Wednesday, August 13, 2025

Polaris of Enlightenment

Economy professor: Trump’s tariffs rooted in “flakey” trade deficit analysis

Donald Trump's USA

Published 9 April 2025
– By Editorial Staff
Jeffrey Sachs of Columbia University.
4 minute read

In a wide-ranging interview with The Duran , economist Jeffrey Sachs critiques Donald Trump’s tariff policies, calling the administration’s understanding of trade deficits “completely flakey” and warning of severe economic and geopolitical consequences.

Sachs, a Columbia University professor and former UN advisor, emphasizes that tariffs will not address the root causes of US trade imbalances and instead risk fragmented trade, rising consumer costs, and global instability.

Sachs begins by rejecting the core argument for Trump’s tariffs: the claim that US trade deficits result from “unfair” foreign trade practices.

– The trade deficits have nothing to do – I will say nothing to do – with the trade policies of the rest of the world. They have no indication whatsoever that anybody is ripping off anybody, especially that the rest of the world is ripping off the United States.

He defines a trade deficit as a macroeconomic imbalance, not a trade policy failure.

– What a trade deficit means – pure and simple – is that a country is spending more than it is earning. That’s all.

Sachs dismisses the Trump administration’s diagnosis as “completely flakey”, comparing it to a shopper blaming stores for overspending.

– Trump calls that a ripoff. It’s a little strange… It’s like a person who goes on a shopping binge, runs a current account deficit against all those stores they visited, and then blames the shops for those imbalances.

– The diagnosis is completely flakey. I taught international monetary economics for 22 years at Harvard. In the second day of the undergraduate course, I explained that a current account deficit was an imbalance of spending and production, essentially – not a measure of trade policy.

The twin-deficit problem

Sachs warns that tariffs will harm US households and industries, raising prices for goods like automobiles and disrupting supply chains.

– If you say, ‘We’re not going to have trade’… that pushes workers into the labor-intensive, low-skilled sectors in this value chain. That lowers living standards.

He highlights the risks of stock market instability, referencing a $10 trillion loss in global markets during tariff disputes.

– This is losing what we call the gains from trade.

Sachs draws a direct comparison to the 1930 Smoot-Hawley Tariff Act, which exacerbated the Great Depression.

– The protectionism of 1930 in the United States was an accelerant [of the Depression].

Sachs ties trade deficits to US fiscal policy, emphasizing the “twin deficits” problem.

– We call this the twin deficits problem: You have a large budget deficit that shows up as a large trade deficit, so it’s a twin deficit. This is kind of a chronic characteristic of the US.

He critiques the weaponization of the dollar, noting that US sanctions incentivize countries to abandon the dollar.

– The weaponization of the dollar in confiscating Russian reserves, Venezuelan reserves, Iranian reserves … means that if you have some trade dispute or foreign policy dispute with the US, you’re likely to get your money confiscated.

Geopolitical risks: Taiwan as the next Ukraine

Sachs warns of broader geopolitical fallout, referencing a 2015 Council on Foreign Relations paper titled Revising U.S. Grand Strategy Toward China by Robert Blackwill and Ashley Tellis and highlights its argument for containing China’s rise.

– The argument [in the paper] is China’s rise is no longer in America’s interest. It must be stopped. A shocking idea: we must do damage to another side not because they threaten us, but because they are too big and therefore they undermine US hegemony – that’s literally the argument in the paper. Not a list of nefarious actions by China.

– The grand strategy of the United States, since it’s inception – in essence – is primacy: The United States must be number one. And so, we must prevent any challenge [to dominance] … And this is the motivation for much of what’s happening from 2015: The attempt to form, in crazy ways, new trade groups in Asia that don’t include China, the export bans on technology, the attempt to destroy companies like Huawei and ZTE and rumours and machinations of all sorts of imagined dangers.

Sachs warns that this confrontational approach risks catastrophic escalation over Taiwan, fueled by tariffs and military posturing.

– The unilateral tariffs Trump imposed – not on the world in his first term, but specifically on China – and now the very punitive tariffs on China … are deeply enmeshed in military buildups and military alliances in East Asia, in saber-rattling every day about Taiwan with the real risk that Taiwan turns itself into the next Ukraine by making the same kind of bets on US protection that Ukraine made, that ended up destroying so much of Ukraine, the same thing could happen in Taiwan.

– If it does, the war is going to be even more dangerous for the world, potentially even catastrophic, and with the instability of US economic and political leadership combined with the deep-state animus toward China, it’s pretty risky.

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Nvidia and AMD to pay 15 percent of China revenues to US

Donald Trump's USA

Published today 13:27
– By Editorial Staff
Lisa Su, CEO of AMD, holds up an AMD Zen 5 chip during the presentation of next-generation processors at Computex 2024 in Taipei, Taiwan.
2 minute read

American semiconductor manufacturers Nvidia and AMD have agreed to pay 15 percent of their revenues from chip sales in China to the US government. The arrangement is the condition for obtaining export licenses under President Donald Trump’s administration.

According to sources familiar with the situation, including a US government official, both companies approved the financial arrangement to obtain export licenses for the Chinese market, which were granted last week.

The American official stated that Nvidia agreed to share 15 percent of revenues from H20 chip sales in China, while AMD will provide the same percentage from MI308 chip revenues. The Trump administration has not yet decided how the money will be used, reports Financial Times.

Never seen before

According to export control experts, this is the first time ever that an American company has agreed to pay a portion of its revenues to obtain export licenses. However, the arrangement fits into a pattern under the Trump administration where the president urges companies to take actions, such as domestic investments, to avoid tariffs.

The Commerce Department began issuing H20 export licenses on Friday, two days after Nvidia CEO Jensen Huang met with President Trump. The administration has also begun issuing licenses for AMD’s chips to China.

Nvidia did not deny the arrangement and said: “We follow rules the US government sets for our participation in worldwide markets”. AMD commented: “Our initial licence applications have been approved” and added that the company “adhere to all US export control laws and policies”.

Criticism from security experts

The decision to sell the chips to China has drawn criticism from American security experts who argue that the H20 chip will help the Chinese military and undermine US strength in artificial intelligence.

— Beijing must be gloating to see Washington turn export licences into revenue streams, says Liza Tobin, a China expert who served on the National Security Council during Trump’s first administration.

In a letter to Commerce Secretary Howard Lutnick, Matt Pottinger, former deputy national security advisor, and 19 other security experts warned against granting H20 licenses. They called the H20 a “potent accelerator of China’s frontier AI capabilities”.

Nvidia dismissed the criticism as “misdirected” and rejected that China could use the H20 for military purposes.

The debate comes as the US and China hold trade talks that Trump hopes will pave the way for a summit with Chinese President Xi Jinping.

Trump deploys National Guard to “liberate” Washington

Donald Trump's USA

Published yesterday 12:17
– By Editorial Staff
President Trump announces that 800 National Guard soldiers will initially be deployed to combat crime and restore order in Washington, DC.
4 minute read

At a press conference on Monday, US President Donald Trump announced a massive operation to combat crime in Washington, DC.

As part of the measures, the city’s police will be placed under federal control, and hundreds of National Guard soldiers will patrol the streets to make the city safer. Trump simultaneously warned that New York could be next for similar measures.

— I’m announcing a historic action to rescue our nation’s capital from crime, bloodshed, bedlam and squalor – and worse. This is liberation day in DC and we’re going to take our capital back, Trump said during a press conference at the White House.

The president expressed frustration over what he described as the growing crime in the city.

— Our capital city has been overtaken by violent gangs and bloodthirsty criminals, roving mobs of wild youth, drugged-out maniacs and homeless people, Trump said and continued: “And we’re not going to let it happen anymore. We’re not going to take it”.

Trump noted that the operations would begin quickly, in the same way as the measures taken at the southern border to stop illegal immigration. “We’re going to clean it up real quick, like we did on the southern border”, he clarified.

“Will be tough”

According to US legislation, the Home Rule Act of 1973, the president has the right to take control of Washington’s police force for up to 30 days, with the possibility for Congress to extend the measures. The Trump administration has sent documents formalizing the takeover to Congress, and later in the day, DC’s police chief and other federal officials met to discuss next steps.

— This will be an opportunity for us to come together and collaborate on being able to go out and execute warrants, said MPD Police Chief Pamela Smith.

Defense Secretary Pete Hegseth clarified in an interview that the National Guard will not just be present but will act proactively in their operation.

— They will be strong, they will be tough and they will stand with their law enforcement partners., Hegseth said, adding: “If you take an action or a shot at them, there will be a consequence”.

“Doubled up on Baghdad”

Trump defended his decision and showed a chart during the press conference comparing murder statistics per capita in Washington, DC with the capitals of cocaine-exporting Colombia, Mexico and Iraq.

— We doubled up on Baghdad, he claimed, describing the situation as “completely unacceptable”.

— They’ll immediately begin massive enforcement operations targeting known gangs, drug dealers and criminal networks to get them the hell off the street, Trump said. He also suggested that certain criminals, whom he claimed came to the US illegally, will be deported.

Photo: screenshot/Truth Social/Trump

— They come from Venezuela, they come from all over the world. We’re going to get them the hell out, he explained.

The National Guard will also assist in a larger operation to remove homeless camps from public places, including parks and underpasses.

— We’re getting rid of the slums, Trump promised and mentioned that beautifying the city’s public areas and repairing median strips and potholes are part of the operation.

“False numbers”

DC Mayor Muriel Bowser, who is a Democrat, confirmed that she will comply with the federal operations but expressed concern that Trump’s decision represents a major interference in local self-governance.

I’m going to work every day to make sure it’s not a complete disaster, Bowser said, claiming to be particularly concerned about the presence of plainclothes law enforcement personnel.

— All law enforcement be identifiable by uniform, a badge, a jacket, so that people know that they are law enforcement.

Trump addressed the criticism and responded in his way.

— I know it’s not politically correct. We’re going to get them the hell out. They won’t be here long,

New York next?

Defense Secretary Hegseth also clarified that soldiers from other states will assist in the operation.

— They will be standing right alongside our federal agents, like they were in Los Angeles. They’re going to be proactive.

Trump also mentioned that he is looking at other cities that may need similar federal operations.

— You look at Chicago, how bad it is. You look at Los Angeles, how bad it is. We have other cities that are very bad. New York has a problem, Trump said, suggesting that more cities may receive federal support if the situation doesn’t improve.

The president also took the opportunity to express his long-term visions for the city.

— Washington, DC, should be one of the safest, cleanest and most beautiful cities anywhere in the world, and we’re going to make it that, Trump summarized and promised that he intends to “clean it up real quick”.

Trump to clear Washington of homeless and criminals

Donald Trump's USA

Published 11 August 2025
– By Editorial Staff
Even previously, homeless tent camps have been torn down in the capital - but now Trump promises more far-reaching measures.
2 minute read

Donald Trump is launching a harsh offensive against crime and social problems in Washington, DC.

The President promises to drive away the city’s homeless population and quickly imprison criminals roaming the streets – an offensive he says will make the capital “safer and more beautiful than it ever was before”.

“We want our capital BACK”, the President declares, and according to Trump, the measures will be implemented without delay.

“The Homeless have to move out, IMMEDIATELY. We will give you places to stay, but FAR from the Capital”, he writes on the Truth Social platform, and continues:

“The Criminals, you don’t have to move out. We’re going to put you in jail where you belong. It’s all going to happen very fast, just like the Border. This will be easier — Be prepared! There will be no ‘MR. NICE GUY'”.

Trump announced that more details will be presented at a press conference on Monday.

Photo: screenshot/Truth Social/Trump

Reaction to brutal assault

The President’s statement comes shortly after Edward Coristine, 19, also known as “Big Balls” and formerly employed at the Department of Government Efficiency (DOGE), was attacked during the night leading to Sunday. Coristine, who now works at the Social Security Administration, was assaulted by about ten youths after trying to intervene in what police suspect was a carjacking attempt.

At least two of the suspected perpetrators have been arrested, and a reward of $10,000 has been offered for information leading to the arrest of the others.

Already on Thursday, Trump presented plans to deploy federal law enforcement agencies throughout DC to reduce crime. The capital is governed under the Home Rule Act of 1973, which gives the city’s mayor and council certain powers, but where Congress has the right to review and overturn local laws – something that rarely happens.

“More violent than Baghdad”

Some Republicans have gone further and proposed a federal takeover of the capital.

According to the DC Metropolitan Police Department, violent crimes this year have decreased by 26% compared to last year, murders by 12%, and total crime by 7%. Compared to 2023, violent crime in 2024 has dropped by a full 35%. Despite the decline, DC still had the fourth highest murder rate in the US in 2023.

— It is our capital city. It is more violent than Baghdad. It is more violent than parts of Ethiopia, than parts of many of the most dangerous places in the world, said Stephen Miller, White House Deputy Chief of Staff for Policy, to reporters last week.

Trump: No trade deal if Canada recognizes Palestine

Donald Trump's USA

Published 31 July 2025
– By Editorial Staff
Is Donald Trump's loyalty to the state of Israel beginning to affect the US negotiations on the country's trade agreements with other nations? NOTE: The image is an archive photo.
2 minute read

US President Donald Trump threatens to halt a trade deal with Canada if the country recognizes Palestine. The statement comes after Canada’s Prime Minister confirmed plans for recognition at the UN General Assembly this coming September.

Canadian Prime Minister Mark Carney announced on Wednesday that the country plans to recognize Palestine as an independent state when the UN General Assembly convenes in September.

Carney highlighted humanitarian arguments and argued that prospects for a two-state solution have disappeared, which other countries – including France and the United Kingdom – have also expressed during the summer.

However, the recognition is conditional and dependent on reforms within the Palestinian Authority as well as promised general elections in 2026 – elections in which Hamas would not be allowed to participate.

Donald Trump reacted immediately and wrote on his Truth Social platform that Canada’s intended recognition would have serious consequences for relations between the countries.

– That will make it very hard for us to make a trade deal with them, Trump declared shortly after Canada’s announcement.

Shaky relations between US and Canada

Trump has previously threatened to impose 35 percent tariffs on Canadian goods from August 1, something that has already caused concern in trade relations between the neighboring countries.

According to American sources, Trump’s move aims to increase pressure on Canada to refrain from recognizing Palestine. The goal is also to defend US trade policy and geopolitical interests at a time of increased tensions surrounding Israel and the war in Gaza.

Mark Carney, (LPC), Canada’s Prime Minister. Photo: World Economic Forum/CC BY-NC-SA 2.0

The trade relationship between the US and Canada is among the world’s largest and has historically been very close, but over the past year several major conflicts regarding tariffs, energy and climate regulations have strained cooperation.

Analysts believe that an American trade halt or high tariffs could have significant economic consequences for Canada’s export industry.

It remains unclear how far the Trump administration is prepared to go, or whether Canada will stick to its planned recognition ahead of the UN meeting in September.

The situation is expected to be closely watched by both other allied countries and international organizations in the coming weeks.

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