Newsletter #32: Rupert Lowe’s 'rape gang inquiry' will be a waste of time

PLUS: Trump gives up on tariffs(?)

Good morning.

Trump has once again dominated the headlines, reversing course on his ludicrous unforced error of imposing reckless, nonsensical tariffs against the entire world. While better than the alternative, it is entirely plausible that his presidency never recovers from this misstep. Meanwhile, Rupert Lowe has been pushing his ‘rape gang inquiry’, British Steel has been saved (for now), and Birmingham has not been saved (for now… just kidding. Birmingham will never be saved, even if the bin strikes stop).

This newsletter’s agenda: Trump gives up on tariffs(?) (free); Rupert Lowe’s inquiry will be a waste of time (paid); British Steel is a headache no-one is prepared to resolve (paid); The rubbish piles higher and higher in Birmingham, but nobody cares that much (paid).

Trump gives up on tariffs(?)

Earlier this week, JD Vance was waffling on about how equities were simply ‘inflated’ — to what level did he think they should fall? — and Donald Trump informed the world that he believed the United States had the ability to make iPhones. All seemed unwell. But just a couple of days later, President Donald J. Trump completely u-turned. He informed us that the tariffs on all countries except China were going to be postponed, except for the universal 10% tariff. China’s tariffs, on the other hand, would be increased to 125%, because they had been rude.

It is a testament to the world that we live in that this was seen as a relief to all; that the decoupling of the world’s two biggest economies seemed like no big deal. It took another day for the markets to realise that actually, this was still very bad (though not as bad as the original plan). In particular, it would be very bad for consumer goods, especially consumer electronics. This would feed through to ordinary, ‘Main Street’ consumers. Sorry, MAGA.

Why did Trump blink? Or was this the plan all along? (Obviously not, you fools.) Well, what we learned is that there is still one thing that scares Trump: the bond markets. Everyone is scared of the bond markets. Even Donald J. Trump.

For many of you, this is probably explaining the obvious. But normally, when equities go down, you expect for bond yields to also go down. Investors need somewhere to put their money that earns at least some return, and nothing is usually seen as safer for this purpose than US Treasuries. But this week, something unusual happened: this relationship broke down. Bond yields went up as equities went down. This seemed to signal a general loss of faith in the American economy, and along with it the dollar; a general ‘Sell America’ signal. Needless to say, this would have been a total catastrophe. Even if a financial collapse was avoided, the cost of servicing America’s gigantic debt would have gone up massively, and a big and painful fiscal adjustment would have been required.

He thus finally seems to have been persuaded by the Treasury Secretary, Scott Bessent, that the tariffs in their current form risked financial meltdown. In order for Trump to save face (which is very important for him), Bessent — a known China hawk — presumably suggested that he double-down on anti-Chinese tariffs. But later on the same week, we were informed that electronics were going to be exempted from the tariffs. But then, Lutnick decided to vaguely signal something about the need to protect American security interests, including semiconductors and electronics, and that the suspension of the tariffs was temporary. Based on the tepid market reactions to these claims, it seems safe to say that few people believe that tariffs will be coming back, at least in their original form. But there is still a general air of uncertainty surrounding everything.

So, after all that. There was to be no reshoring of Nike trainers from Vietnam (something that most of MAGA were insisting was actually a fantastic idea). Madagascar wasn’t going to get hammered for the crime of exporting vanilla to the United States while also being poor. All of those words from MAGA and our glorious post-liberals, about how we needed to respect garment factory workers (who said we didn’t, we just don’t want to work there!) and Americans are actually all queuing up to make trainers for thirty cents an hour, because it’s ‘manly’ or something… wasted.

Trump’s air of invincibility has gone as a result of these shenanigans. Trump’s approval ratings on his ‘handling of the economy’ have tanked: they’ve fallen from 51% ‘approve’ to 44% in just over one month. And that’s before most of the costs have in any meaningful way filtered through to a large part of the public! He has massively lost momentum; the ‘Vibe Shift’ seems like it is in reverse, and it doesn’t help that most of his loudest supporters have acted like total clowns throughout this episode. Even the 10% universal tariff, it should be remembered, is incredibly stupid. It’s a testament to how crazy the world we live in is that we consider this almost a ‘win’.

It is likely that as a consequence of these pointless tariffs, America will now suffer from permanently higher borrowing costs, a bit like with Truss in Britain. Just as Trump’s own air of invincibility has been broken, so too has the American economy’s air of invincibility — as well as any general sense of ‘guardrails’ on the President through checks and balances and/or their own common sense. Other ‘safe haven’ assets have become more attractive: in particular, gold, and Swiss and German government debt. (This in spite of the German Government’s recent borrowing spree.) Of course, these assets are nowhere near large enough in market size to actually replace US Treasuries outright. But it’s still a big concern that this is the current market sentiment.

There is at least one benefit of the tariffs. Anyone who decided to stand up and defend them has permanently discredited themselves. They have proven to be a thoughtless sycophant who is incapable of thinking for themselves, and can thus be safely ignored for the next three years. As we live in a world with an excess of speech, we can only thank them for making our job in deciding who to listen to that little bit easier.

Bonus: No point to me just quoting large parts of this article for subscribers to read, but I highly recommend this article by Adam Tooze. In summary: Trump’s actions are bizarre because they (in effect) lack any real social base. He is, in some basic sense, divorced from reality. Of course, I would note more clearly that both the American Left and the American Right are now divorced from reality in increasingly fundamental respects. The interesting question is the extent to which this is caused by the internet now dominating modern politics. Maybe it’s both a blessing and a curse?