Trump’s Secret Agenda Suffers Setback From Stock Market Panic

As we’ve observed time and time again, Donald Trump is nothing if not predictable. He huffed and puffed this weekend and threatened to blow down Mexico and Canada economically and so far all that caused to happen was a stock market panic. So naturally, he’s backpedaling.

The man is running a show without bona fide advisors. His whisperer, or Hand of the King, if you prefer, is Elon Musk and all Musk wants to do is gain control of the levers of power in this country. He started out in the U.S. as an illegal immigrant and now he’s the shadow president and this is all shits and giggles, to be a monarch. So far that’s not been happening as easily as he thought it would. Maybe he should try reading the Constitution and see how things work.

But spin back this crazy tale even further and you’ll see what Trump is up to. He keeps talking about William McKinley and a fantasy world of prosperity that never was, that was occasioned by the use of tariffs. Why is that? It all has to do with the income tax and Trump’s crazy plan for an External Revenue Service. 

Trump’s embrace of the Republican cult of William McKinley—invented a generation ago by Karl Rove—is a vision not, as Rove’s was, of Republican political realignment but rather of eliminating the income tax. Since the 1950s, tariffs have raised no more than 2 percent of federal revenue, but throughout the nineteenth century, except for a brief period during the Civil War, there was no federal income tax and tariffs were the principal source of federal revenue. McKinley was the last Republican president to resist establishing an income tax. Trump wants to bring those days back. Here’s what Trump said in his inaugural address:

Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens. For this purpose, we are establishing the External Revenue Service to collect all tariffs, duties, and revenues.

Trump doesn’t need to create an External Revenue Service (which would require Congress to pass legislation) to bleed tariff revenue from our trading partners. He just needs a proximate cause. At the moment Trump says it’s to halt the flow of immigrants and fentanyl into the United States, even though crossings on the southern border in 2024 were, at 2.14 million, lower than they’ve been since 2021. Crossings on the northern border are rising, but they still represent less than one-tenth that number. Canada and Mexico have both taken recent steps to reduce these crossings further.

And Trump won’t just bleed revenue from our trading partners, he will gift his cronies with exemptions from tariffs. This is a protection racket, plain and simple. He may not have guys named Vinnie and Rocco going to storefronts and collecting cash, but it’s the same principal, only applied to government.

And the threat of tariffs is a negotiating cudgel. That’s what you saw this weekend when Trump let it be known that if Canada played nice and became the 51st state that there would be no tariffs. And make no mistake, this tariff fantasy will hurt the United States, bigly.

A written statement from the White House crows that the North American tariffs will hurt Canada and Mexico more than they hurt the United States, which is probably true. But so what? Since Trump is not using the tariffs, set to take effect Tuesday, as a negotiating tool—before he announced them, he said there was nothing the two countries could do (nor China) to avert them—Canada and Mexico have no avenue for surrender.

It little matters that trade (per Trump) represents 73 percent of Mexico’s gross domestic product and 67 percent of Canada’s but only 24 percent of America’s because Trump has no plan to leverage any benefit from reducing it. He just wants the revenue. So all the U.S. gets is the satisfaction that the economic wreckage it experiences—and the estimated one-quarter of GDP is a lot!—won’t be as bad as in Canada and Mexico. Unlike Samson, Trump doesn’t seem to grasp that when you pull down the columns of the temple, you may kill more Philistines but you also kill yourself.

24% is a big number. A lot too big for my personal comfort zone. But Trump doesn’t care if he brings down the government because he’s trying to save himself. It’s always about him.

Once you understand that he’s the only reason he does anything, then all the rest makes a great deal of sense. And why all this massive financial upheaval? He may tell the rubes it’s to “make America great” but no, it’s to save Trump from financial ruin. Never forget, he looks great on paper. Inauguration weekend he and $Melania made $6 billion — on paper. Read on and see why that happened.

Trump’s race to shred what little is left of the Constitution’s emoluments clause, I’ve suggested, is driven in large part by his personal insolvency. I think that’s why Trump puts up with Elon Musk well past the point that Musk’s attention-seeking would have exiled anybody else.

Paul Krugman, in his new Substack newsletter, speculates that the Chinese government kept Trump’s China tariff at 10 percent (against 25 percent on Canada and Mexico) by purchasing vast numbers of Trump’s memecoins. That’s pure speculation, but the memecoin racket is not, because somebody is buying up vast quantities of them. Citing a report from Business Insider, Krugman observes that around 40 so-called “whales”—that is, very rich investors—own fully 94 percent of the Trump memecoins. Each of these 40 whales owns more than $10 million of these worthless trinkets.

It’s all part of a kakistocratic oligarcy, government by rich people totally unqualified to run the government. You have a front row seat nowadays to what that looks like.

But the tariffs scam is not working so well, at least not if the stock market Friday and today is any indication. So Trump may have to find a new gimmick and soon. I’ve been waiting for the American equivalent of the Reichstag Fire, but that’s more about seizing military power over the populace and Trump isn’t so interested in that kind of power, (for the moment) he wants to grab all the money first.