Is China the Villain in World Trade? Depends Who You Ask

China holds most of the cards, and tariffs may be winding down, but not without some casualties.

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Trump’s Tariff Retreat: China Plays the Long Game

Sun Tzu advised against direct confrontation when you’re at a disadvantage. A 145% tariff? That’s not subtle.

What’s Happening?

• Trump says a deal with China is inevitable—but tariffs won’t be eliminated.

• Treasury Secretary Scott Bessent calls the move “basically an embargo.”

• U.S. container traffic is down 64%—ports are empty, shelves will be too.

• Small business owners are eating inventory and facing shutdowns.

• 78% of U.S. military weapons rely on Chinese materials. That’s a problem.

Also: China controls rare earth exports. And reshoring isn’t exactly a weekend project.

Who Really Needs a Deal More?

• China has a mountain of U.S. Treasuries and U.S. stocks.

• It manufactures the goods we and the goods we need to make goods.

• It’s entangled in our military supply chain.

Short answer: China has the leverage—all of it.

How Trump Accidentally Helped Elect Mark Carney

In one of the wildest political pivots in Canadian history, Donald Trump made himself a campaign issue north of the border—and it backfired.

Quick rewind:

• Pierre Poilievre’s Conservatives held a 25-point lead in polls.

• Trump called Canada’s border “artificially drawn” and hinted at annexation.

• Canadians rallied behind Carney, former Bank of England governor, and political newcomer.

• Carney framed the election as a fight for sovereignty—not policy.

Result: Liberals win 167 seats. Not an outright majority, but a win—and a direct slap at Trump’s rhetoric.

Fallout:

• Tariffs incoming on minerals and energy.

• Intelligence sharing (Five Eyes) cooling down.

• Canadian trade reorients toward Europe and Asia.

Trump may have redefined the U.S.-Canada relationship—but not in a good way.

Renewables Work… Until They Don’t

Spain and Portugal just experienced one of their worst blackouts. The reason? Cloudy skies.

The chain reaction:

• Solar output dropped 15 GW in 5 seconds—60% of Spain’s electricity load.

• No spinning generators means no inertia, no grid stability.

• Water stopped pumping. Streets went dark.

• The backup plan? Didn’t exist. Batteries weren’t enough.

Let’s do the math:
To fill a 15 GW hole over 4 hours, you’d need 60 GWh of storage.
The entire U.S. battery fleet is currently 37 GWh.

Takeaway:
A 100% renewable grid is not possible without:

• Grid-forming inverters

• Synchronous condensers

• Massive storage

• Real redundancy

California, take notes.

Washington Update: The Tax Cut Tug-of-War

Trump’s fiscal legacy hinges on the next reconciliation bill. Progress is murky.

The ask:

• Permanently extend TCJA tax cuts (valued at $4.5 trillion).

• Eliminate federal taxes on tips, overtime, and Social Security income.

• Dismantle and repackage parts of the Inflation Reduction Act.

The holdup:

• Memorial Day was the goal. Now, July 4th is the maybe.

• House wants $1.5 trillion in spending cuts.

• Senate? Just $4 billion. That's a canyon, not a gap.
  

Bonus drama:
DOGE’s original $2 trillion chainsaw program has been slashed to $160 billion—some ongoing. Musk has quietly exited stage left—to fix the Tesla stock freefall.

In The Markets

Perceptions vs. Reality—who’s winning?

Major indices have recovered all their losses since Liberation Day.

Retail kept buying, while institutions squealed.

The developing consensus that tariffs are getting diluted, plus robust tech earnings, drove stocks nearly 9% higher over eight sessions.

The capital to fuel that run came from gold (gold line, chart below, left-hand axis), while bitcoin (blue line, right-hand axis) diverged and continued upwards with stocks, creeping back close to $100,000. Real gold and digital gold are parting company.

Are we out of the woods yet?

Far from it.

Forecasts among brokerage houses and betting markets about a recession are beginning to align:

• Kalshi: -0.6%

• Goldman Sachs: -0.8%

• Morgan Stanley: -1.4%

• Polymarket: -1% to -2%

Actual Q1 GDP came in at -0.3%. Kalshi, the NYC prediction market, was closest. The market can price anything but uncertainty. If Trump—or Bessent—were to articulate a plan and stick to it, the market would likely push higher.

Businesses need tariff deals quickly, or they will deplete their inventories with premium-priced replacements stranded at ports in China. Shelves will empty.🤞

What’s Next/What To Follow

Love them or roll your eyes—these four keep dominating the tech-business podcast charts. Loud, opinionated, worth skimming at least once a month.

Brunell interviews Pysh, a former helicopter commander and current Bitcoin VC. Not into crypto? Might not be for you. But if Bitcoin’s your thing, this is essential listening.

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