Remember when every economist on CNN said Trump’s tariffs would crash the economy, send us into a recession, and probably cause the sun to explode? The US trade deficit with China just hit a 21-year low. Down 32% in a single year. China isn’t even our biggest trade deficit partner anymore for the first time since 2000.
Somebody get Paul Krugman a tissue.
The Commerce Department dropped the numbers last month and they’re brutal — for China. The trade deficit fell to $202 billion in 2025, the lowest since the Bush administration was still figuring out how to use email. China’s share of US imports cratered from 13% to 7% in twelve months. That’s not a policy tweak. That’s a freight train hitting a wall.
Meanwhile, US steel production just passed Japan for the first time in 26 years. We’re now the third-largest steel producer on the planet. Manufacturing is expanding again — the ISM index has been above 50 for two straight months, which means factories are actually growing instead of closing. Real disposable income went up 1.6%. Average private sector earnings rose $2,700.
But sure, tell us again how tariffs don’t work.
Let’s take a walk down memory lane, shall we? In April 2025, Goldman Sachs told the world there was a 65% chance of a recession. JPMorgan said 60%. Mark Zandi over at Moody’s was practically building a bomb shelter, saying we were on “the precipice of recession.” The economy grew at 4.3% in the third quarter. JPMorgan quietly admitted by July that they “no longer” saw a recession coming. Goldman sheepishly dropped their odds to 30%.
(So when these same geniuses tell you the next thing will be a disaster, maybe don’t sell your house.)
CNN — bless their hearts — ran a headline in January that said “Tariffs could really sting in 2026. Unless Trump chickens out again.” Trump didn’t chicken out. The tariffs stayed. And the trade deficit with China collapsed like a Jenga tower at an earthquake convention.
Trade Representative Jamieson Greer summed it up nicely: “In one short year, the United States has substantially diversified its import sources and reduced its import dependency on China.” Translation for the CNN crowd: it worked.
Here’s what the “experts” will never admit. They don’t actually know how tariffs work because they’ve spent their entire careers worshipping at the altar of “free” trade — a religion that shipped 70,000 American factories overseas while the priesthood at Goldman Sachs got rich off the transaction fees.
You want to know the funniest part? This isn’t even new. America ran on tariffs for over a century before the geniuses in Washington invented the income tax. The McKinley Tariff of the 1890s jacked rates up to nearly 50%, and what happened? Exports of manufactured goods doubled between 1895 and 1900. Manufacturing’s share of total exports jumped from 26% to 35%. The country was booming. No income tax. No IRS. Just tariffs funding the government while American factories hummed.
Sound familiar?
But here’s the part nobody on cable news is talking about. That 13%-to-7% collapse in China’s import share isn’t just a trade number. It’s a strategic earthquake. Every percentage point of that decline is leverage that China just lost — leverage they’ve been holding over us for decades. “Don’t mess with us on Taiwan or we’ll cut off your supply chains.” That was the threat. That was always the threat.
Well, what happens when the supply chains aren’t there anymore?
China’s biggest economic weapon against the United States was our own dependency on Chinese goods. Trump just spent a year dismantling it. And the beautiful irony is that the manufacturing isn’t even all going back to America (though some of it is) — it’s scattering to Vietnam, India, Mexico. From Beijing’s perspective, that’s almost worse. You can bully one country into submission. You can’t bully fifteen.
Mark my words: the next time there’s a confrontation over Taiwan or the South China Sea, the Pentagon’s briefing to the President won’t include the line “but sir, we can’t afford to upset our supply chains with China.” That line is disappearing in real time, one percentage point at a time. The generals just got their leverage back and the economists on CNN are too busy crying about consumer prices at Walmart to notice.
Manufacturing ISM has been above 50 for two consecutive months. Steel production is through the roof. The trade deficit with China is at levels we haven’t seen since people were arguing about hanging chads. And every single “expert” who said this would destroy America is pretending they never said it.
We see you, Goldman Sachs. We see you, JPMorgan. We see you, Paul Krugman. And we’re keeping receipts.
