Inside today’s Daily Journal…

Remember, the first casualty of war is the truth.

President Donald Trump said “Death, Fire, and Fury” would prevent Iran from blocking the flow of oil. He said Iran would be “destroyed” if it tried. He said Iran “has nothing left in a military sense.”

And yet, ships are burning in the Persian Gulf every day, the Strait of Hormuz is closed, and Iran’s regime has not surrendered. Instead, it has moved quickly to consolidate power around a new supreme leader, Mojtaba Khamenei. The new boss is the same as the old boss.

When Trump was elected, I warned subscribers that his tariffs were no panacea. (I also explained they were unconstitutional too.) Tariffs are merely taxes. It’s consumers – not producers – who ultimately pay all taxes. The administration knew this too, of course. But they were happily willing to lie to gain power. Just like they lied about the Department Of Government Efficiency (“DOGE”) and about cutting $1 trillion from the U.S. government’s budget.

Now they have lied about not starting any more foreign wars. And they are lying again about this one ending quickly.

This isn’t about politics. I’m not saying we should have elected Ms. Boozy McMumbles.

My job is to explain the economic reality behind any government policy. Tariffs will increase production costs, disrupt supply chains, and harm the U.S. economy, which, as one of the most open economies in the world, has the most to lose from higher tariffs. That is a simple economic fact, not a political statement. And no amount of wishful thinking will change that fact.

Likewise, the United States cannot defeat Iran with air strikes. Iran is a nation of ~90 million people. It has vast resources, and, despite our government’s claims to the contrary, it isn’t on the verge of a revolution. The economic reality is this: war in the Persian Gulf will be a catastrophe for the U.S. and the world.

Everyone knows how important the region is to oil, but there are many other major oil producers, including the U.S. It’s the other things that the Gulf produces that will cause the real problems. As I explained on Monday, the Gulf produces a range of raw materials that are critical to the world’s economy: including urea, helium, sulfur, ethylene, polyethylene. These are the “boring” chemicals that quietly run the modern world.

Qatar’s Ras Laffan liquefied natural gas (“LNG”) complex is the biggest LNG export hub in the world. LNG is a primary energy source in many large economies, like Japan’s. Ras Laffan also makes roughly 40% of the world’s helium, which is indispensable for chip fabs. Ras Laffan has been knocked offline by Iran drone strikes.