Transcription
All right, guys. So, this is just out of hand. The team today is desperation.
Now, Trump is doing all he can to prove that the US is the global hegemon and to secure the economy. And the first overt move was to take over Venezuelan oil, or at least try to. But he just can't stop escalating. And this time, the target is Iran. He's perhaps the most shocking social media poster on planet Earth. One tweet is enough to destabilize not just the markets but an entire country. Trump is telling the Iranian protesters to take over your institutions. And this should send chills down anyone's spine. This is regime change from a single tweet. And here's the crazy part. Help is on its way.
Now, one can speculate that another military operation could be on the cards. What is going to happen next? Is Delta Force going to do another Rainbow Six strike? Are we going full Mission Impossible, Jason Bourne again? Now, all that is speculation, but what isn't speculation is the economic sanctions coming for Iran, and this is Trump's version of diplomacy and not war. He's going to twist the screws and cut off the revenue to the Iranian economy.
Now, a big part of the protest themselves were the effects of the existing sanctions on the country, and it has to do with a collapsing currency and a cost of living spiraling out of control. Now, Iran is facing a double squeeze. The first is the Iranian real crashing. In just two years, the currency went from 500k per dollar to 1.5 million per dollar. 2025 alone saw the currency collapse by 45%. Now, Iran imports around a third of their GDP. Everything across the board has now gotten much more expensive. Inflation is out of control in Iran. And human nature just makes the whole situation worse. Iranians with money will just convert their savings into foreign currencies. They will buy real estate, and they'll buy physical gold. And that puts even more pressure on the real and causes it to crash even further.
And let's not forget the falling oil prices. Now, Brent crude has fallen by 20% last year, which is hammering down government budgets. Iran has to increase deficit spending. Plus, there's less foreign currency coming to the country. Even more pressure is piled onto the real, and that's why the crash isn't easily reversed, and that's why people, they're all protesting on the streets.
Now, we are witnessing a classic currency crisis, a collapse that really began many years ago from US sanctions. And now President Trump is moving to twist the knife by imposing new secondary sanctions on Iran. Now, the White House will impose an effective immediate punishment on trading partners of the country. Any place, any country doing business with them will face a 25% tariff on any and all business done with the US. It's literally crazy. The global economy is now reduced to a bunch of threats, sanctions, hostile takeovers, and weaponizing consumer markets. It's turning the entire US into an economic weapon for geopolitics.
Now, this threat is destabilizing on all levels. For Iran, this could be the final straw that causes the protest to get even worse. This is most probably an additional 25% on top of the reciprocal tariffs on liberation day. Now, Iran isn't a big economy. So, if exports stop, the global economy will very much survive, but not for Iran themselves, because it's as good as cutting off their lifeline for goods and their revenue stream. That is how damaging these sanctions can truly get.
China and the Middle East will be the most affected. The UAE, Turkey, and Iraq account for $50 billion worth of trade with Iran. And considering their relations with the US, they will probably bow to the pressure. The same goes for the EU. But the main player here is China. Iran's trade with Beijing is 26% of the total. Chinese exporters, they sell a ton of goods like cars, electronics to Iran. That is true. However, the crisis revolves around Chinese imports of Iranian oil. It's always about the oil.
So, the Chinese, they're going to face a big decision point. A 25% additional tariff from the US will be painful. But if China relents and they bow down to Trump, it will be a disaster on just so many levels. This will be diplomatic humiliation because it shows Beijing listens to US sanctions, and this will fracture trust and frameworks across the BRICS nations as well. Now, this will be an economic blow that will stain China as well. Beijing is buying up to 90% of Iranian oil exports, and that's around 1.7 million barrels a day, almost five times the amount compared to Venezuelan crude. There's no comparison here.
Now, the difference is Iranian crude is sweeter or lighter than Venezuelan crude. It's more valuable, and the discounts China gets is just as attractive. Now, giving it up will hammer Chinese refineries, especially the smaller teapots in the country, and trying to corner China physically is impossible. They have a network of ships and transshipment strategies that can easily bypass traditional US sanctions. So Trump is trying to cut everything off with secondary tariffs that black everything. It's basically economic carpet bombing at this point.
Now, the US is trying to control the flow of oil from major producers all over the world. This is the Monroe Doctrine, and the Iranian crisis is just an excuse to keep things moving. There's a reason why Trump is trying to take over Venezuela. Oil reserves there are just so vast. And why do you think US military presence is so concentrated in the Middle East? It's all about the oil combined. The Middle East has 871 billion barrels of reserves, Iran included. Plus, they are the biggest oil exporters on planet Earth. Russia and China, they're untouchable. So, the US is projecting power where they can. The problem with Trump's Iran ultimatum is the Chinese will very likely push back. You are stepping on both tails of the dragon. Geopolitics and economics is just too much pressure at this point.
Now, Trump wants China to be dependent on the US for their crude supply. Basically, to get back the lost Chinese business for big oil companies in America. >> Would have been there, and Russia would have been there. Maybe they both would have been there together, but they're not going to be there now. Uh, one thing I will tell them, and I will tell you, that we are open for business. Uh, China can buy all the oil they want from us there or in the United States. Uh, Russia can get all the oil they need from us, and they do like oil, even though they produce a lot of it. But China and Russia and everybody else is able to go, and we'll be open for business almost immediately. >>
And how will the Chinese fight back now? Chances are, they will play the rare earths card again. Now, Beijing will squeeze critical US industries like EVs and semiconductors, and only last year we saw how vulnerable the US economy is to Chinese supply chains. Now, where Bessin met a Chinese delegation yet to give big concessions for China to resume the rare earth exports. The US is trying to gather the G7 like the Fellowship of the Ring to discuss rare earths. They are gathering Australia, South Korea, India, Mexico, and the EU. Suddenly, the US is concerned about global supply chains. But this meeting will be a non-event. China's lead in rare earths is so wide that Beijing will hold this card for at least the next decade, maybe even longer. At which G7 country will be willing to scrap their environmental regulations to build all these rare earth refineries? And even if they do, Beijing has export controls on technical expertise. The best rare earth refiners are within China itself, and Beijing is not going to let them go easily.
Will Trump really go ahead with this insane plan? Guys, we are in crazy town now. So, anything is possible. But if he does, then the bigger part of his plan will come tumbling down. Now, the US desperately wants Taiwanese chip plants in a country. They are willing to reduce the tariffs on Taiwan from 20% to 15%, and it will put them on par with the levies on Japan and South Korean imports. In exchange, TSMC will build an additional four more chip manufacturing plants in Arizona. That is in addition to six other facilities or factories pledged earlier. Remember, guys, these are just pledges. Nothing is concrete yet. It's a hope and a dream that Trump wants for the entire semiconductor and AI supply chain to be located within the United States itself. So Nvidia designs the chips. TSMC plants in Arizona will manufacture them, and they get shipped directly to data centers in Dallas or Chicago.
And just a month ago, the Trump administration approved Nvidia's H200 chip exports to China. So more advanced chips can be sold to Chinese companies, and there are two layers of agenda here. Now, the first is to get Chinese technology companies hooked on US chip infrastructure. So everything from software libraries to frameworks will be Nvidia dependent. Now, the US realizes that China will eventually catch up with American chips. The brainpower and talent in the country makes it an eventuality. It's not a matter of if, but when. I think the second thing that that I would say that the world didn't realize is how deeply dependent we are in the AI industry on the brilliant students and the brilliant scientists of China. 50% of the world's AI researchers are from China. Their companies in China wants China to win. I think that's terrific. And I think the Chinese want China to win. I think that's terrific. We want America to win, and we can have a healthy competition.
So the US needs more leverage. They want to reshore AI chipmaking directly to the United States itself. Making the chips in Taiwan and shipping them to the US is just not good enough. Now, part of it is an obsession or fear that China will invade Taiwan. Now, I personally don't see that happening, but tell that to the people in Washington. Tell that to the fellas on Capitol Hill. Now, building a chip plant in the US is very costly. In 2024, the TSMC plant in the US reported losses of nearly half a billion dollars. It's the most expensive site outside of Taiwan. You have a ton of labor issues. You have culture shocks. And of course, the cost of production is simply ridiculous. And from then to now, Trump still has not solved the problems of manufacturing in the US. Supply chains are heavily fragmented in the country. Salaries are way higher than in Taiwan. And the sheer idea of building a plant in a desert devoid of easy water supply is just mind-boggling.
And that's why trying to antagonize China today isn't smart. There will be spillover effects from the Iran ultimatum. China could very well restrict rare earths again and spook out TSMC. China, for example, controls almost 100% of these seven rare earth metals in the US, from samarium to yttrium to scandium. The US is beholden on China for these inputs, and you need them for the semiconductor ecosystem. Makers need magnets, they need precision motors, and they need sensors, and all this requires Chinese rare earths to make. If there's no precision, there can be no advanced chips, especially when chips are getting smaller and smaller. The US can't replace this supply. Even if Scott Besson conjures up 100 mines to dig up for the ore, you still have to refine it. The ore will have to be sent to China for refining. And with the Iran issue, Trump just cornered the US himself. China could very well restrict exports, add more licensing hurdles, and slow down shipments. And they can do it under the guise of domestic protection. What can you do? And this is going to put an enormous squeeze on the US industrial complex.
Now, this is going to be a tremendous gamble by Trump. China can make chipmaking in the US simply untenable. And if you're an executive sitting in Taiwan, would you really want to move more production to the US if the China trade war comes back online? No, you would rather stay, you'd rather remain in Taiwan and just produce the chips there. It's all about producing where the costs are the lowest to maximize revenue and to prevent the US from getting all the leverage. But for the US, the plan is to move up to half of Taiwanese production to American shores. The five new plants are just a precursor to the main event. Now, Trump knows this. Taiwan knows this. Everyone knows this. Taiwan themselves are rejecting the idea of reshoring half of production to the United States. So, there's a good chance of the five new plants derailing if China ramps up the heat. And here's the funny thing. Why would China ramp up the heat? Well, because Trump just issued the Iran sanction threat. So, yes, this whole situation has gone from bad to ridiculous. Welcome to the modern economy, ladies and gents. It's a clown show.
But let me know what you think. Will the US really punish China over Iran? And will TSMC move their plans all the way to the United States? Let me know in the comments below. Stay safe. Be sure to smash the like button and subscribe as we navigate through these crazy times.