The System Series: Tariffs (Part II)

Tariffs & The Re-Balancing of the Global System

TOPIC: Tariffs & The Re-Building of the Global System

As we highlighted in Part I, the overarching Purpose of Tariffs is to change the current System – it is both imbalanced and unsustainable. And that imbalanced unsustainability has now swung so far that it has turned into a National Security risk for the US/West and Freedom more broadly.

Tariffs are a multi-pronged tool within a much larger Strategic Framework. They are a catalyst for change. The Media’s black/white delineation between a “means to an end” versus an “end in and of itself” is a waste of Energy. Tariffs are a tool on a continuum with multiple direct and indirect Goals that ultimately target Re-Balancing the System – toward Production in the US, away from Consumption; toward Labor in the US, away from Capital. The Short-Termism of the West and the Incentives within the System have pushed the pendulum too far (toward Consumption/Capital). Long-Term National Security is the undercurrent driving all of these decisions.

Starting with the Framework.

A simplistic way to look at Tariffs is on two axes: Products and Countries.

• Products range from Non-Critical (e.g., Barbie dolls) to Critical (e.g., high-end Semiconductors, Pharmaceuticals)

• Countries range from Ally (e.g., UK) to Adversary (e.g., China)

For Products that are Non-Critical, no one cares. Manufacture plastic ducks wherever you want. Tariffs on Non-Critical Products will be easy areas to play around with in negotiations (i.e., leverage/concession points) as needed. Non-Critical Products are by their Nature discretionary – no one needs it. Tariffs may be placed on certain Non-Critical discretionary items (notably high end/luxury areas – think yachts, does Bezos really need 3?) to decrease Consumption – part of the broader Capital/Labor and Consumption/Production Re-Balancing (we’ll get more into this in the Goals section). Non-Critical Products are where we want to decrease Domestic Consumption.

Products that are Critical require more Attention. Critical Products are necessary for survival – both in the necessities of Life sense (e.g., Food, Water), as well as in the National Security sense (e.g., Semiconductors, Energy). Critical Products must be manufactured at home or by close Allies – both in Proximity and in Trust. Unlike Tariffs on Non-Critical Products, Tariffs on Critical Products are meant to drive a Reshoring of Manufacturing function. Critical Products are where we want to increase Domestic Production.

Looking at the other axis. For Countries that are Allies, the negotiations are generally simpler. The Tariffs themselves are a way to catalyze immediate conversations about the imbalanced System, as well as Democracy versus Autocracy. Tariffs force urgency, and these are urgent matters. Tariff conversations act as a forcing function to have hard conversations, and truly recognize who people really are – who are your True Allies? The way to enable Freedom is to Unify – but first, you must both recognize the issues within the System as it is, as well as understand who is truly an Ally. National Security now sits at the core of every Decision – and the importance of the Collective now supersedes the Individual.

For Countries that are Adversaries, the negotiations are more complex. Both sides recognize the unsustainability of the old System, but both sides also want to strengthen their Pillars of Power within the new System. Both sides want full Control over the Production of Critical Products to reduce external dependencies (Chokepoints) and bolster National Security. Non-Critical Products are simply a bargaining chip – for example, the US will ultimately not care if China produces all of the World’s rubber ducks. But it absolutely would care if China produces all of the World’s food – an example for illustrative purposes.

If your primary Adversary (China) solely produces Critical Products that you need to survive, does that seem sustainable and/or intelligent? Sounds like a Chokepoint – and Chokepoints on Critical Products (e.g., Rare Earth Minerals) that are key components of the Pillars of Power represent very dangerous dependencies that reduce your Control and Power. China has been playing the Long Game – exploiting the Short-Termism of the West to increase their Power and Control. Tariffs are a forced Wake Up Call to bring this into the collective awareness. And the ultimate Objective is to harness this System Re-Balancing as an opportunity – utilizing a growth mindset framework – to peacefully Re-Balance where all parties are better off: China increase Consumption, reduce Production; US increase Production, reduce Consumption.

And remember, these axes represent continuums. There are gray areas along both, but this is a high-level Framework to help order the perceived chaos.

With that simplified Framework in place, let’s move on to the Goals.

Tariffs are a multi-pronged tool – within a larger Strategic Framework – with both direct and indirect Goals that also sit on a continuum. A few of the most important Goals:

1.) Wake Up Call

Similar to JD Vance’s Munich Security Conference speech, which immediately woke up Germany and led them to increase Defense spending and restart Nuclear reactors for low-cost Energy, Trump’s Liberation Day and Reciprocal Tariff announcements were meant to wake up the World: the System needs to Re-Balance – we’re serious, let’s chat.

For decades Presidents of the US have been trying to get Germany to wake up to the reality of their dependencies – Russia for Energy, China for Money/Cheap Goods – and to increase their Defense spend for deterrence and self preservation. The Trump admin accomplished more in a twenty minute speech than the prior 40 years of ‘diplomacy.’

The Tariff Talk is meant to have a similar effect – the System is imbalanced and unsustainable; left untouched, there are both rising National Security and System collapse risks. As highlighted in Part I, there is urgency to the situation – we need to take Action now to Re-Balance.

While we don’t necessarily condone the shock and awe manner in which it was done, we do understand why. There is no Time or Space for diffusion of Responsibility. Or twenty follow-ups with no True Action. The Tariffs bring forth the discussion and Action to the here and now – and everyone is intently engaged. If the tactics used were not extreme – both in delivery and scale – it's possible they would have been ignored. Many in Power do not want change. The Tariffs are an uncloaking device to help reveal the True Character and Nature of the parties involved – Who retaliated? Who escalated? Who is on your side? Who can you Trust?

And the ‘forced’ meetings will not simply be focused on Tariffs and Trade. These meetings open an intentional Dialogue about: the System itself, The Pillars of Power and National Security, and Democracy versus Autocracy.

We live in a time of massive compressed change:

• Technology: AI is a Technological Revolution that enables a paradigm shift in Power

• Energy: Energy Independence is more critical than ever, and new sources are inflecting

• Money: Money is being revolutionized by Blockchain and Digital Technologies

If we embrace change instead of resisting it, we have the opportunity to rebuild the System better – actually harnessing these modern innovations to build a better Future.

Most are still asleep – lulled into a trance by the propaganda of the East and the Short-Termism and manufactured Noise of the West.

If you do not wake up, you are sleepwalking into the Arms of Autocracy – fully handing over your Control and Freedom… in exchange for cheaper TVs – ‘let them eat flat screens.’ Tariffs are the overdue Wake Up Call.

2.) Free Trade

Many seem to think that the US imposing Tariffs on the World is wholly unfair; yet, if you even do a modicum of research (which, of course, the Media does not) you recognize that most of the World has both explicit and implicit Tariffs on the US and its Products… by Design.

Many of these World Tariffs on the US are a relic of the period immediately following WWII. Post WWII, the US was an Industrial Production powerhouse – controlling over 50% of the World’s Production in 1945. Meanwhile, most of the Rest of the World was in shambles – notably Germany and Japan. To attempt to rebuild the World with an abundance mindset, the Marshall Plan was enacted – essentially providing Capital to rebuild Production in the Rest of the World (rather than punishing Germany/Japan and risking their embrace of Communism). In addition, the US essentially dropped all of its Tariffs on the Rest of the World, while simultaneously the Rest of the World (notably Germany and Japan) increased their Tariffs on the US. This was done by design – to shift Production out of the US to the Rest of the World, to enable the Rest of the World to rebuild.

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So this Post WWII System was literally designed to Re-Balance the System peacefully – by reducing US Production (which reached relative extremes; pendulum too far) and shifting it to the Rest of the World, while increasing US Consumption to buy those Products (produced by the Rest of the World) to ultimately fund further Rest of the World Production expansion – and it worked…

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The Purpose of a System is what it does. And this Post WWII System systematically shifted Production out of the US and into the Rest of the World – notably Germany and Japan, who needed rebuilding.

Then along came China and its WTO entrance in 2001 and they joined the Rest-of-World-Production-Party… which then (d)evolved into China exploiting the System (and the Short-Termism of the West) and unilaterally dominating Production – growing from 3% in 1990 to 44% in 2022 (check out the China/Xi Agenda piece for more). Reminder, China still somehow has developing Nation preferential treatment when it comes to trade, and is not held to any of the WTO standards… but who is counting.

So eventually this Tariff-manipulated System worked too well – the Production and Consumption pendulums swung too far and massive imbalances once again emerged. Today with the US Consumption pendulum at an extreme, and the China Production pendulum at an extreme. The Tariffs worked as initially intended – to redistribute Production out of the US to the Rest of the World – but that initial intention was set ~80 years ago. And general Balance was achieved ~40ish years ago. These policies were left in place way too long, and have now driven the System wildly out-of-balance. Pretty logical to revisit from the Foundational First Principles, no?

The point in rehashing this History is to simply point out that Tariffs have been used in the past to Re-Build and Re-Balance Systems (for a lot longer than this brief snapshot shared). And the Tariffs still in place from the Post WWII era simply do not make sense today – they work against the initial Designer and exacerbate obvious imbalances. The World has Tariffs on the US, but the US does not have Tariffs on the World? Unsurprisingly Production flowed out of the US and into the World – The System naturally Re-Balances where incentives guide it; Water finds the cracks.

Why do you think you see BMWs & Mercedes (German companies) and Toyotas & Hondas (Japanese companies) all over the streets in the US, but you rarely see any GM or Ford (US companies) overseas? Because that is what the System incentivized. It is a Product of the System and its Post WWII design. But now the pendulum has swung too far – the ‘loopholes’ have been exploited, the System is imbalanced and no longer serving the majority. And it is certainly not serving US National Security interests. We need change. We need Re-Balancing.

Tariffs should be temporary – to help guide a System to Re-Balance. An ideal System would have no external interference like Tariffs (discussed below). These temporary Tariffs – along with other Policies added over the years – became permanent and have pushed the System to the extreme imbalances we see today.

Further, don’t forget that the only reason this System functions at all is because the US (after WWII) has provided the Security to enable safe and open shipping lanes to facilitate the actual execution of the Trade. Without this Security umbrella, Trade would stop – and yet the US is not compensated for this Service.

Of course none of the talking heads walk through any of this. Or how this all ties to the balance of Production versus Consumption, and Capital versus Labor (upcoming deep dives). And yet, they are quick to criticize the Trump administration for implementing Tariffs. Why? Because they know it forces the System to change, and they do not want change because that could jeopardize their Power and Control.

Delving further down the ‘Free Trade’ rabbit-hole, Tariffs are not the only barrier – in fact, most of the barriers are non-Tariff related (e.g., government subsidies, currency manipulation, IP transfer). For purposes of this piece, we will not get caught up in the details – we’ll just call the collective Tariff and non-Tariff items Barriers for this section. Barriers are external influences that manipulate the System.

To provide an example of Barriers. If a US company wants to sell in China they must do a combination of the following: hand over all of their IP, build a local factory in China employing locals, JV with a local Chinese partner who gets half of the profits. Is that Free Trade? Not to mention the companies you compete with are typically subsidized by the Chinese government.

This example – one of many around the World – is not to judge whether this is good or bad, it just is. And it objectively is not Free Trade. Free Trade has no external influence – today, Free Trade does not exist.

The attempted ultimate Outcome of these negotiations is Free Trade. A System without external influences – like any Natural System, self-balancing given enough Time and Space.

The Path to getting to that Outcome is not easy — it is what we are in the midst of today.

First you need to get People in Power (who derive their Power from the current System) to Wake Up (see #1) and agree to change a System that currently asymmetrically benefits most of them, to a System that does not asymmetrically benefit them. Hence the initial shock and awe phase.

Then, once all Parties are intently listening, you need to make them aware of the absurdity and unsustainability of the current System – from dangerous dependencies (e.g., China almost 50% of World Production, including many Critical Products) to extreme inequality (see Part I). By its very Design, if left unchanged, the System would push these pendulums to even further extremes – Production moving to China and Capital accruing to those with Capital (concentrating or centripetal forces); and Production leaving the West and Labor losing Power (diffusing or centrifugal forces). You see the manifestations of these trends everywhere – from the extreme concentration in the US Stock Market to the extreme wealth concentration in the top 0.01% (see Part I).

Just as a Fish will not question the Water it swims in, Humans rarely question the System they live and operate in – a catalyst is needed. #Tariffs

Liberation Day and Reciprocal Tariff announcements were purposefully extreme – to both Wake People Up and make them Aware of the current System. The absurdity of the extraordinarily elevated and System-freezing initial Tariff figures (profoundly simple and created by AI – the specific numbers completely meaningless) were a Wake Up. The Reciprocal Tariffs were the Awareness inducement – with Awareness comes Perspective, followed by Questioning.

Perspective is key. You often do not appreciate or understand something until you see its opposite – how can you explain or define Light without knowing and experiencing Dark? Perspective highlights the importance of experiencing contrast to fully grasp the value or significance of something – by encountering the absence or negative aspect of something, you gain a deeper understanding of its presence or positive counterpart.

How can the Rest of the World understand and appreciate the absence of Tariffs – the Water (System) they’ve been swimming in for decades – without understanding and experiencing the presence of Tariffs? The Path to Free Trade is first paved with Fair Trade. Reciprocal Tariffs – literally placing the Tariffs you have on me, back on you (equalizing) – is that Perspective-inducing Awareness. That’s not Fair! Oh wait…

But Reciprocal Tariffs are just a step – a Mirror – to make you Aware of the un-Fairness. Then comes the Questioning – hey, maybe this Tariff-manipulated System is outdated? Maybe it does not serve US anymore? It disproportionately funnels our Critical Product Production to our Adversary – exacerbating National Security issues. It disproportionately funnels more Money to those who already have Money – exacerbating Inequality issues.

Once you appreciate this Perspective, then the Path to removing Tariffs altogether becomes clearer. Then the Path to changing and rebuilding the System from the Foundation becomes a lot clearer.

To get to Fair Trade – a step along the Path – you must appreciate the current Un-Fair Trade. To get to Free Trade – the target Outcome – you must appreciate the current Un-Free Trade. It is a continuum. Escalate to de-Escalate. Dark and Light. Yin and Yang.

In these ongoing negotiations, the US is almost certainly saying to Allies – if you remove your Barriers, we will remove our Barriers. Further, these negotiations are a litmus test for who is a True Ally – watch what they do, not say. And the Adversaries fully understand that a unified Allied System with a clear and aligned Vision is incredibly Powerful – there are reasons escalations (e.g., Pakistan/India) keep popping up around the Globe to deter this unification.

This will take Time and Space. Active Listening and Open Dialogue. The System is self-balancing given Time and Space. These Tariff Announcements are a catalyst to change the System; not an end state. The ideal System – the ultimate target Outcome – would be a System with no Tariffs, with no Barriers – one that is fully Natural and Free. Enabling a Global Meritocracy – may the best company win.

While this Goal may be idyllic – it's important to have a Powerful Vision to work back from. To rally around. To strive for. Similar to how Elon starts with the Vision and works backwards from there to achieve it – we must do the same with the System. Lay out the Future we collectively Want, and then work backwards – building the Foundation using First Principles as Building Blocks.

And the beautiful aspect of all of this is – everyone aligned and involved gets a vote in how to build this new System and anyone who chooses to actually play by the collectively-agreed-upon Rules can partake in this new – Non-Zero-Sum – System.

We are a long way from this Outcome. But the Dialogue has begun. We are in the Process of re-shaping the System. People are Waking Up. Awareness is Rising. And this flows naturally into orchestrating a…

3.) Peaceful Rebalancing

Free Trade flows into the Peaceful Re-Balancing Goal. First the Trump admin is focused on creating a True Free Trade System – one where Barriers are (largely) removed (see section above). This System will likely be built with True Allies first – just considering the chasm to close is smaller and incentives are more closely aligned.

This then sets the stage for a Peaceful Re-Balancing. The US is likely to re-engage in deeper negotiations with China once this new System is in place and fortified with Allies. Once this new System has reduced external dependencies, realigned resources, and regained Control of Critical Products. That is when the Trump admin will likely have its peak negotiating leverage – its strongest Pillars of Power – and will offer China entrance into this new System, if it plays by the Rules. And Tariffs will be a key mechanism gating that entrance.

The Peaceful Re-Balancing is ‘simply’ – the US reduces its over-Consumption (pendulum swings toward Production), and China reduces its over-Production (pendulum swings toward Consumption). The US and China are the two hegemons – see our US/Trump, China/Xi pieces – and they are the two players in the old System most out-of-balance. Increased Balance between the Two would help Balance the overall System.

Easier said than done – but to accomplish it, you must start with the Vision. The US – the primary importer – is more open to this Re-Balance than China – the primary exporter. To better understand why, we’ll briefly touch on this – for more details, check out the China/Xi piece.

China operates as a Mercantalist, with clear Industrial Policy. They do not currently allow Free Trade – they use government subsidies, currency manipulation, capital controls, among many other tools to direct their Agenda. They control release valves that would otherwise lead to Balance within the System – as many could subvert their Agenda. And, as the China/Xi piece details, this has worked incredibly well – the Xi Agenda continues to be executed against and has dramatically strengthened China’s Pillars of Power. China – similar to the US around WWII – is now a dominant Power when it comes to Production (almost 50% of Global), including many Critical Product supply chains.

In short, the pitch to join the new System must be compelling – utilizing both carrots and sticks. Joining the new System must be mutually beneficial, Non-Zero-Sum – all sides are better off, win/win. Things you may see down the road (carrots) – BYD (Chinese Auto company) granted permit to build factories in the US to sell into the US market. Other things you may see down the road (sticks) – World Tariffs on China rise to 150%, effectively excluding China from the new System, and removing its access to 50% of World GDP. This is a precarious situation. This requires True and Honest Listening and Dialogue.

This Re-Balancing would not only help equilibrate the imbalance between the countries, but also within the countries. The US clearly needs this – the pendulum has swung too far in favor of Capital over Labor (see Part I, and further deep dives to come). The Re-Balancing toward Production would help facilitate a shift toward Labor and Balance. And China could also use this – their domestic economy is in the so-called Middle Income Trap, and they ideally need to increase their Consumption.

But this goes against what China has done for decades – they have purposefully kept their Currency undervalued (see graph below) to both increase their Productive Capacity and control their Citizens Consumption. China enabling its Currency to float freely and/or appreciate is China empowering its Citizens. As an Autocracy, do they want to give up some of that Centralized Control? Hard to know, but this is part of the high level Re-Balancing calculus.

Since 1994, the USDCNY exchange rate (pictured above) has barely moved (fixed). For an economy that has grown by over 33x, this is incredibly unusual. For context, China’s GDP has gone from ~$560 Billion in 1994 to almost $19 Trillion in 2024 (growth of over 33x).

Further, there are many other ‘side effects’ of a Truly Free Global System. For one – innovation would rapidly accelerate, and incumbents (who were protected by the old System) would be rapidly displaced. Example – BYD’s expansion would accelerate the decline of GM, Ford, et al. Point being, there are nonlinear knock-on effects when you change a Complex System. When you Free a once-heavily-externally-influenced System – Water will find its level, fast.

Overall, this is the high-level Peaceful Re-Balancing that could happen. The Re-Balancing of Global Production and Consumption. The Re-Balancing of Local Labor and Capital, as well as the distribution within. Balance — not Domination (extreme Im-Balance) — breeds Stability. The Vision is there. The Roadmap exists. Let’s harness the Growth Mindset and work on Non-Zero-Sum solutions to manifest this New Balanced System.

But in the meantime, don’t forget the most important current overriding motif: National Security. It sits at the core of every Decision. So in parallel, we must accelerate…

4.) Reshoring

Reshoring of Critical Product supply chains is a critically important Goal, and Tariffs will absolutely be used as a forcing function here.

Reshoring of Non-Critical Products is not a focus, and will not happen. Once again, no one cares where rubber ducks are manufactured. Ignore the talking heads that say the Trump admin wants to reshore jobs that would have Americans piecing together trinkets. It’s Noise. It’s Nonsense. It's Not-Gonna-Happen.

Moving on to the Critical Products. We are and will be reshoring end-to-end Supply Chains for Critical Products – from Semiconductors to Pharmaceuticals, Technology to Energy.

We have to. You cannot have your most Powerful Adversary Control many of your Critical Product supply chains – from Pharmaceuticals, to Defense, to Semiconductors.

COVID exposed the fragility of supply chains. COVID exposed the US dependence on China for many Critical Products. And yet, over the last 4+ years, almost nothing has been done to reduce those dependencies. We must address them now.

Technology is a critical Pillar of Power, and end-to-end Control over the leading edge Technology supply chain is key for National Security/Defense (Power). Leadership in Technology is Defense; it always has been. And Control over Asymmetric Technology is key for deterrence. IP ownership is not enough, you must also Control the Production. AI is the underlying Technological Revolution happening today (deeper dive soon), and it will reshape every Industry – notably dual-use areas around Defense like Robotics. Securing this end-to-end supply chain is of paramount importance.

And do not forget, there is no scalable Technology, there is no Production (Industry) without Energy – another Pillar of Power. You need abundant, low-cost, stable Energy to Power your Production – without it, there is no reshoring.

Which flows nicely into part of the reason why we will be strengthening our relationships with Trusted Allies like Canada and Mexico, Australia and Argentina – aligning Visions to ensure Resources for these Critical Products are readily available. These negotiations and discussions are happening now – as a result of the Tariff-induced Wake Up Call. The New System – Free Trade and Re-Balanced – is being designed.

This does not mean rubber duck manufacturing will be moved to Canada. This does mean that the US and Canada will work closely together to develop Energy supply chains – from Natural Gas to Nuclear. The US has woken up Germany in Europe; Japan is already awake in Asia – the pieces are coming together for rising self-reliance. The concept of creating an aligned New, fully Free Trade System starting with the Western Hemisphere is not fantasy – its coming. The Greenland, Panama, and Canada comments are not empty overtures (see the US/Trump Agenda). They are opening moves in this Strategy, with Tariffs as the follow-up forcing function to initiate the Re-Building of the New System – which ideally extends and expands to encompass the Globe.

In the meantime, you also need Money – another Pillar of Power – to help finance the Reshoring and Rebuilding of Critical Product Production – notably Technology and Energy. Enter the Middle East…

In addition to the more ‘obvious’ Allies, the US is quickly converting the typically more neutral Middle East – from UAE, to Saudi Arabia, to Qatar – to potential parties in this New System. The Middle East has plenty of Energy and Money, so in exchange, the US has recently signed deals for Technology. In return for Technology access (notably around AI), the Middle East is providing Money – direct Capital investment in Production both domestically and in the US, as well as Critical Product orders – and Energy – likely agreeing to keep Oil Supply elevated. This highlights the Non-Zero-Sum nature of the New System when you engage in dialogue with a Growth Mindset – both parties are better off. For the US, this deal helps directly fund (Money) the reshoring of Critical Product Production and keeps Energy prices subdued – which helps enable the affordability of building and operating this Production. For the Middle East, they are now gaining access to Technology critical for National Security.

Despite the obvious, common sense need to reshore Critical Product Production, there is constant criticism. Common (conflicting) retorts are around Labor: ‘We don’t have the skilled labor to handle these Critical Product supply chains!’ Or ‘We are all going to be working in sweat shops!’ Or ‘The Robots are taking all of our Jobs!’

More Media Noise to distract you. Confuse you. No actual research or substance – pretty classic.

Short answer – reshoring Critical Product supply chains likely will not initially create that many jobs. And you know what? It does not matter – we do not need them (yet).

In fact, today we don’t actually even have a supply of jobs problem at all. We have a Labor Force problem – our Demographics are worsening and have been since ~2000 when the Baby Boomer retirements began. Now those retirements are accelerating and the Labor Force Participation Rate is shrinking (see the graph below). We briefly offset that with (Illegal) Immigration – Biden and co actively suppressing Labor wages – but now that is shut off (deeper dive for another time). So our Labor Force growth – for now – is relatively weak. Long story short, we have more Jobs today than Labor.

This Balance can absolutely change. And it likely will as we re-Privatize the Economy – shrink the Government (reduce Public workers), grow the Private market. And as we re-Balance our Economy – toward Production, away from Consumption. Overall, the pie likely can grow – but the bigger point is the distribution will change (toward Private/Production, away from Public/Consumption).

And the re-Balancing will happen in waves. The initial Reshoring will create some jobs upfront – construction workers to build the facilities, technicians to install equipment, and engineers to operate the machines. These are all net new jobs that will be created – they would not exist at all without Reshoring Production. Moving Production from anywhere to the US creates incremental Labor Demand (i.e., Jobs). While a lot of these new Production facilities will be automated – controlled by Robots (more on this in our Labor deep-dive) – you still create a flow of higher skilled jobs (to maintain/operate the Robots) that would not otherwise exist. In parallel, we should be reforming our Immigration System to help streamline the Legal Immigration process – notably for Foreigners who complete Higher Education in the US. This will be critical as the supply of jobs eventually begins to exceed our Domestic supply of Labor.

Down the road, incremental new jobs will come from further accelerating and expanding upon the base Technological Revolution – AI will be more transformational than the Internet. While rapid Technological changes do cause disruption, they also create brand new opportunities. You’ve seen this throughout History – when the horse and buggy were displaced by the automobile, out came the mechanic, the auto assembly line workers, the car dealerships, and so on. And the likes of Amazon, Uber, and Spotify could not have existed without the Internet. These building blocks and byproducts are difficult to precisely predict, but Innovation continuously spurs growth and creates opportunity. Technology drives Productivity and enables us to focus our Energy on increasingly more ‘important’ (and/or desired) areas. While the jobs and industries may not exist today, they have likely been imagined – just read Sci-Fi. The beautiful thing about the World is it is always expanding – it's a Non-Zero-Sum game with the right mindset.

Back to Reshoring. We need to Reshore Critical Product Production for National Security Purposes (primary goal). This will create some incremental new jobs upfront (positive byproduct). Future job growth will initially come from a Private resurgence (over Public) and Production expansion. Eventually an entirely new wave of jobs will be created by the expansion of the Technological Revolution (more on all of this in an upcoming Labor deep dive).

To build out Production (i.e., Reshore Critical Product supply chains) you need Technology to underlie, design and develop it, Energy to Power it, and Money to finance it. The Pillars of Power never sleep.

Overall, Reshoring both improves National Security (Resilience and Adaptability) and Re-Balances the System – toward Production. And the chain reaction of net new job creation is a nice bonus. The multi-pronged Nature of Tariffs is becoming more obvious – with both Critical Goals and nice-to-have byproducts like...

5.) Revenue Generation

The order and layout of these Goals was purposeful – they are clearly overlapping, with many happening in parallel. And there is also a cadence. Revenue generation is not a core focus of Tariffs – while it certainly helps strengthen the Money Pillar and address the unsustainable Fiscal deficit, those outcomes are primarily byproducts while discussing the ‘more important’ broader Vision and Design of the New System.

In the meantime, Money is still a powerful motivator. And let’s not forget that the only reason the old (i.e., current) System works is because the US Security umbrella enables it. The US Navy patrols the seas to facilitate Safe Travel and Trade. US Security is the Foundation of the System – without it, the System stops functioning; you cannot Trade, Tariffs or not. Simultaneous with the Tariffs, the US is (strongly) hinting at this – they are pushing for Peace and reducing their Security blanket. The removal of the Security guarantee would mean an end to the old System.

Providing that Security is not Free – a simple heuristic, look at the US Defense spend (graph below); it’s essentially half of all Defense spend (at least the reported).

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So everyone benefits from US Security, but only the US pays for US Security? Hm. That setup certainly worked for a period while the US was the unilateral hegemon – and it helped expand the USD Network. But that setup, the premise it was founded on, and the imbalances (Inequality, Deindustrialization, etc.) it is helping perpetuate do not serve us anymore.

This leads into a potential Revenue source – maybe there is a toll to access this new System? Maybe there is a toll to access the USD Network? Maybe you have a choice of providing your own Security or paying for access to the US umbrella? Maybe it's explicit – (a USD toll) – or maybe it's implicit (increase your Defense spend to X% of GDP). We’ll delve into more of this in our Mar-a-Lago piece (part of the upcoming Capital segment), but the point is, maintaining, policing, and growing the System is not Free. Maintaining, policing, and growing the USD Network is not Free. So the new System will be different – more Balanced burden sharing.

This entire old System was built just after WWII. Despite all of the innovations and information since then, it has not been updated. At the center of this old System is the USD – which has essentially been treated as a public good. Keynes’ (ominous) predictions about selecting One Country’s currency as the Global Reserve Currency have come true – it has Deindustrialized, heavily indebted, and heavily financialized the US and its Economy. It has driven extreme imbalances – from Consumption vs. Production to Rich vs. Poor. Perceived as “Free,” this USD “public good” has been abused – driving pendulums way too far. In hindsight, Keynes’ proposal for a supranational currency (the bancor) would have been intelligent to implement and/or revisit along the path as imbalances unsustainably grew. We did not – those in Power did not want to cede Power or Control. But Today we have that Opportunity to Wake Up and Build something Better and Balanced.

An apt Chinese proverb: ‘the best time to plant a tree was 20 years ago. The second best time is now.’

So access to the New System, its inherent Money Network, and its Technology & Energy Resources (the Pillars strike again!) should be more Balanced – that is the desired Outcome. Tariffs can be a way to achieve parts of that directly (i.e., a Toll to share burdens) and/or indirectly (i.e., a catalyst to Re-Design the System). A True Opportunity for Creativity. A True Opportunity to Harness Modern Innovations. A True Opportunity for Open Dialogue. Once we collectively Decide a New, Balanced, System is the Goal – the Opportunities are endless.

In the meantime, another way to both address the massive old System Imbalances and generate Revenue is to add Tariffs to what you want less of Consumption-wise. Tariffs are similar to a Tax. When you Tax something, you get less of it. When you Subsidize something, you get more of it. In this case, high level Balancing-wise, you’d want to Tariff High-End (Rich) Consumption, and Subsidize (or not Tariff) Production. For example, if you Tariff High-End Luxury Goods like Yachts, the Price of Yachts will go Up, and the Consumption of Yachts will go Down – all else equal. Further, this generates new Revenue for the Government – every Yacht sold, a portion of that Money flows to the Treasury. And that Revenue can then be funneled toward Production – subsidizing Domestic Semiconductor Manufacturing, for example. Shifting excess Money from Capital (Rich) and Consumption, toward Labor (Poor) and Production.

You can see how these Flows can lead to multiple levels of Re-Distribution and Re-Balancing. This does not appear to be the best long-term solution – too much centralized Control in picking what and what not to Tariff (Tax). But it is a viable short-term solution to both begin addressing the Imbalances and generating Revenue, while you Design the New System.

Further this simple Tariff-driven-flow-of-Money exercise provides a microcosm of what occurs on a Global Scale every day – as Trade Flows, Money Flows all around the World. Restructuring Trade Flows necessitates restructuring Capital Flows (Trade Wars are Capital Wars) – it’s all interconnected. We’ll delve into this in the upcoming Capital pieces. A brief teaser is: Openness – Capital Flows, Information Flows, and so on – is great for Progress, but it can also be weaponized against you. While the US has open Capital Flows and Information Flows, China does not – this is a type of double standard that must be rectified in the New System.

Needless to say, National Security priorities trump Luxury Consumption – don’t think a 0dte option holds much weight in the battlefield. Controlling Money absolutely does enable a layer of Control – it is unequivocally a Pillar of Power. But when the Money is not backed by any sustainable Physical Power – via asymmetric Technology, Productive Capacity to Build it, and Energy to Power it – it's empty. Always work from First Principles; the Foundation. If you don’t have food, water, shelter, and safety – do you really need 15 different day trading apps for Fartcoin? Take a second (ideally more) to just think. What the Money is for. Where the Money is being allocated. Power Posturing and Deterrence are empty threats if you do not have the means (Productive Capacity) to enforce them. Where Money flows will dictate the Power Peking Order for the decades ahead – don’t expect to see another 12 dog apps get funding; do expect to see the construction of massive robotics factories.

As you can see Tariffs are both Simple and Complex – a multi-faceted Tool to Re-Balance the System. They are not Black and White like the Media blindly suggest. They are path dependent – shaped by the decision chains of the parties involved. They are both useful for short-term Revenue generation, and long-term Re-Balancing. And they are disruptive and dangerous without an ultimate Vision.

VISION & PATH

All of these Goals are clearly interconnected – they are different puzzle pieces building up the Foundation of the New, Balanced System. To better understand the Vision, read the Trump Agenda, watch Agenda 47. He’s been talking about Tariffs and Global Re-Balancing since the 1980s – it's silly to presume there is not a broader Strategy. Work back from the Vision to better understand the path and the tools being used to construct the Future.

Tariffs are a multi-Purpose and multi-Dimensional Tool – they will be adjusted in Phases to handle the path dependent responses of the parties involved. High level, there will be multiple overlapping Phases:

• Shock and Awe – Liberation Day woke everyone up

• Negotiations – Discussions around the New, Balanced, System have begun

• China Negotiations – Deeper Negotiations with China will accelerate as the Rest-of-World Negotiations wrap up. Once the New System architecture is in place.

All of this will likely reach a crescendo around July 4, 2026 – the New System will be quite clear by then. Those who are joining it will be quite clear by then.

A longer piece, so quick recap.

• Tariffs – multi-faceted, multi-dimensional Tool to change the System

• Framework – Products (Critical vs. Non-Critical). Countries (Ally vs. Adversary).

• Goals of Tariffs:

  • A Wake Up Call to recognize the current System is working against us

  • A Mirror to highlight the current Un-Fair and Un-Free Trade

  • An Opportunity to Build a better Truly Free Trade System

  • A Catalyst to accelerate the Peaceful Global Re-Balancing – toward Production in the West, and Consumption in the East

  • A Mechanism to drive the Reshoring of Production of Critical Products driving the Beautiful Re-Balancing and increasing System Resilience and Adaptability (improves the health of the Technology and Energy Pillars)

  • A Revenue Generation Tool that helps Re-Balance the System and strengthen Responsibility/Accountability (improves the health of the Money Pillar)

• Motif – National Security (removing Chokepoints/Dependencies)

Each flows into the next. And (unsurprisingly) ties to strengthening the Pillars of Power. This is a Framework to plug new data points into as they come in – enabling you to help Order your Mind.

Do not get caught up in the minutiae – the details do not matter, exemplified by the fact that the initial calculations were done in about 3 seconds, likely via ChatGPT. Focus on the Forest (the Vision), not the Trees. Use the Framework to better understand the Path.

Do not forget the National Security focus:

Trump’s Tweet: "IT IS GOD'S JOB TO SIT IN JUDGEMENT, IT IS MY JOB TO DEFEND AMERICA -- I WILL NEVER HESITATE TO WIELD AMERICAN POWER TO DEFEND THE UNITED STATES"

Do not forget the Pillars of Power:

Technology - “The Trump Administration will pursue a bold, inclusive strategy to American AI technology with trusted foreign countries around the world, while keeping the technology out of the hands of our adversaries.”

Entrance into the New System grants access to US Technology and Energy Resources, and the Money System. Technology is intimately linked with National Security and Defense.

Focus on bringing the System more into…

BALANCE

The Goal is a System change and massive Re-Balancing.

As highlighted in Part I, the pendulum has swung too far – Tariffs are a tool to restore Balance, exemplified by a recent Bessent speech. The old System moved so far in one direction it became fragile and rigid – the opposite of Resilient and Adaptable. As with any Natural System – inherently Balance-seeking – out of Dis-Order comes Order: a New, more Resilient and Adaptable System will emerge.

The rules of the New System will be governed by those with the most subsequent Power – determined by Leadership across the Pillars of Power: Technology, Energy, & Money. Technological Leadership, Energy Abundance, and ‘Sound’ Money are foundational for Economic and overall System Abundance. The ongoing meetings are inputs into the collective System Design.

We need Balance, not Domination. We need a Growth Mindset, not Scarcity Fearmongering. We need Non-Zero-Sum Goals, not Zero-Sum Centralized Control. The combination of Balance, Growth, and Symbiotic (Mutually Beneficial) Design drives Abundance and Prosperity. The opposite leads to scarcity and war. Choose wisely.

THINK

“Thinking is difficult, that is why most people judge.” – Carl Jung

Tariffs are not just a call for Nation States and those in Power to Wake Up. They are also a Call to all Individuals. The Individual Experience is a Fractal of the Global Experience.

Wake Up.

We must Observe the World.

Become Aware of the ‘Water’ You are Swimming in.

Understand How it Works.

Liberate Yourself from External Control.

The Clarity that emerges from stepping back and questioning the System itself enables Clearer Thinking.

Too many people jump to immediate Judgment because it is easier and they are told to – implicitly or explicitly. Thinking is more difficult – but it breeds thoughtful dialogue which helps facilitate Growth. To Build a Better System, everyone must Contribute. Everyone must Listen. You do not have to Agree, but you do have to Engage.

Tariffs force Change. Those in Power under the old System do not want change – hence the Media labels Tariffs as inherently bad.

Do not get caught up in the Media-led noise – it’s there simply to distract you and instill Fear. They want you to talk about penguins and empty shelves because they don’t want you to have Time and Space to actually Think for yourself. Because they know that once you do, you’ll realize that the System must change.

We are not advocating for or against Tariffs or how they were rolled out. We simply seek to understand what is and why – so we can better forecast and envision the potential paths ahead.

The Rollout is Ordered Chaos – part of a larger Strategic Vision. Many have blind spots because they despise Trump – to See, you must remove your biases.

The old System leaders continue to fall into very obvious traps (for anyone studying History), and then blame mistakes on others – constantly diffusing Responsibility. We need Accountability, now.

The broader generalized divide right now is:

New System

• Young

• Poor

• Middle America

• Labor

Old System

• Old

• Rich

• Coastal America

• Capital

Understand the incentives. Ignore the party labels. Start Thinking about each issue for yourself. Don’t be told What to Think. Focus Energy on How to Think.

The Re-Balancing of the US must also come with Re-Unification. We must come together and provide a Template for the World. A New System built on Freedom and Morality.

The old System incentivizes Short-Termism and the Self. The New System must Focus on Long Term Growth and the Collective. Collective does not mean communism — it simply means caring about the Future beyond You.

A vote for the old System is inherently a vote for Autocracy – the old System strengthens China and the East, and weakens the US and the West.

The old System is not working for the US. It is not working for the majority. We are losing relative Power. We are losing relative Prosperity.

Stop denying the facts. Ignoring reality does not help. Since China’s entrance into the WTO, the Power and Prosperity of the US has declined.

Link

Tariffs are a call for Self Reliance – to make everyone more Resilient.

Tariffs are a call for Balance – to make everyone more Adaptable.

Tariffs are a call for Collaboration – to make everyone Stronger.

Apply it at the Individual level. Apply it at the Country Level. Apply it at the Global Level.

Time to Wake Up.

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Thanks for reading. If it was useful, share it. If it could be more useful – let me know how (info@aquavisadvisors.com). If you have any questions, comments, or want some resource suggestions to learn more – let me know.

Change your mindset – scarcity to growth. Let’s build a positive-sum world of abundance.

Order your Mind. Harness your Money. Shape your Future.