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**FEBRUARY 3, 2025**
On the Prospect website
[link removed] 'Filled With Unmitigated Terror' [link removed]
A Q&A with Nathan Tankus on what it means for Elon Musk's forces to have commandeered some level of control of the U.S. payment system. BY DAVID DAYEN
[link removed] What Is Donald Trump's Mandate? [link removed]
Voters want big changes from Biden's failed policies, but many are not in Trump's plan. BY STANLEY B. GREENBERG
The GOP Still Has No Legislative Plan [link removed]
Republicans agree on what they want broadly, but not on the details or how to get there. Failure is not an option, and yet it may happen anyway. BY DAVID DAYEN
The Onion of Kensington [link removed]
The American dream collides with tragedy in a historic, largely immigrant community in Philadelphia that's one of the epicenters of the nation's fentanyl crisis. BY GUADALUPE CORREA-CABRERA & SERGIO CHAPA
Kuttner on TAP
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**** O Canada
Trump epitomizes the deadly combination of arrogance, ignorance, and incompetence. Will his gratuitous trade war be his first major reverse?
Trump's punishment of Canada, of all countries, is based on the bizarre premise that Canada is a major source of fentanyl. In fact, about 86 percent of fentanyl [link removed] caught by U.S. customs is smuggled into America by U.S. citizens. Most of the uncaught fentanyl comes from China, followed by Mexico. The amount that comes in from Canada is trivial. Last year, some 23,000 pounds of fentanyl were intercepted from Mexico, and just 43 pounds of fentanyl from Canada, which would fit in a single checked bag at the airport.
Trump's bullying pattern is to order an outrageous policy, browbeat the other side into real or token concessions, moderate his own policies, and then claim victory. In the case of Mexico, the ploy went according to script.
On Monday morning, after a conversation with Mexico's president, Claudia Sheinbaum, Trump offered to hold off on the threatened tariffs for one month [link removed]. In exchange, Sheinbaum agreed to send 10,000 Mexican National Guard troops to the border to try to intercept fentanyl smugglers and other illegal migrants. (The stock market damage has been muted because of this reversal.)
But the Canadians, stereotyped as the most mild-mannered of souls, could be the ones to give Trump a bloody nose. Trump has wounded Canada's national pride and roused Canadian patriotism. And it's happening in the middle of an election.
Chrystia Freeland, the former finance minister who is vying to become Canada's next prime minister, called for a boycott of American products [link removed] as the best way to stand up to Trump and his "billionaire buddies." Doug Ford, the conservative populist premier of Ontario, is Trump's kind of guy, but not when Trump attacks Canada. He has called for a four-year war against Trump. Ford has been sporting a cap that reads, "Canada Is Not for Sale."
Canada's battered prime minister, Justin Trudeau, has never sounded tougher [link removed]. Canada has released a list with hundreds of American goods that would face 25 percent tariffs starting Tuesday, and the list is set to be updated to include thousands more products in the next three weeks. Announcing a long list of retaliatory moves in a televised address, Trudeau said, "We don't want to be here. We didn't ask for this." Trudeau added, "This is a choice that, yes, will harm Canadians, but beyond that, it will have real consequences for you, the American people."
Trudeau is scheduled to have a call with Trump this afternoon. Trump will want to follow the script of cutting a last-minute face-saving deal. Given how little fentanyl actually comes from Canada, it's not clear what such a deal could be. And Trump has threatened that tariffs on the EU will follow soon [link removed].
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ECONOMISTS HAVE OFFERED DIFFERENT ESTIMATES on just how much damage a trade war could do to GDP and inflation. At the very least, the tariffs will play havoc with supply chains, raising prices on a variety of goods. But the deeper cost is impossible to forecast based on tariff rates alone, because conflicts like these have a way of getting out of hand and the knock-on effects will be more damaging than the immediate costs.
Inflation ticked up to 2.9 percent in December, well above the Fed's target of 2 percent. Higher inflation will bid up the prevailing interest rate on bonds, a trend that is always a killer for the stock market-which is already overvalued.
The long-term damage is even more severe. The big winner is of course China. The fact that Trump threatened 25 percent tariffs on America's allies Canada and Mexico, members of the USMCA trade deal that he negotiated, but only 10 percent on China is bizarre. Trump's family and Elon Musk both have business interests in China. By some calculations, about 70 percent of Trump's new cryptocurrency was purchased in China [link removed].
Whether or not Trump cuts some kind of long-term deal with both Mexico and Canada, his irrationality on trade is pushing more and more nations into economic alliances that exclude the U.S. He has repeatedly trashed the EU [link removed] for discriminating against U.S. products. The EU has made its own trade deal with four South American nations [link removed]. The goal of a common EU-U.S. front against China is up in smoke. And more and more Third World countries are making separate deals with China. This month, Indonesia became the tenth nation to join BRICS [link removed], a group led by China that also includes Brazil, Russia, India, and South Africa.
All of this makes a mockery of the supposed overarching U.S. policy goal of containing China. Trump's new acting undersecretary of state for public diplomacy, Darren J. Beattie [link removed], has ridiculed the Uyghur genocide and proposes letting Beijing have Taiwan in exchange for concessions in Antarctica.
Meanwhile, the sheer incompetence of his minions is letting China off the hook, even in areas that Trump invokes as paramount, such as containing fentanyl. A great deal of fentanyl comes into the U.S. from China via the "de minimis" loophole that allows shipments valued at less than $800 to come into the U.S. and avoid customs inspections. But the loophole has two parts. Trump's order does not suspend "Informal Entry [link removed]," the category under which most fentanyl comes in from China and evades customs inspection.
The Democratic Party, trying to figure out its own future, has not been much of a factor in this fight. That will come. In the meantime, Trump is fully capable of destroying himself.
~ ROBERT KUTTNER
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