I’ll spell it out explicitly one last time. Everyone thinks Trump wants balanced trade. He does not. He wants to force allies to stop trading with China. Completely. Zero inbound supply. Because it’s not just because of American jobs. It’s a proactive move to slow down Chinas industrial rise. Everything is downstream of this. Reserve currency status. The ability to address fiscal debt. It’s a crazy risk because China has a vote. It’s a crazy risk because you are forcing Europe to commit seppeku because they have very little leverage or say in the matter. It’s a crazy risk because Xi might bomb the fabs in Taiwan and the world doesn’t get AGI. It’s a crazy risk because China knows how financialized we are and will dump bonds and equities to drive anger towards trump. But it also has benefits if it works. If your allies can’t trade with China there is no near peer competitor to worry about. That has a ton of benefits. Just look at what happened after WW2/USSR collapse when American was the last man standing. Hegemony. Trumps advisors like Miran believe that you can coerce your allies to pay for your security umbrella in the form of buying longer dated treasuries. This removes the overhangs of the debt load while allowing you to pump markets in time for midterms. If Mexico can’t import from China then you solved the fentanyl crisis because they won’t have precursors. More importantly by establishing a tolerance for risk the level of fear you can instill in cartels is an order of magnitude higher. “Shit if they risked WW3 they won’t think twice about droning Sinaloa. “ This same “logic” applies to the Middle East. Now I will repeat for the 100x that this is not advocacy. I’m only telling you guys what the people in power believe. And I’m telling you that what happens next if I’m right will come down to how Xi wants to fight. He can go gloves off or glove on. There are real constraints as I have outlined in prior tweets. But there is a plan and therefore the tolerance for market pain is way way higher than you think. Because first you need Europe to be willing to commit economic seppuku. And they won’t want to (rightly). So Trump will crush them economically until they cry uncle. And then they still won’t want to and he’s going to threaten to defang NATO. And then they still won’t want to and he will withdraw swap lines. Or a lot more likely, he will do it all very forcefully and all at once to maximize leverage. Now you’ll rightly ask… why wasn’t this messaged better? Why have midwits like Lutnik on the team? Because you are attempting to execute a reckless gambit where the big variables are not what the tariffs rates are. Or if you tariff penguins. Or if the person sounds dumb on TV. Non of that matters. What matters is - will Japan capitulate quickly and agree to buy a large amount of treasuries? Will Saudi capitulate quickly with your B2 bombers waiting in Diego Garcia to bomb Iran? Will China invade Taiwan? Many of you think everyone around Trump is retarded. I get it. You hate the guy and everything he stands for. But I will say this until I’m blue in the face. Bessant, and even Miran, have higher IQs than most if not all of you. They thought through the second order effects. Believe me. If I, a dumb TMT L/S bro thought this far ahead, they certainly did too. Which means they warned Trump how risky this was and how deeply irrational it is if you planned to eventually cut a deal with China. Therefore you have to assume Trump heard the risks and said “fuck it we ball” anyways. Economic Blitzkrieg. That’s what we’re seeing. And it’s only the start.

Unfortunately the rest of the world has forgotten this and first has to forcibly be reminded that they need us a lot more than we need them. “historically the americans have been really quite Benign about their global public goods hegemony despite the ability to extract significantly more rents than they do, and it makes it easy for people of all stripes to fight for america rather than under it. we probably don't have to, but i hope america overall works towards export promotion of american models rather than export control”

Thiel, Bessent, Musk

That’s what *they* want you to think 😏

Count how many times David Sacks said the word “gatekeep” on the latest All-In pod 😏

The only way this move is rational is if the U.S. admin is absolutely certain Chinese open source models are about to fall badly behind as Mythos level models employ anti-distillation. This is in fact more bullish for the AI trade than anything else including limiting international TAM. As long as America can export the products it creates with AI to the rest of the world the AI TAM is global. And the last year of tariff wars has demonstrated that the direction of travel is in favor of American export access. This is bullish AI. The biggest risk was always the Chinese.

Me texting friends at Anthropic this morning

picture this 8 of the world's biggest problems getting solved in the next 12-18 months 1. obesity: retatrutide phase 3 confirmed 30% bodyweight lost. 65% of patients no longer clinically obese. FDA submission late 2026 2. testosterone decline: FDA is expanding testosterone therapy. peptide and endocrine protocols going mainstream. the 1970 baseline is coming back. 3. birth rate crisis: embryo optimization commercially available today. scientists just rejuvenated aging human eggs in the lab. fertility is soon no longer a countdown 4. aging: Life Biosciences just injected the first reverse-aging drug into a human. Sinclair's oral reprogramming pill entering XPRIZE trials. 5. Alzheimer's: Retro Biosciences dosed the first humans with a pill that reactivates the brain's cellular cleanup machinery. Phase 1 results Q3 2026. 6. cancer: daraxonrasib nearly doubled survival in pancreatic cancer. RAS has been undruggable for 40 years. they drugged it. 7. mental health: psychedelics got a presidential executive order. Compass weeks from the first FDA approval of psilocybin. 8. heart disease: inflammation replacing cholesterol as the primary target. the root cause is finally being treated not the symptom. every single one of these has a clinical trial or an FDA action behind it right now humanity is slowly healing bio/acc

Bessent sharpening his knives gleefully. Ready to weaponize swaplines and energy access to make a point 😉

What comes next: The govt will rollout an emergency citizenship program for any foreign-born employee working in a lab contingent on them immediately moving to the U.S. Everyone will be heavily vetted via the same screening construct already utilized by the defense primes. Google will have to move the entirety of DeepMind to the U.S. and fire whoever refuses to relocate. People will gleefully assume Demis will just start his own UK lab instead before realizing the next step is the US is about to gut foreign “unmonitored” access to compute. You can pull a LeCun but you won’t have sufficient compute to do shit. Greencards will be given to family members too. Foreign govts will freak out when they realize what is happening. We are gatekeeping and hoarding intelligence preemptively. Why? Because by GPT 7 France will be like “oh you just destroyed our services sector we are going to tax the labs to pay for the necessary benefits to prevent riots” and it’s a lot easier to do that if labs have critical employees based in Paris. Ditto for every other foreign nation. Anyone acting like this is surprising is simply incapable of thinking four steps ahead. We are going to see industries nuked over night. There will be civil unrest. The only way to navigate that is to tax and gatekeep. The only way you can tax something is if it lives in your borders. We are repatriating exposure points preemptively. Compute gatekeeping comes next. 🫡

Wait…. Some of you are surprised?

I am seeing a bunch of faulty logic being used to analyze the *possibility* that OAI might cut token pricing. First this further supports the notion that having the best model is worth more in a non-linear manner. That this is even being considered by OAI demonstrates that they are keenly aware of this and are trying to bridge the gap until they can roll out their equivalent to Mythos without losing too much mindshare. Second it is too early to tell if this has definitive implications wrt how much rent seeking the labs can skim on top of the compute layer and therefore it’s hard to tell if this has any implications for the hyperscalers. This could easily just be modest share jockeying even as the rent extracted by frontier labs accelerates as does their ARR with continued strength for inference margins. Third this is *not* bullish software. These cuts aren’t being done because enterprises aren’t willing to pay for AI or aren’t adopting it in their orgs. They are being contemplated because Anthropic has released a monster of a model but fucked up on the messaging and there might be temporary blood in the water. You might actually be able to convince your engineers to use moderately shittier models *temporarily* if you convince them Fable is going to fuck then over or banish them to Opus 4.8 on a whim. Fourth non of this is coming close to having any bearing on the ROIC of compute capex. Token pricing matters top down ofc but small changes in price and share at the margin are very different from what really matters. Scaling laws are holding. Models are getting smarter. Don’t let narratives and price action conflate with probability distributions which continue to further skew rightwards.

China. It was always China.