When Sycophants Run the World’s Largest Economy
Great, Now China, Japan, and South Korea Are Best Friends
Standing in Greenland, U.S. Vice President J.D. Vance said something that made me bury my face in my hands. He didn’t speak of national security. He didn’t try to explain why the United States was preparing to steal from a friend in broad daylight.
Instead, he said: “We can’t just ignore the president’s desires.” The Supreme Leader desires, so it must be delivered.
The groveling has been visible for some time now. The GOP didn’t push back when Donald Trump gloriously mismanaged COVID—they joined his game of politicizing a pandemic and took it to every corner of the country. They didn’t call him out when he lied about the 2020 election—they humored him. They did nothing when he incited a mob on January 6th—instead, they tried to cover it up. They didn’t reject his incompetent cabinet picks—they confirmed them.
They grovelled when he was out of power. Now they are on grovel duty 24/7.
I believe the word is sycophants. Singing paeans to collect whatever morsel of power falls from the top. And when you’re groveling that low, you don’t say no. You keep singing yes, in chorus. That is what is going on now.
The man who bankrupted casinos, who paid barley any income tax before stumbling into politics, now claims he can replace the income tax of a $29 trillion economy with tariffs on imports.
Even in Lalaland, it doesn’t work that way.
Federal tax receipts in Fiscal Year 2024 were about $5.1 trillion.
That’s what it takes to keep the lights on in America: to fund the military, Social Security, Medicare, highways, veterans’ care, education, the courts, federal law enforcement, air traffic control—you name it.
Now here’s what the U.S. imported in 2024: $4.11 trillion worth of goods and services.
Trump wants to slap a 25% tariff across the board. Do the math. That’s a theoretical $1 trillion in revenue—assuming every import still comes in, no trade partners retaliate, no one cheats or circumvents it, and American consumers are happy to foot the bill for higher prices on everything from cars to clothes to medicine.
And even then—it’s still $3.9 trillion short of what’s needed.
This isn’t a plan. It’s a punchline with nuclear consequences.
And that trillion-dollar tariff revenue? It only materializes if everyone keeps exporting to the United States like nothing happened. But what happens if they don’t? What happens if they start going the China–Japan–South Korea route?
Wait—what? That was my reaction too when Chinese state media announced that the three nations—historical rivals—have decided to work together in response to Trump’s tariffs.
Donald Trump has done the unthinkable: he’s united three countries that barely tolerate each other. Japan and South Korea have had decades of tension over wartime history and territorial disputes. The U.S. was often the only thing holding their cooperation together. Now that America is turning hostile to their core industries, they’re turning to each other.
On Sunday, the trade ministers of China, Japan, and South Korea met in Seoul for the first time in five years. They pledged to boost regional trade cooperation—to work together to mitigate the impact of Trump’s 25% auto tariffs and to reduce their reliance on a hostile American market.
The meeting included South Korea’s Industry Minister Ahn Duk-geun, Japan’s Yoji Muto, and China’s Commerce Minister Wang Wentao. These three countries have tried for over a decade to hammer out a trilateral free trade deal—stymied again and again by territorial disputes. But now, Trump’s economic aggression has become the common enemy. He’s forced them into alignment.
And that’s the real danger.
If Japan and South Korea can find more stable demand in China, and China can reduce its dependence on U.S. tech and consumer markets, why not reroute the trade flows entirely? Why keep selling to a country that keeps moving the goalposts?
The U.S. makes some amazing products—but how many are truly irreplaceable?
The real pain for the U.S. doesn’t come just from retaliatory tariffs. It comes if the rest of the world starts quietly rebalancing away from America. Not all at once. Not dramatically. Just a few percentage points at a time.
What happens if U.S. imports/exports drop 5% this year, and keep dropping for the next four?
What happens when global markets adapt—and America becomes just one of several options, instead of the economic center of gravity?
A freaking disaster. That’s exactly what will happen.
The United States will slowly lose ground. The global market for American goods will shrink. Bit by bit, America will cede its position as the world’s economic leader.
And once that begins, the cascade will hit everything: jobs, wages, innovation, investment, even the strength of the dollar.
But who’s going to tell the Dear Leader that he’s delusional if he thinks a trade war will grow the U.S. economy?
No one.
And if someone does try—Donald Trump will fire them. That’s the cost of electing a strongman. You don’t just lose truth. You lose talent, perspective, checks, balances, and eventually, the edge that made America what it is.
There is always a cost for choosing dictatorship. And it looks like the bill is coming due.
“The real pain for the U.S. doesn’t come just from retaliatory tariffs. It comes if the rest of the world starts quietly rebalancing away from America. “
That rebalancing includes the degradation of science and learning. The smartest teachers, scientists, researchers, inventors, entrepreneurs will be leaving in droves, and the best and brightest from around the world will choose anyplace but America. 😢
Well done Shankar, another great newsletter.
When will Wall Street finally get the memo, or do they not ultimately care, one way or the other? It seems they believe tax cuts are better than market growth; until it’s not.
That’s when all hell will break loose. Unfortunately, for most 401k holders and retail investors, the equity markets are lagging indicators. And they will ultimately be the ones left without a chair, when the music finally stops. IMHO…:)