A New Era for North America

30 Years a Bully

At 12:01 this morning, Team Trump’s sweeping 104% tariffs on Chinese imports officially took effect, marking a pivotal moment in the U.S.-China trade war.

“He asks for the world,” says Paradigm’s hedge fund veteran Enrique Abeyta, referring to Trump’s negotiation style. “If he says, ‘I want a 50% or 100% tariff,’ he knows it’s ridiculous.” Instead, Trump is leaving room for negotiations.

According to Enrique, Trump’s strategy is deliberate and rooted in decades of business experience. “There’s a plan,” he reassures. Accordingly, tariffs are just the opening salvo in a broader strategy aimed at addressing dire imbalances in global trade.

At its core? This strategy is about “countering China,” he says. Nearly every move — from reshoring manufacturing to addressing the fentanyl crisis — ties back to reducing America’s dependence on China.

[For the second day in a row: Just as we’re about to hit “send” on today’s e-letter, Trump is allegedly considering a 90-day pause on tariffs for countries willing to negotiate. That said, according to rumors, there likely won’t be any such mercy shown to China. Which would only reinforce Enrique’s thesis. Read on!]

“China is an economic aggressor,” Enrique says bluntly. The world’s second-largest economy, he says, has risen to global prominence through bullying policies that have left the U.S. vulnerable in key industries.

He points to rare earth minerals as one glaring example. Decades ago, the U.S. was a major producer of rare earths, he says, but China flooded the market, driving American companies out of business.

“America’s got tons of rare earths,” Enrique notes. “The problem is the Chinese were playing chess… I don’t even know that we were on the checkerboard.”

Tariffs, he argues, aim to correct this imbalance by incentivizing domestic production and reducing reliance on Chinese imports.

Enrique underscores tariffs aren’t just about economics. At this juncture, Trump’s trade strategy is a matter of national security.

“We’ve created massive vulnerabilities,” he warns, highlighting how dependence on Chinese supply chains could be catastrophic, for instance, in a conflict scenario.

“If China decided to get truly aggressive — let’s say with Taiwan or even the Philippines — we’d be dangerously reliant on them for critical goods,” Enrique explains.

Reshoring strengthens America’s position against its most formidable competitor and ensures greater self-reliance in essential industries.

Trump’s tariff strategy also extends to tackling the fentanyl epidemic. While Mexican cartels distribute the drug across U.S. borders, Enrique emphasizes the origin: “The fentanyl problem is China, China, China,” he asserts.

“Fentanyl is one way they’re poisoning our country,” he adds. While domestic enforcement plays a role, Enrique believes cutting off Chinese supply lines would make a significant impact. “You stop those imports of fentanyl coming in, trust me, it’s going to help a lot.”

Enrique’s point: “Trump’s worldview is fundamentally bipolar — the U.S. versus China.” And unlike past rivalries with nations like Russia, China poses a unique threat due to its rapid economic growth and industrial scale. “China got to this point in 30 years!” he emphasizes.

“So bringing this all together,” Enrique summarizes, “I believe the goal of tariffs is to create what I would call a ‘unified common market’ of North America. One that imposes significant barriers on China.

“I think when all is said and done, they’ll redo former NAFTA (now USMCA). And we get a bunch of good stuff, and it'll be fair. And I think they put tariffs on all goods coming from China into North America.” he says.

“Trump’s goal is to neuter China — to stop exporting our wealth and our consumption that subsidizes them to be a global aggressor,” Enrique concludes. “If we don't, I believe there will be an inescapable backlash in the next 20–30 years.”

Given Enrique’s clear-eyed perspective — even if China refuses to negotiate tariffs — the Trump administration can still weaken China’s grip on global trade and fortify America’s position for the long game.

[Before the tariff freakout last Wednesday… Enrique Abeyta sat for a 45-minute interview on Monday, the content of which provides this morning’s introduction.

As you can see, his “Liberation Day” preview was calm, cool, collected… and overwhelmingly correct.

Currently, Enrique has an equally compelling thesis — this time on tech giant Nvidia, that “virtually nobody sees coming,” he says.

“I’ve got an awesome idea, a great company,” Enrique adds. “It wins with tariffs, it wins with reshoring, it wins with AI.” Click here to see the details.]

Spiked, Shredded and Crushed

“Volatility continues to spike. Stocks are getting torn to shreds. Bonds continue to get crushed,” says Paradigm’s chart hound Greg Guenthner.

“I don’t have to tell you to be careful out there,” he says. “But I do think it’s important to review how we should approach a ‘broken’ market.

“For starters, there’s no reason to force new trades while the market is in flux… There’s a hint of panic in the air and we’re seeing erratic moves in stocks. That’s not a good environment to make targeted, higher-probability bets.

“This is also a day where we’ll have to pay close attention to the news,” Greg says. “I have a feeling that rumors, fresh headlines and conflicting information will continue to drive the markets in both directions.

“Let’s do our best to keep our heads on straight,” he adds.

“This is a good time to be heavy with cash in your trading account. We want to be ready to take advantage of any big opportunities that emerge once we get some signals.

“It could be tomorrow, it could be next week,” Greg concludes. “The opportunities will eventually come.”

For the moment, at least, stocks are getting a reprieve. The techie Nasdaq is leading the way, up 1.60% to 15,510. Simultaneously, the S&P 500 (+0.80%) and the Dow (+0.60%) are taking a breather at 5,025 and 37,870 respectively.

But oil, nevertheless, is getting a beatdown; crude is priced at $57.35 for a barrel of WTI. Precious metals, on the other hand, are catching bids. The yellow metal is up 3.75% to $3,103 per ounce while silver is up 2.25% to $30.35.

Crypto, at the time of writing, is rebounding: Bitcoin is up 1.70% to $78,000; Ethereum is up 2.30% to $1,500.

The “Mar-a-Lago Accord”: Jim Rickards Explains

The concept of a “Mar-a-Lago Accord” is gaining traction, echoing historical international currency agreements… including the Smithsonian, Plaza and Louvre accords.

The idea — visited in Stephen Miran’s November 2024 paper A User’s Guide to Restructuring the Global Trading System — suggests using currency devaluation to counter the impact of tariffs, addressing what Miran sees as a “persistent dollar overvaluation.”

“Shortly after the paper was published, Trump appointed Miran as chair of his Council of Economic Advisers, which gives his views added weight,” says Paradigm’s macro authority Jim Rickards — who first discussed the idea of a Mar-a-Lago Accord in his 2019 book, Aftermath.

In fact, Jim believes that Miran’s current proposals could lead to a global financial crisis.

The original agreements, for instance, addressed currency imbalances to stabilize the global monetary system.

• The Smithsonian Agreement in 1971 proposed to devalue the dollar after President Nixon ended its convertibility to gold

• The Plaza Accord in 1985, initiated by Treasury Secretary James Baker, aimed to devalue the dollar gradually through central bank interventions.

“The purpose of the Louvre Accord was to lock down the accomplishments of the Plaza Accord,” says Jim, “to stop further dollar depreciation and return to a period of relative stability in foreign exchange markets.”

The “Mar-a-Lago Accord”: Jim Rickards Critiques

Miran’s plan, Jim notes, involves devaluing the dollar and issuing 100-year bonds to attract foreign reserve managers — in theory, mitigating the impact of devaluation.

But Jim critiques Miran’s approach, cautioning that it overlooks the necessity of international cooperation.

“The success of the Plaza Accord depended entirely on close cooperation of major finance ministries,” he notes. “No such cooperation exists today.”

Jim also argues that the proposed dollar devaluation would not combat potential inflation from tariffs but rather exacerbate inflation by increasing the cost of imported goods.

He further dismisses ideas such as revaluing gold on the Federal Reserve’s balance sheet as mere “accounting games” that would not affect the world price of gold.

The most significant concern, according to Jim, is the potential disruption to the short-term Treasury debt market. “Substituting 100-year Treasury debt for short-term Treasury bills would make those bills scarce,” he warns.

Given that Treasury bills serve as the most liquid collateral in the world and are fundamental to the eurodollar system and the derivatives market, their scarcity could “implode bank balance sheets and lead to the greatest banking crisis in history.”

In light of these potential risks, Jim suggests investors follow the lead of the BRICS+ nations — Brazil, Russia, India, China and more — by increasing their holdings of gold as a safe-haven asset.

“The BRICS are moving toward gold as fast as they can. Investors can do the same,” Jim says. “Don’t be left behind.”

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Gold Fever

“I love searching for gold,” says enthusiast Joe Marihugh as he scours the desert terrain with his trusty Minelab Gold Monster 1000 metal detector

The Desert Gold Diggers club, formed over 35 years ago in Arizona, has seen a surge in interest as gold prices soared past $3,000 per ounce for the first time in U.S. history.

According to club president Ralph Montano: “We’ve gotten a lot of new members lately” — eager to learn the ropes.

For hobbyists like Montano and newcomers alike, metal detecting offers potential rewards. But Montano tempers expectations: “You’re not going to get rich… You might get lucky.”

Whether uncovering nuggets or antique coins, the hunt for treasure is a time-honored pastime. “It’s out there — it’s still out there,” says Mr. Marihugh.

“I’ve been all the way over to California and Oregon looking for gold. I found a nice big hefty 3-gram nugget over there,” says Bob Burgette, who joined the Desert Gold Diggers’ spring event in March.

“When you see something like that, it just shines [when] the sun hits it. So it just gives you that gold fever.”

The last of the true romantics? Nah…

We’ll be back tomorrow; hope to see you then!

Best regards,

Emily Clancy
Associate editor, Paradigm Pressroom's 5 Bullets