“Perhaps history is teaching us that today’s popular leaders like Donald Trump and Marine Le Pen are not the people’s last chance. They are the globalist’s last chance.”
– Kurt Schlichter
April 4, 2025 — It’s not definitive that the old world is gone.
But judging by the tone from Wall Street and the media this week, you’d think someone just kidnapped America’s babies and melted down their flat-screen TVs.
Markets didn’t crash — they sulked. Over the past three trading days, the Dow dropped over 5%, the S&P 500 and Nasdaq cratered 9% each, and the Nasdaq itself got into bear market territory – all on the scent of tariffs, trade retaliation, and the faint odor of losing control over the world economy.
Yes, tariffs are economically “bad” — we’ve heard it loud and clear. And we’ve (hopefully) said it louder and clearer. Say it with me: They’re taxes. They distort markets. They raise prices and shrink margins.
“All things being equal,” the economists say. But that phrase, all things being equal, is code for “in a perfect world.” And if you haven’t noticed, we don’t live in one of those. We never have.
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Like many of you, we’ve spent a career studying the history of and defending the free market. But free trade only works when it is actually free and when markets are grounded in shared rules and mutual benefit.
If you must know, that is one talking point from the Trump Master Playbook that I do agree with.
For the better part of the post-World War II Pax Americana epoch, the market hasn’t been free, and the rules have not been applied equally.
Least of all, since the Berlin Wall came down in 1989 and Francis Fukuyama declared the “End of History” shortly thereafter.
Since the turn of this millennium, the average citizen of the U.S. has endured an ideological cargo cult called globalization — a belief system that favors open borders, subsidized welfare states, a private equity finance ideological war on the global climate crisis, neocon-sponsored forever wars (hot ones!) and an all-out assault on free speech and civil liberties.
Economically, the U.S. government – with all its constituent branches – has turned a blind eye and footed the bill with a maxed-out credit card.
Instead of free trade and all boats rising with the tide, we got four compounding deficits — savings, trade, budget, and leadership — as we laid out back in I.O.U.S.A. nearly two decades ago.
The movie came out in 2008, before fentanyl, populism, and whole regions falling into quiet collapse. Before 77 million people realized they’d been written out of the script for the American Dream.
While the think tanks wrote white papers about creative destruction, the reality was just destruction. The jobs didn’t come back, and the wages didn’t go up – a trend dating back to 1971 and the end of the gold standard.
What filled the void? Despair, drugs, and decades of political cynicism. That’s become our unsustainable status quo.
Tariffs, for all their crudeness, are the political expression of a deeper fracture. They are the wrecking bar now being used — clumsily, perhaps — to pry open the false promise that a “rules-based international order” would always serve American interests.
Meanwhile, China is playing an entirely different game. They’re not interested in theory. They’re interested in control.
As John Robb points out, the U.S. and China are running two incompatible models of innovation. China is centralized, state-run, and vertically integrated. Innovation isn’t a side effect of commerce — it’s a pillar of national strategy. AI isn’t a platform; it’s an operating system for national power.
The U.S. model is decentralized, messy, and brilliant — when it works. But it’s also slow to coordinate and easy to derail. Capital flows to TikTok knockoffs faster than it flows to chip foundries. And no one — not Congress, not the Fed, not Silicon Valley — is really steering the ship.
This matters because the next economy will not be built on consumer gadgets and ad-click revenue. It will be built on chips, energy grids, rare earth metals, industrial AI, and the code that runs autonomous weapons, smart factories, and digitized trade.
As we pointed out yesterday, China is already building that future. They might have overbuilt their real estate and rail infrastructure, and are dealing with that hangover, but they at least put in the work and helped grow their middle class while American politicians hollowed out their own.
America is still holding hearings. And getting stalled by protests and circuit court judge rulings. Who really runs this country anyway?
The question isn’t really whether tariffs are good or bad. They aren’t good. But in the immortal words of my erstwhile writing partner Bill Bonner, “We got what we deserve.” Good and hard.
For better or worse, it’s time to clear the rubble and get to what’s buildin’ next. Despite Fukuyama’s declaration in the 1990s, history didn’t end. Nor does it ever.
A new chapter is being written, heralding a shift away from the “End of History” and the resurgence of the nation-state, tariffs and all. The globalist trend of opening up markets – leading to jobs shifting to the lowest-labor-cost corner of the world – is over. The little guy may finally be able to get ahead for the first time in decades.
As we have said before, with this new chapter will come winners and losers for the economy.
Despite the doom and gloom in financial markets this week and the shock and awe being expressed by the financial media, the great American restructuring at least has a shot at filling in what has been long hollowed out.
And for the forgotten men and women impacted by decades of globalization, a fighting chance at a future those of us who work in the world of investments get to enjoy.
We don’t like tariffs, but if they mean creating an America that works for all Americans, as Bernie and AOC would yell in your face, it’s at least worth trying.
The status quo is unsustainable. By unsustainable, we mean “cannot be sustained.”
‘Til Monday’s Swan Dive,
Addison Wiggin
Grey Swan
P.S. Tariffs aren’t just about flat-screen TVs, cheap Nike sneakers and the fentanyl trade.
They are about capital controls — a world where semiconductors, AI chips, rare earths, and supply chains aren’t economic inputs… they’re national security.
Welcome to the post-globalist trade order, where chips are the new oil, and tariffs are strategic borders.
From our inbox this week, it’s a scary, dystopian underworld run by the new mafia Don and his space cadet buddy, Elon.
What’s really at stake? We break it down in our latest research, which we call: Chip Wars: The Rise of Strategic Capitalism.
The scaffolding for the next economy is already being built. The only question is who will wire it and who will reap the benefits first.
Yes, please, by all means, join the cacophony. List the reasons we’ve got the analysis right (or wrong) here: addison@greyswanfraternity.com
