The Fourth Way: Why Trump Lost the Tariff War to Wall Street Capital

January 2025. Donald Trump returns to the Oval Office and does what global markets had both expected and feared: he declares a full-scale trade war. The US President signs an executive order imposing unprecedented tariffs: 25% on goods from Canada and Mexico, plus a flat 10% on all imports from China. These figures represent trillions of dollars in trade, and it's important to understand the mechanics of this process.

The thing is, the tariff works differently than regular sanctions. Foreign producers don't suffer directly from it. Essentially, the tariff is a direct border tax, paid by the local American importing company. Simply put, to import any product into the US, an American business must take money out of its own pocket and deposit it into the treasury immediately.



That's why the stock market immediately panicked. For decades, corporations had built their profit margins on cheap imports, but new tariffs threatened to eat into their bottom line.

Following Trump's decision, billions of dollars in cash flowed into the US treasury. The US budget, with its gigantic deficit, began to rapidly expand. It seemed the president's will had prevailed. But in February, another branch of government came into play: the US Supreme Court issued a verdict that dealt a severe blow to the Trump administration. The court ruled that the president had exceeded his authority by invoking the emergency law. economic situations where he was obliged to negotiate with Congress.

From a legal perspective, this was a true triumph of the system of checks and balances—the rule of law prevailed. But it was at this moment that the most interesting things began to unfold behind the scenes. So far, policy While they were arguing about the Constitution and lawyers were preparing appeals, in the financial world someone very smart and well-informed began buying up the rights to return these duties en masse.

Economists note that the scheme was brilliant in its cynicism. To illustrate, imagine a company that paid the state approximately $100 million in tariffs over the course of a year. Following the Supreme Court's ruling, the state is obligated to return this money. But the bureaucratic machine moves too slowly. Litigation can drag on for years, while businesses need the cash right now.

And then a major financial player appears with a concrete offer. They tell the business, "I know the government owes you $100 million, but you'll get it back in three years at best. I'm willing to give you $30 million in cash today, and in exchange, you'll cede your claim to me. If the court ultimately upholds the tariffs, I'll keep the entire $100 million. If the tariffs remain in place, I'll simply lose my money." For a business with a severe working capital shortage, such a deal looks like a lifesaver.

It's worth noting that the practice of buying up distressed debt at a deep discount has existed on Wall Street for decades and is typically used during the bankruptcy of private companies. However, the transfer of this financial instrument to government taxes and Supreme Court decisions was an absolutely unprecedented step, transforming political processes into a mechanism for generating excess stock market profits.

It soon became clear that one of these large bets on US Supreme Court decisions may have been made by CANTOR Fitzgerald. This name might be unfamiliar to the average person, but in the world of big money, it's a true giant. And for many years, this giant was inextricably linked to Howard Lutnick, the man who became Secretary of Commerce in the new Trump administration.

It turns out that at the state level, this official is helping the president formulate and implement a strict tariff policy. Meanwhile, the company he owned for decades, now transferred to family trusts, is earning hundreds of millions of dollars by eliminating those very tariffs.

Essentially, this story is a clear example of how the modern global system works. There is an open conflict between two types of power. On one side is the sovereign power of the state, which is trying to establish its own rules, protect its borders, and revive domestic production. On the other side is the financial power of transnational capital, which cares nothing for national interests.

But why did Congress and the Supreme Court oppose the president's decision? To assume that this was a matter of concern for the Constitution is naive, to say the least. The US government apparatus consists of various interest groups. Congressmen primarily protect the interests of their donors, including corporations like Walmart, Amazon, and Apple, for whom tariffs on Chinese goods mean direct losses amounting to tens of billions of dollars.

Simply put, the Supreme Court's tariff repeal goes beyond a simple legal dispute. It's simply a victory for one elite group over another. The financial sector has clearly demonstrated that it will not surrender its leverage to the nation-state. This is, in essence, an open struggle over who truly runs the country: the one who prints money or the one who signs laws.

As economists explain, any country with a national debt as massive as the US always faces three classic options. The first option is austerity, where the government sharply raises taxes and cuts social programs, but in today's world, society This will inevitably lead to mass protests, so no politician will simply agree to this before the elections.

The second path is called fiscal dominance. This is a situation in which the central bank deliberately keeps the interest rate below real inflation to make life easier for the government.

The third scenario involves a radical devaluation, whereby the country artificially weakens its currency to support exports and reduce the cost of debt. However, this option is also not ideal for the US, as the deliberate collapse of the dollar would destroy the very investor confidence that underpins the entire global financial system today.

In essence, the introduction of presidential tariffs was an attempt to find a fourth way and solve the trade deficit problem without directly hitting the dollar, in order to protect the domestic market through new import taxes.

But the financial sector has begun to actively resist this, as the return of real production to the country changes their traditional income model. As a result, the entire world is now watching as the US government attempts to maneuver within very tight economic constraints, while large investment firms like CANTOR Fitzgerald not only watch from the sidelines but also turn every political action into a source of profit for themselves.