The Outsider Perspective Issue 443 | The Beltway Outsiders

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Good Friday Morning! Except for the newest trend in men’s fashion: toupees. They are making a comeback. According to the NYPost, “Balding millennial men are nixing pricey trips to Turkey — preferring to rock retro rugs instead.”

This story is depressing on two levels. First, I can’t blame Gen-Z for this, which is something I’m getting used to doing. Second, the Post talked to multiple people from Tennessee about this story. “Tyler Stanton, a Nashville influencer, granted over 2.1 million TikTok viewers a step-by-step look at his toupee installation process. ‘Here it is ladies — drink it in,’ he teased, showing off his bare crown before the wig was semi-permanently affixed to his scalp. ‘Honestly, my friends didn’t even know I had fake hair.'”

Some women are cheering it on, comparing it to hair extensions for them. I’ll take a hard pass on this trend. Just shave it all off.

This week, I’m going to jump into the trade war with China, going through what is happening and Trump’s tactics—links to follow.

Quick Hits:

The flare-up between India and Pakistan was a window into Chinese weaponry. China largely arms Pakistan, and India gets its arms from the West. Both sides are claiming victory and that they utterly decimated the other. But it seems pretty clear India overwhelmed Pakistan. China ran out to declare the superiority of its military equipment (early returns from U.S. observers are calmer). China is using the Ukraine conflict to test its equipment against U.S. arms, and got another taste versus India.
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Where you can find me this week

Please subscribe, rate, and review The Horse Race on YouTube — the reviews help listeners, and readers like you find me. Make sure to sign up for the Conservative Institute’s daily newsletter and The American Almanac.

Trump’s Economy Is Ignoring All The Trade War Waves – Conservative Institute

Democrats Continue To Lie About John Fetterman’s Health – Conservative Institute

An American Pope Truly Is A New Era – Conservative Institute

The China Trade War Continues… Will Trump?

In terms of economics, I’m a free markets/free trade guy. The idea that capitalism and free markets have improved the world, combined with American notions of freedom and liberty, is a fact. If you don’t believe me, spend some time scrolling through Our World In Data for proof of how radically the world has changed in just two centuries.

Human history has existed for eons as a thing where very little happened over vast expanses of time, with brief bursts of wealth and advancement. Then you have the march from the Industrial Age and the American Revolution to now, and it’s like watching a thousand years of changes poured into decades.

But where I’ve changed over time is how free and accurate I see markets. The libertarian believes that markets and prices speak the truth. Their arguments against tariffs are simple: they’re like any tax that impacts people’s ability to access goods and services—a necessary evil at best, just plain evil at worst.

I’ve encountered that with the China vs U.S. trade spat. And I where I’ve shifted is that markets aren’t telling the truth. In fact, the major change from the end of the Cold War to now is that governments have learned to wage war through economics in ways that previous monarchs could only dream of doing.

The libertarian says tariffs are an unnatural barrier to two parties conducting trade. But the opposite is true, too: a government that forcibly creates a monopoly by undercutting all global prices to drive out competition is bad, too. That’s what China has done over the last two decades.

China looked at the OPEC model, and how that oil conglomerate held the U.S. hostage in the 1970s, and decided to use central planning to both: 1) lift Chinese citizens out of poverty, and 2) steal growth from the United States. In the post-Cold War era, we were so rich that even this didn’t impact us. But our interests have shifted.

I could pick multiple industries to explain this fact, but I’ll choose a new one that popped up this week: U.S. energy officials are concerned China is sending us “rogue communication devices” to go in our solar electricity equipment. Those parts communicate back to China, and the CCP can communicate back to those devices.

Combine this report with the news story that China admitted to the Biden administration that they’d been hitting U.S. infrastructure, and you get a clearer picture. China has used America’s thirst for cheap goods to target our infrastructure.

The libertarian response is simple: choose a different company. Here’s the problem: you can’t. China dominates the industry and has purposely pumped government funding into these companies to allow them to sell products cheaper than anyone else globally and drive them out of business.

China accounted for at least 80% of the components of solar panels as recently as 2022, according to an International Energy Agency report, especially polysilicon, glass and solar cells. Solar also demands increasing critical mineral supplies, of which China is a key player across the globe, and electronics.

In the U.S., private industry has poured $18.2 billion into developing a domestic supply chain in recent years, according to Atlas Public Policy, that includes everything from the ingots and wafers that make up panels to electrical and structural components to assembly of the panels themselves. Most of that came from the Inflation Reduction Act passed during former President Joe Biden’s administration, with massive funding for clean energy investment.

In other words, to support their green initiatives, Democrats had to pour billions into U.S. investments to avoid China. And they still couldn’t do that.

This playbook is what OPEC has done over the years: drive prices up and down to destroy competitors and then enrich themselves after fewer players are in the market. If it weren’t for the fracking revolution in the United States, we likely would have lost our domestic oil exports during the Obama years.

China targets a product and dominates not just that product but the entire supply chain around it. They’ve pivoted to putting spyware into that hardware to gain even more valuable intelligence about people’s actions.

This is China’s trade war: to wreck everyone else and force other countries to be subservient to them. To expand this project, they launched the “belt and road initiative.” The problem with the Chinese model is simple: because it is centrally planned, it cannot innovate. The Chinese are hyper-dependent on stealing technology and making it cheaper.

That brings us to the tariffs. Trump’s vision of a United States that can have tax cuts with tariffs that offset those cuts is something that doesn’t exist. It’s a figment of his imagination. But he is correct that China poses a threat. Both the Obama and Biden administrations agree on this point. This is one of the few universal beliefs across both parties.

If waged correctly, the effect of this trade war should be to force global supply chains to diversify away from China. If, in the end, Chinese manufacturers are forced to pay tariffs while the world is near zero, it would provide a check against a vile communist regime.

But as I’ve repeated countless times, the most important part of this trade war is both the deal Trump gets and whether it is enforced. Libertarians are largely useless in this area because they are blind to the problem China presents and don’t believe the government should answer an economic threat against it.

Liberals and conservatives are left to meet the moment and come up with a solution. I don’t know what that looks like, but it is one of the few uniting concepts in Washington D.C.

Trump’s pause on tariffs gives him negotiating room with China. But neither the United States nor our economy is out of the woods. In fact, I nearly wrote this newsletter to list all the troubling signs in the economy (which are legion). Tariffs are just a portion of this—we’re still in the economy that Biden created.

We should have had a recession in 2023. Biden pumped cash into the markets with the Treasury and his spending bill, which offset a downturn. But the inherent weaknesses of 2023 are still there and were never dealt with.

You can hear the concern when you listen to the Federal Reserve. The odds of rate cuts are vanishing. The Fed believes that if it cuts rates into this mess, it’ll see inflation spike. I have no evidence to prove them wrong. In some ways, I think Scott Bessent is now worsening the inflation problem by continuing the same policies in the Treasury as Janet Yellen.

In short, there are real problems in the U.S. economy, from China to the U.S. economy. Instead of dealing with those issues, it’s starting to look like Trump is just falling back on “let’s pump the stock market” to make people happy. Once again, punt the issues down the road.

He has a lot riding on his tax cuts and any trade deal with China. If those two things boost the U.S. economy (likely), the Fed won’t be able to cut rates because the economy will start running hot again.

I know we’re still only a few months into Trump administration 2.0. But the early ideas that they’d fight China, deal with the debt, and get interest rates down are starting to fade. We’re in a market pump moment, and nothing is real.

Links of the week

Former FBI Director James Comey under investigation for post seen as a potential threat to Trump’s life – CNBC

Democrats plot a midterm comeback fueled by Republicans’ Medicaid cuts – Semafor

America’s largest health insurance company is imploding – CNN

Biden Cabinet members worried about his capacity in a crisis – Axios

A Ragtag Group of Covid Truth-Tellers Go to Washington – The Free Press

AOC Tied With “No One” as Face of Democratic Party – RealClearPolitics

Ten Years and a Hundred Days of Trump – Compact

Vance and Rubio to travel to the Vatican for Pope Leo XIV’s inauguration – NBC News

Trump Says U.S., Iran Close to Nuclear Deal – WSJ

X/Twitter Thread(s) of the week

Mark Halperin wrecks Jake Tapper’s coverage of Biden’s decline.