Donald Trump, who considers himself an authority on pretty much everything, wrote one of his typically bombastic posts on Truth Social right after this morning’s release of unemployment data. He wrote:
“LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT, which the U.S. Supreme Court, in its ridiculous and very costly Tariff decision, strongly acknowledged “the President” has an absolute right to do.”
His lapdog of a Vice President weighed in as well.
“One of the main reasons he [Trump] cares a lot about interest rates is because he wants Americans to be able to afford a home,” Vance said, referencing Trump. “When interest rates go higher, that means that borrowing costs are higher.”
Well I’ll be doggone. JD’s got it all figured out. When interest rates go up, borrowing costs rise as well. There’s insight for you.
Since JD Vance managed to get himself accepted into Yale Law School, it would be safe to say that he is not an idiot. He is merely clueless when it comes to financial markets. Or possibly he does understand financial markets and pretends not to. Neither hypothesis is even a slightly reassuring.
On the other hand his boss, Donald Trump, has given close to incontestable evidence that he is the village idiot. His threat to stop trading with all the countries with whom the United States runs a trade deficit comes fairly close to proof positive that he doesn’t have the slightest idea of what he is talking about. Consider for one, that the whole idea, if you can call it that, makes no sense.
It makes trade a zero-sum gain, even though each transaction was voluntarily agreed upon. It further assumes that the transactions are discreet; that the cost of goods sold is immune to the laws of supply and demand, and that the costs of truncated supply chains are not paid by a combination of consumers, employees and equity owners. Which is precisely where the costs fall.
This is not exactly new. The doctrine of free trade was first discovered by Adam Smith in the Wealth of Nations where he n=made the case against mercantilism. Later David Riccardo (1817) made the argument much more powerful. The mathematical proofs were published by Francis Edgeworth in 1873.
Then there is the matter of the President’s power to “stop” trading with any country with whom the United States has a trade deficit. Despite the claims of POTUS, the Supreme Court was pretty clear just this past Feb 20 2026 that the President lacks that power during peacetime. (Learning Resources, Inc. v. Trump) Not to mention that Trump has attempted to impose tariffs on goods from countries where the US has a trade surplus!
In its comments on the Learning Resources, Inc.(for which it filed an amicus brief) the Pacific Legal Foundation said
“The 6–3 decision held that in enacting IEEPA, Congress did not delegate “the distinct and extraordinary power to impose tariffs,” a power that the Constitution vested in Congress.”
Then there is the matter of credit ratings . Trump keeps on insisting that the US has the best credit in the world. Apparently, unbeknown to Trump, eleven ( 11 ) countries have higher credit ratings than the US, which was first downgraded from Triple AAA way back in 2011. Currently the US lacks a Triple AAA rating from any of the majors (S&P, Moodys or Fitch).
In fact, of the eleven (11) countries with higher credit ratings than the US, eight (8) have a trade surplus in goods with the US according to the US Census Bureau. (See the table below).
Using U.S. Census Bureau 2025 goods-trade data:
| AAA country | U.S. balance | Who had the surplus? |
| 🇩🇪 Germany | –$73.0B | Germany Census.gov |
| 🇨🇦 Canada | –$48.3B | Canada Census.gov |
| 🇨🇭 Switzerland | –$32.5B | Switzerland Census.gov |
| 🇩🇰 Denmark | –$7.6B | Denmark Census.gov |
| 🇸🇪 Sweden | deficit | Sweden Census.gov |
| 🇳🇴 Norway | –$2.1B | Norway Census.gov |
| 🇦🇺 Australia | +$4.8B | United States Census.gov |
| 🇳🇱 Netherlands | +$59.0B | United States Census.gov |
In fairness it should be said that (1) the trade deficit is nothing to worry about and (2) Donald Trump did not create the fiscal disaster we are in all by himself. He had plenty of help over the last 50 or even 100 years. But the truth of the matter is that he has promised not to touch Social Security which is one of, if not the largest driver of our rotten public finances. (Not that the Democrats are any better–they have promised to expand the program).
So why do we have trade and budget deficits? And while we are at it, let’s not forget that the accumulated debt burden from budget deficits is $40 trillion. That is trillion with a T.
So why do we have these deficits?
We have trade deficits because modern supply chains create the most efficient way to produce and distribute goods and to a lesser degree services. If we were to abandon them, the costs of production and distribution would be substantially higher and we would all be poorer.
We have budget deficits because the public (erroneously) thinks it is getting free stuff. And politicians reinforce that erroneous belief. It is baked into the cake of modern liberalism which term is a slightly less threatening characterization than socialism. But that is what it is.
Remember what the “Kingfish”, AKA, Huey Long said:
“Don’t tax you
Don’t tax me
Tax the man
Behind the tree”
That is where we are. Remember Mexico was going to pay for the wall that never got built? Mayor Mamdani is going to run grocery stores that sell stuff 30% below the competition. And we will have free buses. And rent control. And Medicare for all.
As long as we persist in producing policies and elect politicians that espouse soak the rich taxes to pay for the desires of the middle class–Huey Long style– that is were we will stay. Until we collapse.
JFB
