance. The U.S. borrows at much better rates than its underlying finances would normally allow, thanks to the dollar's status as the world's reserve currency and confidence that America will always pay its bills. If foreign buyers sour on U.S. Treasuries, however, that could force the Treasury to pay higher yields to bring back buyers. Such a move would put upward pressure on interest rates for mortgages, small-business loans, and other common types of borrowing throughout the economy. Foreign investors held just over $9 trillion worth of Treasuries at the end of April, down only slightly from the record set in March. The decline in the dollar this year, Haworth said, has been much more pronounced than any offloading of Treasuries. That makes sense, he added, because a slowdown in trade affects the flow of dollars first as greenbacks are used in fewer transactions. Changes in the allocation of Treasuries, often held as investments or bank reserves, happen much more slowly. 'There's probably still some fundamental pressure as we suss out where trade and tariffs end up,' he said. The Treasury data from April showed foreign private investors were net sellers of long-term U.S. debt. Government institutions like central banks and sovereign wealth funds were net buyers. More current data suggests the latter trend may have reversed in the months since, though. Holdings by these official entities in the custody of the New York Federal Reserve have declined by $48 billion since late March, prompting Bank of America credit strategists to suggest that 'cracks' in demand from these investors are now visible. Still, it doesn't seem foreigners are dumping U.S. debt just yet. Even angry Canadians. 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