The High Cost of Chaos is Manifesting Everywhere!

Never in my life have I seen so many articles prominently featuring the word chaos as I did on Thursday when I started writing this column. Stories that didn’t use chaos used a synonym for chaos, such as confusion. The word dominated the news so much that an editorial giving a broad sweep of news categories was the only way I could give the full sense of the situation. As a result, today’s article, again, has the breadth of one my Deeper Dives, giving everyone another chance to sample something similar to those.

Monday and Tuesday, the stock market plunged. Wednesday climbed like a SpaceX rocket, solely because of vague hopes stirred by one of Trump’s key cabinet members who said exceptions to the Trump Tariffs were forthcoming. Then Thursday the market plunged again as those exemptions and renewed delays added up to less than feverish hopes had bet on. And now, Friday, as I come back to put the finishing touches on the final revision of this article, the stock market is falling again, in spite of the fact that Trump just removed the tariffs, again, that he just put on for another month. Since today’s economic news, consisting of the Friday jobs report, was pretty neutral (barely less than expected and not yet in recessionary territory like Wednesday’s report), the market is apparently just exhausted from all Trump’s back and forth moves—too weary to rise even when tariffs get temporarily lifted.

Thursday:

Trump on Thursday announced that more Canadian and Mexican goods made in compliance with the USMCA would receive a one-month extension on the taxes. But that news did not deliver the same upward momentum in the market seen in the prior session as uncertainty around the policy swirled.

Friday:

Dow drops, heads for worst week in nearly two years on Trump’s trade policy uncertainty

The Dow Jones Industrial Average retreated on Friday, with the benchmark headed for its worst week in about two years as the salvo of trade policy actions unnerved investors….

Stocks have been on a roller-coaster ride this week with President Donald Trump’s tariff policies worrying investors about future U.S. growth and inflation….

Treasury Secretary Scott Bessent acknowledged to CNBC on Friday that the economy could be starting “roll a bit.”

Even Friday’s news that Trump was lifting the tariffs again did little to calm the market that has had, as I said earlier in the week would likely be the case, its head banged from ceiling to floor enough to knock it loopy, though it did recover later in the day. That’s the way fatigue works. Investors get tired of being whipsawed all over the place and start finally doubting the hopes will endure more than a few days, though this market has been at peak irrationality with hope for a very long time, so who knows what moxie to move it still might find?

Thursday:

Investors appeared fatigued by the barrage of changes to and statements from administration members around the tariffs in recent days….

The S&P 500 hit its lowest point since early November in the session.

“You’re just having confusion,” said Keith Lerner, chief market strategist at Truist. “That confusion is permeating into the day-to-day swings of the market.”

Friday:

Trump 2.0 is leaving investors ‘overwhelmed’ — and strategists warn the volatility isn’t over…

Stocks on Wall Street sold off on Thursday, with sweeping losses hitting all major indexes and the Nasdaq Composite sliding into correction territory. European and Asian stocks have also seen choppy trade around Trump’s tariff announcements and policy rollbacks this year.

The volatility of Thursday took place even as Trump offered concessions to Canada and Mexico by way of delaying some of the levies until April 2….

Strategists told CNBC on Friday that investors should brace for further swings in markets arising from Trump’s trade policies, given the president’s apparent tendency to change tack.

“Volatility will stay with us,” Philippe Gijsels, chief strategy officer at BNP Paribas Fortis, told CNBC. “Headlines keep flowing and go in all possible directions. Besides the geopolitical uncertainty there is still the massive economic uncertainty with the U.S. clearly slowing… The situation in Ukraine — are we going to have a ceasefire or will things escalate? [Then there’s] tariffs, on which the ‘strategy’ changes every five minutes.”

The confusion looked like this in just a single-day capsule on Thursday:

• Trump took the tariffs he just imposed on Mexico for a second time, back off for a second time because Mexico’s president is good people.

• He signed an executive order giving some exemptions to Canada, even though he had just said less than 24 hours prior that only Mexico would get some exemptions. (Now Mexico gets total reprieve for a second month.)

• Trump discovered due to the intense pleading by American automakers that the tariffs were going to club US automakers hard over the head, so he gave automakers a temporary exemption.

• But he’s ticked off Canada, so they have said (so far) all their new retaliatory tariffs will stay on until Trump takes off all of his, so maybe even the automaker tariffs will get put back on again.

• Trump discovered US farmers would be hurt by having critical costs soar; so, he lowered his tariff on fertilizer from Canada.

• Trump is also considering waving certain agricultural products from his planned tariffs in the next round because it turns out tariffs are not as good for US farmers as he told them all for the past two days they would be … and because we still need to eat. Apparently “everything is on the table,” except food, which could be running low as some items did last time tariffs disrupted supply chains during Trump 1.0.

• In fact, suddenly only 62% of imports from Canada will be impacted by the tariffs. (Then, when Trump ratcheted back down som more, taking off nearly all tariffs again for a month, Canada removed its retaliatory tariffs on Friday.)

• But Trump’s reciprocal tariffs to other nation’s retaliatory tariffs are still scheduled to be applied for the first time on April 2. (Maybe he should have scheduled them for April Fool’s day since they are likely to be jerked away like Charlie Brown’s football as soon as Canadians take another kick at the ball with renewed retaliation.)

Trump’s on-again, off-again tariffs threats have roiled financial markets, lowered consumer confidence, and enveloped many businesses in an uncertain atmosphere that could delay hiring and investment. But the president said that economic uncertainty was not influencing his evolving exemptions.

Whatever! They are certainly constantly evolving, then devolving, then revolving.

A good president would talk with each industry to find out how tariffs would impact them before imposing them across the board, rather than stripping half of them away the day after imposing them when industry starts to squeal like all those pigs that US farmers will no longer be selling to billions of pork-hungry Chinese because …

China has already enacted countermeasures on a range of commodities including soybeans, pork and beef. Canada also has retaliated against about $107 billion worth of U.S. goods, while Mexico plans to announce its response on Sunday.

That is the same thing that happened under Trump 1.0 that drove American farmers hog wild so that Trump had to create bailouts for them. Soybeans and pork are major US exports to China. Chinese buyers are not going to pay 15% more (China’s new tariff level) for US pork and soybeans, and US farmers run at too tight a margin to take a 15% haircut.

Promises made, promises broken

Some of Thursday’s moves were precipitated by Trump’s Treasurer, Scott Bissent. Originally he practically promised the nation with all the convincing factitude he could muster that “tariffs are not inflationary.” Thursday he sucked that back on emerging hard evidence that they clearly are with a full-throated claim that …

“Access to cheap goods is not the essence of the American dream,” Bessent said during a speech to the Economic Club of New York. “The American Dream is rooted in the concept that any citizen can achieve prosperity, upward mobility, and economic security. For too long, the designers of multilateral trade deals have lost sight of this.”

Notice how cleverly he tried to redirect the conversation there. He implies the fact that tariffs actually do drive up prices (especially in the present already-hot inflationary environment) is not what Americans are concerned about; they are concerned about restoring the American dream. (Can they not be concerned equally about both since rising prices keep pricing the American dream out of reach?)

Of course, Bessent couldn’t make this lame attempt at changing the conversation without lobbing some Trumpian diplomacy at Canada by calling PM Trudeau “a numbskull.” Apparently, Canadian leaders are dumb in the head if they retaliate with tariffs, while Trump is brilliant if he launches a tariff war. It’s sort of like the argument that Zelenksy is an evil fool for fighting back when invaded and should just lie down and accept all the blame for the hot physical war Putin launched with his initial shells, bombs, and missiles and invading tanks. You’re a numbskull, in other words, if you try to defend yourself from being invaded and don’t just bend over and accept whatever the strongman does to you.

Just as Bessent doesn’t understand that people will fight back if someone threatens to take over their country, or he wouldn’t have slurred Canadians for doing exactly that against Trump’s strong-arm tactics, he also has a poor grasp of economics, though it is supposed to be his area of expertise:

Earlier in the day, Commerce Department data underscored how far the U.S. has fallen behind its global trading partners. The imbalance swelled to a record $131.4 billion in January, a 34% increase from the prior month and nearly double from a year ago.

“This system is not sustainable,” Bessent said.

Here is the correct understanding: America has had a large trade imbalance for decades because Americans love to buy things and generally have the money to do it, and they do care about price and variety; so, they buy things from places that either make them more cheaply or better or offer something different. Putting a wrench on that abundance and tightening it down to make it harder by making them pay more, isn’t going to make them happy. We are always going to have a natural trade imbalance with any individual nation because we are generally richer than most and populous.

With a fraction of our population, Canada will never buy as much from America as we are able to buy from them. With a fraction of our wealth, Mexico won’t either. So, the only way to even that score is to make sure Americans consume less of what they want.

The joy of tariffs aside, however, the point for this article is the top-level, chaos-causing flip flopping. First, tariffs wouldn’t cause inflation, according to Bessent. Now they might cause some for awhile, but that doesn’t matter because Americans are concerned about bigger things, like the dream:

“Across a continuum, I’m not worried about inflation,” Bessent said.

Of course, he isn’t. He’s rich.

That reminds me of Zero Hedge’s borrowed motto: “On a long enough timeline the survival rate for everyone drops to zero.” Likewise, for inflation. Stretch the continuum out long enough, and yes, you’ll get to where inflation proves transitory and dives back to zero (or 2% as the target) so that you don’t have to worry about it anymore. Many of us, however, don’t have that long to live.

The market will be underFed for awhile

Thus, it is not surprising to read another headline Thursday that says discussions of the word “transitory” are re-entering the public debate.

President Donald Trump’s rapidly evolving trade war threatens to resurrect an all-too-familiar question for the Federal Reserve: If inflation moves higher, will it be transitory?

While …

the central bank’s reaction will depend on whether they believe the tariffs are stoking a one-time price increase or causing longer-lasting ripple effects.…

The reaction of markets is not looking at whether inflation is transitory right now but is becoming reactive to the fact that Trump’s policies appear transitory—on one day, off the next, back on for some tariffs, but off again for another month for other tariffs, partially reduced here and there, and scarcely even about trade at all, except apparently for illicit drug trade across the borders.

If the goal here was to make all nations eliminate any tariffs on US products, that goal has not been stated. I’m all for an even playing field. Trump, instead, keeps talking about fentanyl and border security and says he is using tariffs to leverage border changes that have nothing to do with other nation’s tariffs. And, if Canada and Mexico still have tariffs that are more than adjustments in Canada’s case for their own value-added tax on their own products to create a level playing field with foreign products coming into the nation that have not had VAT applied, then Trump was an abysmal fool to sign the trade agreements he lauded so highly during Trump 1.0. THAT was the time to make sure we established a fully even playing field once and for all for US products so he wouldn’t have to rescind his own word on treaties he originated and accepted, losing all credibility, just to fight the war all over again!

Bessent put the word “tentative” back to use, assuring us that …

“Tariffs will be a one-time price adjustment,” Bessent said at the Economic Club of New York. “While I’ve agreed not to talk about prospective Fed policy going forward, I would hope that the failed team transitory could get back together and think that nothing is more transitory than tariffs.”

You want to talk about a numbskull! Or maybe he’s just a bald-face liar: tariffs themselves may be transitory, but they are never a “one-time price adjustment” because the inflation they create tends to hang around forever. Sure, the inflation rate eventually goes back down, but the jacked-up prices become the new basis for all future months of inflation as long as you live because the prices often don’t go back down once vendors get them up. That means future inflation rates continually get applied to a larger base price for bigger jumps as measured in dollars, not percentages.

The price adjustments solely from the tariffs sometimes hangs around for decades on top of whatever global inflation is doing with that additional tariff. So, it may just make a single leap, but it is a single leap that is adding to what you pay for as many months or decades as it lingers. So, it is very non-transitory!

And there is plenty of room here for all the chaos to become a new reason that the Fed stays out of fighting inflation too long once again.

Thursday:

But Fed officials have some time to figure it out. There is uncertainty over the details, duration and scope of Trump’s final trade policies, and the levies are subject to constant flux — as evidenced by the White House’s decision Thursday to exempt Mexico for now from the new 25% tariffs on any goods and services that fall under the North American trade agreement known as USMCA.

[And now, Fed Chair Jerome Powell said exactly that on Friday: They are going to hold and see how all this tumbles out before making any more policy adjustments.]

Not only does the Fed have to worry about not making a recession worse, but the on-again/off-again Trump tactics leave the FOMC members with no idea whether tariffs will keep pushing up prices for months or all end a month from now or never get fully implemented in some cases or be adjusted over every squeal the president hears. That creates a lot of room for policy error because, if the Fed members think this inflation is transitory because the tariffs that will be accelerating it might be transitory (on a short continuum), then they will delay in fighting inflation, especially since they now have to be concerned about a rapidly gaping recession that demands the opposite response from the Fed.

“There’s a lot of uncertainty. We don’t know how long the tariffs will apply. We don’t know what other countries may do in response to this,” New York Fed President John Williams said Tuesday during the Bloomberg Invest conference in New York, adding he expects tariffs to boost inflation. “I think the current place where policy is is good. I don’t think we need to change it right away.”

So, here we go again: the Fed is being baited into believing this new surge in inflation may be transitory due to tariffs possibly being transitory (which, with Trump, could be the case), so they will likely be too slow in fighting inflation all over again, especially since they are probably loath to admit so quickly that their policy change toward lowering interest rates was ill-conceived and sent inflation back up even before the Trump Tariffs.

My predicted stagflationary recession now seen by everyone

But, oh, cost of chaos doesn’t stop with just inflation going back up more quickly.

The Fed has just as much reason to believe the tariffs will cause a recession (though I believe one was already forming, but the tariffs and DOGE job cuts will greatly exacerbate our plunge into recession).

Economists have expressed fears that the American economy may be on a path toward recession or a downturn that could rival those of 2020 and 2008.

These concerns have been heightened by falling retail sales and associated layoffs, the anticipated impacts of President Donald Trump's tariffs on prices and domestic consumption, American stock indexes trailing their European counterparts in recent months, the Federal Reserve's statements indicating that inflationary struggles are far from over, and data pointing to sharp declines in consumer confidence.

And here, again, is the chaos part:

"My major concern is that the on-again/off-again tariffs, the ripple effects of the ham-fisted DOGE-led personnel policies, the challenges to long-held norms and institutions, policy-making by Musk tweets or Trump Truth Social posts is creating uncertainty and anxiety that could lead businesses and maybe even investors to say, well, I think I'm going to wait and see."

This uncertainty, Wessel warned, could lead many to defer investments or "hunker down," leading to knock-on impacts for economic growth.

He cited the muted performance of the U.S. stock market as an early warning sign—the S&P 500 having dropped back to pre-election levels, a trend seen with the Nasdaq Composite and the Dow Jones Industrial Average.

The chaos will make it all the harder for the Fed to figure out how to get out from between the rock and hard place I’ve always said they would find themselves squeezed into by a stagflationary recession:

"I'm also wondering if inflation is stuck above the Fed's 2 percent target and that all this tariff talk is raising inflation expectations," Wessel added. "If so, the Fed will be increasingly reluctant to cut interest rates."

The recessionary aspects of tariffs will make the Fed more hesitant to raise rates, but the inflationary aspects will make them more hesitant to cut rates. Whatever will they do in all the chaos?

"It seems almost unavoidable at this point that we are headed for a deep, deep recession," professor Rothstein wrote in a Bluesky thread last week.

Rothstein said his concerns were based on the large number of federal workforce layoffs and contract cancellations enacted by the Department of Government Efficiency (DOGE).

From March onwards, Rothstein believes these will feed into weak nonfarm payrolls reports, the monthly measure of employment in the U.S. released by the Department of Labor.

Besides the direct impact of DOGE's efforts on federal government employment, he said that this could contribute to "enormous private market uncertainty,"

That’s the timeline I’ve given, too. March is when we will start to see the changes from what happened during February. Of course, chaos doesn’t just shake markets; it also shakes up consumers—the bedrock of the American economy:

Kenneth Rogoff, professor of Economics at Harvard University and former Chief Economist at the International Monetary Fund (IMF), told Newsweek:

"The thing that probably has the markets most spooked is the sharp decline in consumer confidence, especially as consumption spending was the only thing holding up fourth quarter GDP growth which was otherwise tepid…."

"Almost half of all American consumers voted against Trump, and a great many of them seem convinced that his policies will lead to catastrophe. The forceful early rollout of policy changes terrifies these consumers. So without reassurance of some stability, it would be little wonder to see them cutting back on purchases. Trump may need only 51 percent of Americans as voters, but the other 49 percent also have a big impact on the economy."

That last line is the key. Whether consumers voted for Trump or not, these polices are shredding government everywhere with massive layoffs and stabbing out with tariffs then retracting the blade then stabbing again. The resulting plunge in consumer sentiment among all those who did not vote for Trump is likely to result in a catastrophe for all voters. Trump voters are glad to see the changes, but if half the populace is shaken by those changes and how they are being executed and financial markets are all shaken by them, then the economic change will be massive because of the change to the 49%.

The ability of voters to realize the truth about how major fear in 49% of the buying public changes the economy likely rests entirely on what their biases were about Trump when they voted; but believing that catastrophic fear in 49% of the voters won’t change a consumer-based economy substantially isn’t going to dampen the effect of that much consumer sentiment going down the drain.

Stocks falling, bond yields rising around the world today, consumer spending falling off.

The hard evidence of the tariff impacts on inflation

And what is the hard evidence emerging Thursday that tariffs will be inflationary? One piece comes from the nation’s top purveyor of cheap retail:

Walmart Inc. has asked some Chinese suppliers for major price reductions, with the US retail giant’s efforts to shift the burden of President Donald Trump’s tariffs facing strong pushback from firms in the Asian nation, according to people familiar with the matter….

Negotiations are held with individual manufacturers and the price cuts differ by firm, they said.

So far, few have acquiesced. Suppliers’ margins are already razor thin due to Walmart’s strategy of procuring goods cheaply in order to maintain its competitive advantage, according to the people.

And this is exactly what I said to the idea floated by all the king’s men last month when his cabinet members claimed the producers in foreign nations will cut their prices so that they will pay for the tariffs (just like Mexico paid for the wall). I said there was very little chance of that this time around (and not much of that happened last time around as Mexican merchants told US producers to fly a kite and simply shopped elsewhere to stock their shelves) because years of hot inflation have already caused producers to tighten their margins as much as many of them can.

If there are cuts in prices made on the suppliers’ side they will almost all have to be due to cuts in quality, and Americans are not going to like that either.

Walmart’s push shows how rising geopolitical tensions are set to reshape global supply chains and pile pressure on US consumers already grappling with cost-of-living stresses. While Treasury Secretary Scott Bessent downplayed concerns about the tariffs, saying Chinese manufacturers will eat the extra cost, big box retailers Target Corp. and Best Buy Co. have warned shoppers should expect higher prices from the trade war that’s also ensnared Mexico and Canada.

In fact, they said earlier this week those price adjustments would begin this week, and that was even before the latest tariff salvo.

The retailer has historically had strong bargaining power over its Chinese suppliers and requests for lower prices have mostly been met, according to people familiar with the matter. But the scope of the recent requests are unusual and leaves manufacturers weighing whether to absorb the costs to maintain a longer-term business relationship.

Meanwhile, the DOGE cuts have already created the highest number of layoffs since the Great Recession with the exception of the extraordinary lockdown period of the Covidcrisis, the likes of which we may never see again as governments forcibly turned off their economies to prevent their people from catching a worse-than average cold.

Once again, not all of the damage that is happening is due to the actual DOGE layoffs of government workers. About a third is happening in private industry due to the increase in uncertainty, as I last projected would be the falling dominoes we would see:

“With the impact of the Department of Government Efficiency [DOGE] actions, as well as canceled Government contracts, fear of trade wars, and bankruptcies, job cuts soared in February,” Andrew Challenger, the firm’s workplace expert, said in the release.

The chaos extends beyond the global economy

With all of that, the cost of chaos is not limited to economics. Foreign relations have been thrown into tumult, as Trump on Thursday abruptly turned off all of Ukraine’s US missiles and some other heavy munitions by disabling their targeting systems. Trump’s pullback from NATO and swing toward Putin has caused Europe to seriously up its war footing, increasing the risk of WWIII, according to Putin, himself.

Spooked by Trump and Putin, Europe rushes to rearm.

You can be sure those won’t be contracts to rearm with American weapons manufacturers either, not that I care about feeding the local MIC. I care about using war to eat up their products, necessitating more; but Trump’s moves have just changed where the weapons will be bought and who is paying for them while increasing the likelihood of a greater war because he’s scared Europe half to death with his shock changes that came with little to no discussion or time. People who feel compelled to act in an emergency manner tend to overreact:

Along with the specter of a belligerent Moscow, President Donald Trump’s sudden redrawing of alliances and withdrawal of support for Ukraine are driving Europeans to fast-track plans to bolster their militaries, upgrade their arsenals — and, ultimately, to curb their dependence on the United States.

Curbing their dependence on the US is good. We cannot afford to keep being the world’s cop and its bodyguard. However, don’t expect ready support in the future from old allies who feel shockingly abandoned if the following plays out, as is also in the headlines posted below from Thursday:

Defense Secretary Pete Hegseth says US is ‘prepared’ to go to war with China over tariff threats.

Defense Secretary Pete Hegseth declared early Wednesday that the US is “prepared” to go to war with China, hours after alarming threats from Beijing in response to President Trump’s stiff new tariffs.

“We’re prepared,” Hegseth said on Fox News’ “Fox & Friends” in response to China saying it was “ready to fight” any “type of war.”

I’m not sure it was accurate for the article to say the US would “go to war … over tariff threats,” but the saber-rattling statements from China emerged over the tariff threats, showing the kind of reaction the tariffs can cause. Hegseth, I suspect, was just saying, “If you really decide to go to war with us, we’re ready.” Still, that kind of talk can escalate, just as tariffs quickly escalated into talk by China about war.

Hegseth’s threat came after China declared late Tuesday they were ready to clap back if the US was bent on waging a trade or tariff war — soon after Trump’s initial 10% tariff on Chinese imports doubled to 20%.

So, the escalated war rhetoric is a collateral cost of the tariffs. Canadians, too, have said the US is waging economic war on their nation. Tariffs, like sanctions, are somewhat the modern equivalent of laying siege to city. They have the effect of cutting off supply lines and creating scarcity and sometimes even hunger.

Trump also said on Thursday that all 240,000 Ukrainian refugees in the US will now lose their refugee status and be deported because Zelensky made Trump mad with what Trump claimed was disrespect (though I don’t know how you form a serious peace deal without talking seriously about the parts you don’t like). I guess it was the fact that Z aired those opinions publicly, rather than in a closed meeting.

Anyway, missiles gone, and Ukrainians all gone, too. At least, until Zelensky signs on to Trump’s demands. Then that policy will likely be reversed, too. For real families in the US, however, the “You have refuge here, no you don’t” approach has got to be chaotic. What do you plan for with housing, school, jobs, etc.? But Trump seems to thrive on negative energy.

Here’s how Trump’s diplomatic reversals are increasing the likelihood of a great war … at least at the moment: Europe is rushing in to fill the gaps, and its panic reaction to unexpected total US withdrawal of support from Ukraine is causing Russia to state that it will be amassing millions of troops to “fertilize the soil with European blood” if necessary now that Europe “will be powerless without the US.” Backing down from a despot yearning to expand his empire back to its glory days, as with backing down from Hitler, tends to cause violent tyrants, who have shown themselves willing to destroy homes and villages all over the countryside they want to seize, to play their hand more powerfully. Acquiescing to Hitler did not slow him down.

Besides Britain’s prime minister saying the UK and other nations would put troops inside of Ukraine to fight, France’s Macron said that France will consider putting other nations of Europe (such as Ukraine) under its nuclear protection now that it is, according to Macron, no longer clear that France could trust the US to be its ally.

In some ways, the 27-nation bloc, where the need for consensus can hobble decisions, is moving faster than usual. Yet it is playing catch up with a more militarized world — and it was not built for Trump’s battering ram of decisions.

“The E.U. was built for peacetime,” said Nathalie Tocci, director of the Rome-based Institute of International Affairs and a former E.U. foreign policy adviser. “There was no need for speed but rather this kind of slow, careful construction of shared interests and identities and all the rest of it.”

In such “dramatic moments” though, “what you tend to think of as being technically impossible is often not,” she said.

So, the amplitude for WWIII just went up this week, not down due, to the rambunctious way Trump is massively changing foreign policy every day. Europe has always exhibited plenty of its own chaos, and its liberal inclinations I can live without; but Trump’s surprise moves have triggered alarmed responses among America’s apparently former allies because they have a direct impact on security by a US president who even threatens to take over the lands of US allies.

As I say, alarmed responses tend toward overreaction. That is the cost of the kind of chaos you get when you effectively dissolve old alliances on a daily basis, while also threatening to add their lands to your own empire and withdrawing in less than a weak military support they have known for more than half a century.

“Listen, there is no point in complaining about the new reality, we must learn to deal with it,” Polish President Donald Tusk told reporters Thursday….

“I want to believe the U.S. will stand by our side, but we have to be ready for that not to be the case,” French President Emmanuel Macron told his country before the summit. “The future of Europe must not be decided in Washington or Moscow.”

What we see in Thursday’s news reveals that America was actually a stabilizing force for Europe by slowing it down from over-reacting to Russia. Without the certainty of that strength protecting Europe, Europeans are now rushing to heal the new gaping wounds of America’s withdrawal from its former steadfast alliances.

Overnight, that has taken us back to an arms race:

Leaders are seeking to rally weary populations to redirect funds to weapons, which will be tougher in countries where military spending is relatively lower and deficits are high. Countries closer to Russia’s borders including Poland have launched drastic increases in defense budgets.

Putin is going to find himself with far more European weapons along his border than he had prior to his invasion of Ukraine. That’s just a clear fact!

Now that Trump has cut off intel to Ukraine, allies are also weighing the prospect of sharing less intel with the US because they fear it will be leaked to Russia now that Trump has completely shifted the battlefield in Russia’s favor.

Some U.S. allies are considering scaling back the intelligence they share with Washington in response to the Trump administration’s conciliatory approach to Russia, four sources with direct knowledge of the discussions told NBC News….

The allies, including Israel, Saudi Arabia and members of the so-called Five Eyes spy alliance of English-speaking democracies, are examining how to possibly revise current protocols for sharing intelligence to take the Trump administration’s warming relations with Russia into account, the sources said…

Though the extent of a U.S. policy change toward Russia remains unclear, allies are weighing the possible implications of what could be a historic shift, a Western official said.

Old friends, they now fear, may no longer be trusted, especially ones that want to seize Canada and Greenland for their own, and many in Canada think that is what Trump’s poorly communicated tariff objectives really are—a way of strong-arming Canada into becoming the “51st state” in the USofA. That is the cost of erratic actions that come with little to no conversation with your past friends but are sprung on them publicly via television. However, Trump loves the chaos.

At first, Trump’s early-term energy on multiple fronts was a bolt of energy as he scratched his Sharpie across executive orders and chased away the lethargy that marked President Joe Biden’s waning months in office.

Six weeks in, however, as Trump makes gut-check calls to dismantle post-Cold War national security arrangements, the global free trade system, and the federal machine – all of which helped make the US a superpower – a new realization is dawning.

There doesn’t seem to be a plan….

Trump’s haphazard efforts to make peace in Ukraine, revive Rust Belt-heavy industry with 19th century-style tariffs and slash government are as improvisational as the “weave” – his name for his stream-of-consciousness campaign screeds.

And the world is once again left hanging on the “America first” president’s whims and obsessions.

“There’s too much unpredictability and chaos coming out of the White House right now,” Canadian Foreign Minister Mélanie Joly said Wednesday, describing US trade policy as a “psychodrama” her country can’t go through every 30 days….

The president, for instance, said Wednesday that Canada hadn’t done enough to stem the flow of fentanyl over the border – but only minuscule amounts of the drug are involved. Sometimes the White House complains about the flow south of undocumented migrants – but these numbers are also small. Trump also wants manufacturing to leave Canada and move south. No wonder some officials in Ottawa have concluded he’s trying to weaken their country to make it easier to annex….

To some extent, the chaos is the point. And the theatrics of a president addicted to stunt politics are key to his political appeal.

But allied governments have their own politics to worry about – a factor the Trump administration often seems to ignore.

Mexican President Claudia Sheinbaum … said Wednesday that her country could consider alternative trade partners to the United States “if necessary….”

While unpredictability is a real estate superpower, it’s a liability when running a country, an economy and a planet – where continuity and predictability are preferred.

“It’s just constant, and it’s exhausting,” said Julian Vikan Karaguesian, a former Canadian Ministry of Finance official, referring to Trump’s scorched-earth tariff offensive. “It’s almost surreal. Is it real? Is it going to be real this time?… Maybe the modus operandi here is uncertainty. It’s not tariffs, it’s not anything else, but intentionally creating a sense of chaos and a sense of uncertainty….”

Trump’s relentless bullying of America’s friends – while seemingly doing everything he can to advance its traditional adversary Russia in Ukraine – may also drain US power in the long run.

Speaking of laying siege with sanctions

The supposedly anti-war president, besides having his Secretary of Defense threaten China, is doubling down on the same old sanction game with Iran, announcing today that the US will “destroy Iran’s economy” with sanctions (as if those haven’t been imposed for years to little effect, but this time, I guess, they will be tougher.) We will lay siege until they die or surrender.

And Trump will annihilate Hamas, the president of peace and shalom said, if they do not fully surrender, too.

“Release all of the Hostages now, not later, and immediately return all of the dead bodies of the people you murdered, or it is OVER for you. ‘Shalom Hamas’ means Hello and Goodbye…. I am sending Israel everything it needs to finish the job, not a single Hamas member will be safe if you don’t do as I say…. This is your last warning! For the leadership, now is the time to leave Gaza, while you still have a chance…. Make a SMART decision. RELEASE THE HOSTAGES NOW, OR THERE WILL BE HELL TO PAY LATER!”

The president has already made clear that his answer for Gaza is that he will redevelop it as his own resort, and Hamas (as well as all Palestinians) stands in the way of his development ambitions. So, leveling Gaza will be entirely fine in his eyes because doing so with US munitions will save a lot of demolition costs for his total redevelopment vision.

Trump’s brusk Musk move

Chaos comes in unexpected ways by its own nature, and one of those unexpected ways that should not be unexpected at all, is that Trump curbed Musk’s powers today. He swatted him down after a month of letting him have totally free rein over all departments of government and all cabinet members who run those departments. Trump finally heard enough rebellion from the other cabinet members to put a ring in the nose of the belligerent Musk ox by telling him and them during a cabinet meeting that Musk has no authority to fire anyone. Only the heads of each department have that authority. Musk can only advise.

Most of us thought that was how DOGE was supposed to work in the first place, but Trump formerly told agencies they must do as Musk said and he made no effort at all to rein him in, looking on approvingly and loving a good scrap. So, I think there has been a little cabinet chaos, which we saw displaying itself last month and this month in the form of cabinet members countermanding what Musk demanded. That is intragovernment chaos when you have a president who encourages on enables one non-cabinet member to run over higher-ranking actual cabinet members by congressional consent in their own departments. That blatant breach of chain-of-command was not well taken.

Now, this raises a question: If Musk never had firing authority, will those cabinet members start hiring the fired people back? Well, that was in the news on Thursday, too! The hideous CDC, which gave us Covid quarantines and the vaccine of death just rehired 180 employees, as Musk admitted in the cabinet meeting that DOGE had made some mistakes. (Who could have seen that coming from a group of high schoolers who are barely post-pubescent? And who lost paying subscribers by saying these highly probable mistakes would soon become manifest?)

The mistakes were bad enough that the CDC told the 180 to do a 180 and come back immediately. It is not clear, however, whether any of them did. The number of CDC employees who were fired and immediately rehired gets added to downward revisions to the original firing targets that now bring the total announced CDC layoffs down from 1300 to 550, thus reducing your future DOGE participation benefit check. Surely, no one can say this looks like a circus!

“Read this e-mail immediately…. After further review and consideration … You should return to duty under your previous work schedule…. We apologize for any disruption that this may have caused.”

Ah, well, disruption is the nature of chaos!

Apparently, the employees were a little more essential that Musk and his Mighty Men with “big balls” realized. As I suggested at the start of this, it might be wise to know who you are firing and what they do before you make your termination decisions. The wrecking-ball approach tends to do a lot of indiscriminate damage and needlessly upset a lot of people.

It’s not clear how many of the reinstated employees returned to work Wednesday. And it’s also unclear whether the employees would be spared from widespread job cuts that are expected soon across government agencies.

Indeed. You have to wonder how many will want to re-enter all that uncertainty. If they were good and useful at what they did (as the rushed rehires would indicate) they might do better to just present their pink slips to the local unemployment office and start collecting while they seek work for a better-behaved employer. No doubt a good number will try exactly that and will not mention they received a rehiring email, so let’s hope they were not too essential, even though Musk admitted to the errors. In fact, perhaps we should hope all those who were rapidly asked to return were non-essential and even unimportant … just in case none of those who have been so bandied about decide to return.

Even Trump implied these were disastrous firings when he told the press after patting Musk down that cabinet heads are better positioned to know who are the best and brightest and most needed employees. Apparently, he finally realized what I have been saying, which is that the broad-axe or wrecking-ball approach is needlessly disastrous:

“We just had a meeting with most of the Secretaries, Elon, and others, and it was a very positive one,” Trump said on Truth Social. “It’s very important that we cut levels down to where they should be, but it’s also important to keep the best and most productive people.”

“As the Secretaries learn about, and understand, the people working for the various Departments, they can be very precise as to who will remain, and who will go. We say the ‘scalpel’ rather than the ‘hatchet,’” Trump added.

Well, that’s as I said this should have been done from the start. It takes time for new cabinet members to make intelligent determinations about who should go and who should stay. I’m glad to see Trump is learning on the job something that should have been obvious to him before he was even hired for the job. Better late than too late … but maybe it already is too late.

Not bad for a 24-hour news cycle!

(And now I will move on to writing that article I promised that focuses mostly on the good things Trump talked about in his speech to congress in order to balanced my approach.)