Shooting the moon
Trump 2.0's effort to resurrect past greatness requires the entire world to lose while only America wins -- a tough trick to pull off
In the card game of Hearts, you typically win by avoiding taking “tricks” (single rounds of play) that include heart cards (13 cards worth a penalty point each) and the Queen of Spades (one card worth 13 penalty points). In other words, lowest score wins.
In a trick, each player throws a card down on the table, with that trick’s suit (heart, spade, diamond, club) being determined by the player who won the previous trick. In any round, the player who plays the highest card of that suit wins the trick, collecting all the cards played in that round.
It’s a weird game in that you really don’t want to “win” rounds. Instead, you want others to get stuck with the bill, so to speak — your goal being to avoid winning any trick that includes any hearts or the Queen of Spades.
Referencing real-world trade, hearts is sort of a mercantilist game: you want to “export” your cards to other players while not accepting their “imports.” Play your cards right and, when the rounds are done and all cards are distributed, you’ve won zero rounds and have received zero cards, leaving the other players to add up their penalty points. In effect, your mercantilist approach is to maximize exports and minimize imports, meaning you win and they lose — in that zero-sum calculation.
It’s a fun game, with one crazy, table-flipping twist: If you are, say, way ahead on penalty points (and thus losing), there is one strategy to catch up radically by suffering no penalty points while all other players individually get hit with a max penalty of 26 points.
That strategy is called “running the table” or “shooting the moon.”
In this strategy, you actually try to win all the penalty cards, and, if you do, that maximum outcome nails everybody else with a max penalty total while you get off scot free, as they say.
It is a desperate strategy. Fail to get all of the penalty cards — but say, you get most of them — and you’ve just run up your negative total. But, pull it off and you’re back in the game pronto because only you win while everyone else gets tagged with 26 penalty points.
Trump 2.0’s approach to this global tariff war strikes me as the trade equivalent of attempting to “shoot the moon” in Hearts: every other nation in the world needs to accept this new Trump paradigm that says trade with the US can be balanced or tilted in America’s favor, but in no instances can America suffer the “loss” that is defined as a trade deficit of any sort.
Trump wants that reality to come about in almost instantaneous fashion, which, of course, if manifestly hard to arrange because comparative advantage in trade doesn’t work like that. Some states, like the never-heard-of-by-anyone Kingdom of Lesotho, can really only offer dirt-cheap exports to the US (textiles) while not buying anything back simply because the economy is so poor. So, asking Lesotho to suddenly go from net exporter to the US to next importer (or break-even trading partner) is borderline nuts. — and not to mention cruel in its intentions.
Trump 2.0’s shoot-the-moon-like trade strategy is like a lot of that man’s magical thinking: I say it is so, therefore it is happening.
Pull it off and bingo! You’ve rejiggered the global trade equation in your favor.
But lose? Then you’re just deeper in the hole, are you not?
The odds are not in your favor in this desperate all-or-nothing strategy, so the risk is high that, if you are the US attempting this, you could easily end up damaging your global standing in profound ways:
Global investors stop seeing you as a good bet, taking their Foreign Direct Investment (FDI) elsewhere. This makes it that much harder to grow your economy.
These global investors also start viewing your future as far more cloudy, thus making your sovereign debt that much less attractive — or no longer the “safe haven” it’s long been. If enough of your usual Treasuries’ buyers start begging off those purchases, then you have to keep offering better returns on your US bonds to get outsiders to buy them, driving up the cost of your deficit/national debt servicing. From an FT article:
International investors have already seen their share of US Government debt fall from 33 per cent in 2015 to 24 per cent in 2024. This will clearly fall further if foreign investors see the US as an increasingly unreliable partner and funds are repatriated in response to US tariffs.
But way before that dynamic sets in, these same investors can simply pull their money out of your equity/stock markets — again, no longer seeing good returns being likely given all this self-inflicted economic tumult. And yes, we are already seeing a lot of foreign money leaving US equity markets as stock values plummet throughout our economy.
All such negativity begins to push the rest of the world into seeking better trade relations with everybody and anybody OTHER than you, resulting in your getting shut out of good deals as they emerge over time (bilateral trade deals, multilateral trade pacts, and so on), thus making you an even less attractive trade partner or FDI target.
The more the world trade around you while avoiding you, the less central your currency becomes, diminishing its long-term value as a reserve currency, thus making it — again — harder for you to finance public debt. Check out the surge of money into alternative sovereign bond offerings.
All of these outcomes are set further and faster in motion by this global tariff war, the longer it goes on.
Trump is betting his aggressive, right-now shoot-the-moon tactic will prevail — and there are non-crazy arguments from experts saying that it can work, but there are solid reasons to expect it to fall far short of any comprehensive win.
Yes, in a one-on-one with either Canada or Mexico, the US can bully big time. So far, Mexico is accommodating and Canada is telling us to go fish — to reference another card game. Our two other great trade partners are China and the EU. For now, the EU is simply trying to keep it all fair and balanced, whereas China is truly going to the mattresses and signaling its firm determination to seek escalation dominance throughout this fight — whatever its length.
Remember, the US share of global trade continues to decline over time, not because we’re not trading enough but because the rest of the world is trading and consuming that much more, making our consumption less central to global economic growth. Today, the US accounts for just under 10% of the global goods trade and 14% of global services exports (where we do much better).
Trump’s nightmarish vision is that America is in steep, fatal decline, hence his shoot-the-moon boldness. He wants America of the 1950s to be resurrected — almost magically, by reversing all manner of economic trends.
Our desperation is clearly being revealed.
From AXIOS:
Balaji Srinivasan, a well-known angel investor and crypto bull, posted to his 1.1 million X followers after Trump's "Liberation Day" announcement: "This is nuking every single supply chain that passes through the US in any way, under the illusion that 45 years of deindustrialization can be fixed in one day of 45% tariffs."
How long will the American public put up with this uncertainty and tumult and disruption?
We are about to find out.
Trump the candidate promised short term gain with zero pain. Now, he’s selling the public long term pain for even longer term gain — not easy.
