The numbskull

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The price of copper surged today after the rogue America president said he’s imposing a 50% tax on imports of the metal. Futures went up 17% in ten minutes.

Well, guess who gets whacked?

Yup. Us. Canada supplies a third of all the copper imported into the States. Of the $9 billion we dig up and ship every year, over half goes to the US – almost 500,000 tones of ore and refined metal. So this means, in a flash, Trump’s Treasury will collect close to $2.5 billion in annual tariffs on Canadian copper – unless the new taxes gut our industry.

Canada’s biggest producer is Teck Resources. Its stock was sent on a wild ride, first as copper prices jumped, then as the tariff reality set in. Once again, the White House has proven its capricious and wild cowboy unpredictability.

Well, that hit came hours after Trump chickened out on his 90-day reciprocity tariff pause (set for tomorrow) then announced a new deadline (August 1) plus a fresh set of tariffs on key trading partners like Japan. The White House said in April it wanted 90 trading agreements with as many nations in as many days. It got two of them. Both just provisional and sketchy. The jury is out on whether the July 21st deadline for a new deal with Canada can be met. Don’t wait up for it.

It would be hard to make this stuff up for a Netflix drama on how one man could ruin a global economy. Bu we’re living it. And the greatest threat could be yet to come.

Trump has called Jerome Powell, the calm and deliberate head of the American central bank a “disaster”. Actually he also called him “stupid” plus “dumb” and a “numbskull”. He started a fight with the guy during his first term, and has turned it into a major war. Trump wants interest rates slashed 2.5%, right back down to Covid levels. Powell has resisted, saying tariffs will bring inflation and there’s no way he wants to throw gas on the fire.

But Trump craves flames. Big, beautiful ones. He wishes to ignite the economy with cheap money and thereby pave over deficits, debt and disruption. The other day he sent Powell a tally of bank rates from around the world and scrawled instructions on it. Powell shrugged, so the president had his flack hold it up for media and say the CB is hurting America.

Wow. Here she be.

By law the prez can’t fire the Fed boss, except for ‘cause’. That’s not happening. So Trump is expected to name Powell’s successor early (the term is up in May of 2026). The new guy will probably acquiesce to the president’s wishes, and act as a ‘shadow’ governor after being appointed. This may pressure the Fed to ease off on its rate policy, along with undermining the creds of the bank itself.

There’s a reason monetary policy is not handed over to politicians. At least in democratic, stable western nations. Central bankers need to be independent of the electoral process so they don’t do stupid things like try to inflate away debts instead of spending responsibly, or flood the system with money, destroying the national currency. If interest rates and money supply were the responsibility of people who only focus on being popular and winning electios then loans would be dirt cheap, asset values rising, equity markets in party mode and the population soon dealing with hyper-inflation.

Like in Venezuela. The CB there was directed to increase the money supply to paper over runway government spending at a time when oil revenues sagged. Inflation his 50% – per month. The economy contracted by more than 60%. The country is now a basket case, after being one the best on the planet – thanks in part to the political destruction of central bank independence.

Powell sees inflation flowing from Trump’s embrace of 19th Century tariff economics. Like today’s 50% levy on copper. In fact he told lawmakers a few days ago that rates would have come down already in 2025, had the tariff thing not happened.

Now there’s a new fly backstroking through the soup. Trump’s Big Beautiful Bill – signed into law on Friday – will add at least $3.5 trillion to the national debt, already at $36 trillion. Paying the interest on that pile takes more tax revenue than financing the entire American war machine – and the heap’s about to grow larger. Trump wants lower rates to drop the servicing charges.

Oh, and did we mention the immigrants?

US society is being ripped apart in places (like LA) by an aggressive arrest/deportation program. ICE (Immigration & Customs Enforcement) has been told to snatch at least 3,000 people a day and ship them off somewhere. Ultimately, eleven million could be removed, which economists warn will be a serious cause of inflation. About 40% of American agri workers are immigrants – many undocumented. They form a large part of the homebuilding and construction industry, plus the hospitality sector.

If the work is undone leading to shortages, prices will go up. If employers have to rase wages to attract non-immigrants, overhead will rise. Costs will increase. Consumer prices augment.

So add it up. Tariffs on imports raising the cost of stuff in Walmart. Produce and meat more expensive in grocery stores, thanks to labour disruption. Debt service charges increasing because of corporate tax cuts and larger deficits. Currency devaluation making imports more expensive. And if the Fed were to slash rates, kindling more borrowing, debt and asset growth, well, Trump’s legacy could be one of economic ash.

Recently Powell was asked if he’d step down if Trump ordered him to.

“No,” he said.

Courage lives on.

About the picture: “I thought I was a cat person. Until Kate came to live at our Saskatchewan farm,” writes Leeann. “On this day, Kate was on gopher patrol. Thank you for your blog. I’ve never commented, but I have been reading for a long time, and I find your advice to be very useful. We’re hoping a slow erosion in real estate prices will match up with our plan to pass the farm on to our son and live somewhere else. But as you’ve pointed out — nothing wrong with renting.

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/07/08/the-numbskull/