Trump, Tariffs, Transgressors and Truth

All the king’s men promised us the Trump Tariffs would not cause inflation, yet they are already causing inflation.

It was a slick promise

There was no chance that would ever be true, so the claim that tariffs would lead to inflation was part of my ten economic predictions for 2025. Three articles on oil note that oil prices have already started escalating again in anticipation of Trump’s tariffs threatened against Canadian oil along with his declarations regarding Gaza and Iran.

Oilprice.com says,

Newly elected U.S. President Trump, as promised during his election campaign, is putting the already fragile security situation in the Middle East and North Africa at risk, as his statements regarding Gaza, Israel, and Iran are unlikely to support stability. At the same time, the Washington administration is pursuing a full-scale oil and gas confrontation with OPEC+ and Iran. Already, Gaza-based extremist group Hamas has delayed its handover of Israeli hostages, while Iran is openly confronting Trump's tactics, showing no signs of backing down in the foreseeable future.

As some analysts have stated, the coming five days could shape a new reality in the Middle East….

As a transactional president, Trump is using his well-known street-fighting tactics, honed from his experiences in U.S. real estate, to pressure all opponents into accepting new geopolitical rules.

Trump has threatened that “all hell will break loose” if Hamas doesn’t hand over its prisoners. This, of course, in thinly veiled code, says to Israel, “Bomb away if you don’t get your hostages back by the Sabbath.” Trump rightly points out that the world’s policy for battles between Israel and Hamas which restricted Israel to using proportionate force, has done nothing but create a stalemate for more than half a century; so, a new approach is needed; but Trump’s half-baked Gaza plan is getting a poor reception in the Middle East, except in Israel:

The current tensions in the Middle East are escalating. Saudi Arabia, Egypt, Jordan, and others have openly criticized Trump’s approach, warning Washington to reconsider if it does not want to lose regional influence.

Here’s the thing: The only way Trump will succeed in getting these surrounding nations to absorb the Palestinians, as his new Gaza plan requires, is if he strong-arms them with tactics like 100% tariffs on their oil. Never mind the inflation that would cause for Americans because, I suppose, Trump’s response would be “drill, Baby, drill.” But drilling takes time. Speculation in the oil market is immediate; so, as investors look at the rising political volatility in the oil-rich region of the world, they are already driving oil prices back up.

Simultaneously, Trump’s economic measures, particularly new tariffs and his “drill, drill” strategy urging U.S. oil and gas companies to ramp up production, are increasing pressure on OPEC+. Without a clear overall strategy, Trump is trying to force the international oil group—primarily Arab national oil companies, as well as non-OPEC producers like Russia and Kazakhstan—to expand production and exports. Sector analysts and American oil companies have already indicated that Trump’s “Drill, baby, drill” campaign is unrealistic, and they also warn that OPEC+ cannot comply immediately….

Trump’s 110% support for Israel is another potential flashpoint. If negotiations between Hamas and Israel fail to secure the release of all hostages, Israeli Prime Minister Benjamin Netanyahu has been given the green light to resume military action. U.S. analysts indicate that Washington does not currently plan military action against Iran, but at the same time, Israel has been authorized to adopt a hardline approach.

Where I am going with this is an economic argument. As Trump personally glows over his rich development prospects for Gaza, economically, his actions point in this direction for the United States:

With rising instability in the Middle East, potential military conflicts on the horizon, and concerns over the stability of Egypt and Jordan, oil prices are set to rise. If the Gaza war resumes or if tensions escalate with Iran, oil prices could easily break $90 per barrel. Even an OPEC decision to suddenly increase export quotas may not prevent price hikes, as key producers will find themselves caught in geopolitical crossfire.

Another article on Oilprice.com in our headlines (see boldface titles) says these are the forces that are already at play in the recent rise in oil and gasoline prices:

Trump's New Tariffs Boost Oil Prices Despite Potential Demand Consequences…

New week, new Trump tariffs – the momentum coming from Donald Trump’s constant threats has been a boon to oil prices, even if the price movements sometimes contradict macroeconomic assumptions. The 25% tariff on steel and aluminum could be disruptive for global economic growth, further aggravated by the threat of higher inflation keeping US interest rates unchanged for longer, but the market’s kneejerk reaction was once again bullish, sending ICE Brent back to $77 per barrel.

We don’t know if the Canadian tariff threats will materialize or not, but we do know that the president briefly raised tariffs on Canada, even though his own treaty with Canada forbids the application of tariffs until 2026. What does a paper document matter or your own word when it stands in the way of the leverage you’d like to have? He tossed that aside like a rag.

President Donald Trump’s threatened tariffs on Canadian crude oil imports could raise gasoline prices for U.S. drivers if the levies are enacted next month, according to major refiners and energy analysts.

The price of gasoline has already seen a notable rise since Trump took office.

Tacitly, the White House admits that (of course) tariffs raise prices:

A White House official told reporters on Feb. 1 that Trump decided to impose a lower 10% tariff on Canadian energy rather than 25% to minimize the impact on gasoline and home heating prices.

“Drill, Baby, drill” isn’t as easy as it sounds because refineries in the US are geared toward refining heavy crude, and US oil tends to be light, while Canadian oil is heavy. Rebuilding refineries would take a decade and add a hugely inflationary cost of its own. What the US tends to do is buy heavy crude from countries that have a lot of it because it is cheaper than our pure, light crude; and then we sell our light crude to nations with refineries that can use it.

U.S. refiners, however, have “few economically and politically viable alternatives” to Canada’s heavy crude, Mason Mendez, investment strategy analyst at Wells Fargo, told clients in a report Monday. Domestic production could replace some lost Canadian supply but U.S. crude is generally lighter than Canadian oil, Lipow said. Many U.S. refiners have physical limitations on switching totally to light crude oil, he said.

60% of America’s oil imports come from Canada because of how close its heavy crude is. 70% of the crude that gets processed specifically into gasoline and diesel comes from Canada.

In general, a 10% tariff passed to the consumer would increase gasoline and diesel prices by about 15 cents per gallon, Lipow said in a Feb. 2 note.

We can easily absorb that much, of course, if that is all it comes to, but it is still inflationary; yet, I think it will come to more than that. Gasoline is already up more than that. There are other associated inflationary risks that come from tariff wars than just the immediate cost passthrough of the tariff:

“There is a danger here for the U.S., and that is Canadians are really angry,” Freeland told CNBC in a Feb. 4 interview. “We will retaliate if we have to. You should be glad that you have us as a reliable energy supplier. We do have alternatives.”

Canada could retaliate against tariffs by choosing to sell its oil to other ready buyers, forcing the US to buy more expensive oil from other sellers that also come with higher transportation costs, due to originating halfway around the world.

While tariffs by themselves may only raise the price of gasoline by 15 cents per gallon, fuel shortages, should Canada stop selling to the US in retaliation, could drive the price up twice that much. Middle East tensions, even more, until we hit that $90/bbl crude that causes the prices of all things to rise.

Tariffs are a cost gusher for all industries

Henry Ford used to joke, “You can have any color of Ford you want, so long as it’s black.” I’ll turn that into a crude joke. Ford car prices, like crude oil prices, are being driven by tariffs. It isn’t just the oil. It’s the things that run on oil, too, that are going up under tariffs. Tariffs are pushing prices in many other industries, but the one in the news is the automotive industry.

Ford’s CEO says that new tariffs on aluminum and a variety of other things out of China are already increasing Ford’s costs, but they also are risking renewed supply-chain shortages that could slow production, causing product shortages that we have recently seen severely drive prices higher. This is where we leave 15 cents or 30 cents far behind.

The operative word he uses for the currently developing situation is … (drum roll) … chaos:

Farley described this week’s 25% tariffs on steel and aluminum, as well as threatened levies of the same amount on Mexico and Canada, as currently adding “a lot of cost, and a lot of chaos” to the industry….

The biggest concern for Ford is all of these actions that appear relatively minimal, including on suppliers, combining to negatively impact the automaker’s business.

“We’ll have to deal with it. That’s what I’m talking about cost of chaos. A little here, a little there. … This is what we’re dealing with right now,” Farley said….

Farley seemed most concerned about potential duties on goods from Mexico and Canada, saying a long-term 25% tariff that could go into effect as soon as March 1 would be “devastating” and “blow a hole in the U.S. industry that we’ve never seen.”

Ken Griffin, CEO of hedge-fund investment firm Citadel, says the problem is that Trump’s “bombastic” trade rhetoric is making it difficult to establish trusting trade relationships by eroding trust generally in the US, especially with a president who couldn’t care less if he honors his own word in his own treaties. (Trust, you’ll see as this article goes along is the truly big thing at stake here.)

“From my vantage point, the bombastic rhetoric, the damage has already been done,” Griffin said Tuesday at the UBS Financial Services Conference in Key Biscayne, Florida. “It’s a huge mistake to resort to this form of rhetoric when you’re trying to drive a bargain because ... it tears into the minds of CEOs, policymakers that we can’t depend upon America, as our trading partner.”

Truth becomes the victim when you don’t honor your own recent trade treaties.

Griffin, who voted for Trump and was a megadonor to Republican politicians, believes the hostile dynamics caused by punitive tariffs could make long-term investments challenging for multinational companies and investors.

“It makes it difficult for multinationals, in particular, to think about how to plan for the next five, 10, 15, 20 years, particularly when it comes to long lead time capital investments that could be adversely impacted by a degradation of the current terms of engagement as amongst the leading Western countries when it comes to terms and trade,” he said.

Griffin previously cautioned that crony capitalism could be a consequence of tariffs. Crony capitalism is an economic system marked by close, mutually advantageous relationships between business leaders and government officials.

The cost of darting left then darting right; making a treaty, then breaking it; imposing tariffs, then dropping them the very same day, is that nobody trusts anything you say. It’s all tactics and none of it lasts beyond your present mood or needs. You’re too erratic. That is exactly where you can expect a low regard for honor and truth and a high regard for loyal relationships will lead. Those who are in with head—who are loyal to him—are the ones who thrive in business … mafia style. That is what doing business in America may now be turning into.

Truth is the victim

It’s not surprising, then, that so many of Trump’s actions in the headlines of the past twenty-four hours focused on granting pardons to felons and corrupted politicians. Rolling Stone said that the president’s new plan seems to be to “make America corrupt again.” That is particularly discernible in his actions this week:

In one such action, he has ordered the US Manhattan attorney to drop corruption charges against New York Mayor Adams who was “accused of taking bribes and soliciting illegal campaign contributions from foreign nationals.”

And in a startling admission, the DOJ said the decision was not based on the case’s merits but influenced by this year’s election and Adams’ ability to support policies “critical” to the Trump administration….

That’s crony politics, and Trump cares so little about it being obvious that his own DoJ states outright that the case was not dropped based on its merits. Why would you admit that? Well, to make sure Adams remains on a short leash, Adams must agree in writing that the case against him is being dismissed “without prejudice,” meaning it can be brought to trial again if the Trump DoJ decides to bring it back up. New York’s mayor will be on a choke chain with Trump holding the other end of his leash. “Fail to be loyal to Trump, and we’ll let you go back to trial. We may even be the ones to take you there.”

Trump also pardoned Chicago’s former corrupt mayor, Rod Blagojevich, who was imprisoned for, among other acts, dishonesty, and conflict of interest, in illegally trying to sell the senate seat that was vacated by Barrack Obama when he became president. Said the foul-mouthed Blagojevich in a phone call recorded by the FBI:

"I mean, I've got this thing, and it's [expletive] golden. And I'm just not giving it up for [expletive] nothing," Blagojevich said.

Blagojevich had served 8 years of his 14-year sentence when Trump released him this week on his leash. Blagojevich, of course, refers to himself as a freed political prisoner, calling the criminal justice system both broken and unfair.

"We want to express our most profound and everlasting gratitude to President Trump," Blagojevich said. "How do you properly thank someone who has given you back the freedom that was stolen from you?"

That gratitude, I am sure he understands, is to be expressed with equally everlasting loyalty. I guess if you get imprisoned for trying to sell a senate seat, you have had your freedom stolen from you because any politician should be free all the time to sell appointed government positions for personal gain. Those who support Trump’s pardon, support that position. Trump is supporting that position.

President Trump said he was granting Blagojevich a full pardon. He called Blagojevich's sentence a "terrible injustice" and he called the former Illinois governor, a nice man.

There is going to be a heavy price to pay for restoring the corrupt as loyal people to the president and calling truth lies and lies the truth. The cost of making excuses for this kind of mafia-style leadership is that you live in an even more corrupted nation because truth, itself, becomes the casualty.

In yet another act in the last 24 hours of vacating integrity,

President Donald Trump signed an executive order directing the Department of Justice to pause enforcing a nearly half-century-old law that prohibits American companies and foreign firms from bribing officials of foreign governments to obtain or retain business.

A mafia-style government and solid crony system have always depended on bribes. This law gets in the way of that kind of deal-making, so it had to be jettisoned to make room for Trump’s style of negotiation. Those who care more about Trump than truth will find ways to justify that—justification and rationalization being what they are. The more we excuse this kind of leadership, the more truth will be the victim.

The pause is being implemented to avoid putting U.S. businesses at an economic disadvantage to foreign competitors….

“Many, many deals are unable to be made because nobody wants to do business, because they don’t want to feel like every time they pick up the phone, they’re going to jail,” Trump said, referring to U.S. anti-corruption efforts.

In other words, for the past half-century, Americans couldn’t make deals the good-ol’-fashion Mexican way by greasing some palms of the good-ol’-boys without being afraid they might go to jail. America was trying to set a business standard that didn’t ride on endless bribes and their counterpart—blackmail.

The pause in criminal prosecutions under the FCPA is being implemented to avoid putting U.S. businesses at an economic disadvantage to foreign competitors.

It is always cheaper and certainly more expedient to do business by bribery and lying or always more successful. Good-ol’-boy systems depend on it. In the absence of laws, to the liars go the spoils.

The FCPA’s intent is in part to prevent American firms from fueling rampant public corruption that undermines the rule of law in many parts of the world. Over time, the FCPA’s rules have grown into bedrock principles of how American businesses operate overseas.

But principles get in the way of expediency.

The law didn’t just go after Americans who offered bribes. It also went after foreigners and foreign businesses that offer or accept bribes … to whatever extent the long arm of US law could reach out and grab them.

In one step backward from the enshrining of corruption for corrupt individuals, a court ordered that the head of the US whistleblower agency be given back his position. It still illustrates the same thing because Trump had recently fired him in an effort to take down the agency because whistleblowers are not good for corrupt business. The mafia hates whistleblowers!

Also on Monday, Trump removed the top U.S. ethics official, David Huitema, according to a notice on the Office of Government Ethics' website. Huitema assumed the role, which is tasked with preventing conflicts of interest among government workers, in December.

How are you going to get to develop Gaza into your own Riviera if conflicts of interest are not allowed? Of course, the Supreme Court has assured that Trump cannot be tried for anything carried out officially that breaks mere ethics laws or just about any other law, but it does not protect his henchmen when they carry out orders to offer bribes. They would know they were dependent on a Trump pardon if caught. Trump would still have to pardon his developer son-in-law if Kushner also benefits from developing Gaza after the US absconds with it and uses its muscle to press the Arabs to pay for rehousing the Palestinians in Arab lands. Trump, it is starting to appear, is leveraging US strength for his own new real-estate development dreams.

The moves are the latest by the Trump administration to expel officials who investigate wrongdoing within the federal government. Trump last month fired 17 inspectors general who serve as independent watchdogs within their agencies, without providing a reason.

Can’t have that. That’s just “lawfare,” except, of course, in the many cases where truly corrupt businessmen and politicians are put down.

The Special Counsel Office allows whistleblowers to make disclosures about alleged misconduct within federal agencies and investigates complaints of retaliation. It also enforces a U.S. law known as the Hatch Act that limits political participation by federal employees.

Finally, Steve Bannon was allowed a plea bargain in the last 24 hours for fleecing Trump supporters. He admitted he was guilty in order to get zero time in prison.

Steve Bannon, the confidant of President Donald Trump, pleaded guilty Tuesday to defrauding New Yorkers who donated to "We Build the Wall," an online fundraiser for Trump's signature project during his first term, in exchange for a sentence without prison time….

Bannon said after the hearing that he would call on new Attorney General Pam Bondi to prosecute New York Attorney General Letitia James and investigate Manhattan district attorney Alvin Bragg, both of whom brought successful cases against Trump….

"We Build the Wall" promised 100% of donations would fund a wall along the U.S. southern border, but Bannon redirected money elsewhere….

Bannon defrauded donors to the nonprofit by falsely promising that none of the money they donated would be used to pay the salary of "We Build the Wall" president Brian Kolfage, while secretly funneling hundreds of thousands of dollars to him by laundering it through third-party entities, prosecutors said.

The campaign represented that "We Build the Wall" would use the money to privately construct the border wall, and prosecutors said a "central piece of the public messaging in support of this fundraising effort was that Kolfage was not taking a penny of compensation." Financial records show Kolfage was paid, according to a secret salary arrangement, an upfront payment of $100,000 and monthly payments of approximately $20,000.

In a world where conservatives have long claimed to have the moral high ground of expecting to live in a nation ruled by law and particularly the constitution and democracy, not the decrees of kings, it seems odd that all the people set free this week were convicted of fraud, including defrauding their fellow Trump supporters. The message is loud and clear: “We don’t care—even if we are the ones you rip off—so long as you are loyal to Trump.”

And, so, is it any surprise this week that we also find a person who was formerly fired over a cybersecurity issue wherein he was accused by his employer of providing confidential trade secrets to the employer’s competitors, that this teenager, who gave himself the online moniker of “Big Balls” has just been promoted to being a senior advisor (at the age of 19) to the State Department?

Few developments better typify the unique insanity of the current political moment than the ascent of “Big Balls,” a 19-year-old software engineer who briefly worked at Elon Musk’s brain startup Neuralink, got recruited to the billionaire’s government-deconstructionist effort DOGE and, now, in a twist so ridiculous it seems like it was stolen straight out of South Park, has apparently been hired as a “senior advisor” to the U.S. State Department….

Wired initially reported that Coristine had previously worked for Path Network, a cybersecurity firm that was known to hire reformed cybercriminals. Bloomberg subsequently reported that Coristine was actually fired from that firm after he leaked “internal information to the [company’s] competitors.” “I can confirm that Edward Coristine’s brief contract was terminated after the conclusion of an internal investigation into the leaking of proprietary company information that coincided with his tenure,” a Path Network spokesperson told the outlet last week. Coristine, meanwhile, has said that he did “nothing contractually wrong” while at the company.

Ethically wrong, certainly, but not specifically forbidden in his contract.

Now, for whatever reason Balls/Coristine has been given a horrifying amount of access to the data and internal systems of the federal government.

You take an indicated felon and make him president, and an increasingly corrupted government is what you get for excusing his offenses. The truth will prove to be the victim over time. You may hate me now for saying it; but mark my words, you’ll wind up with a country deep in chaos and corruption. Those who dismiss these words of warning out of loyalty will eventually deserve the corrupt government and lack of truth and all the chaos that comes with that kind of dismissal.

Trump is slaughtering a lot of corrupt agencies, and I like that, but he is also simultaneously freeing corrupt people—tried and convicted by jury—and making sure they remain loyal to him. I don’t see that those he is putting in charge will be any less corrupt than those they replace. They will just be more beholden to the one who has placed them. That’s how the mafia works.