After Tariff and Trade War Threats, Trump Floats Annexing Canada, Retaking Panama Canal, and Buying Greenland

This time next week, President-elect Donald Trump will arrive in Washington, D.C., to take the Oath of Office — but then what? He’s given America some clues — everything from tariffs to mass deportation is on the table. But new wildcard proposals have surprised even the returning President’s most ardent supporters.

Merchant of mayhem: Remember when Trump wanted to buy Greenland near the end of his first term? Well, he’s serious about buying it from Denmark now — and that’s not all he’s after. He wants Panama to return the Panama Canal, annex Canada into the union, and rename the Gulf of Mexico the “Gulf of America.” These approaches seem divorced from Trump’s promises to cut taxes and reduce inflation, but they’re all part of a strategy — call it the Trump Doctrine.

• Trump and allies insist that the efforts are a matter of national security and economic well-being, consistent with many of the President’s earlier mercantilist policy proposals.
• It’s unlikely that these expansionist initiatives will amount to anything, but Trump has not ruled out taking territories by force — whether through military, trade or otherwise.

What Does Trump Want?

The proposals might simply be a distraction or taunts. Alternatively, they could represent a haphazard body of economic policy that echoes the costly and chaotic foreign policy of America’s past — including the annexation of Hawaii, the occupation of Haiti, and costly wars in Vietnam and Korea, to name a few. However outlandish, taken with the tariffs, Trump’s policies have a theme.

• Joining the US is wildly unpopular in polls of Greenland and Canadian citizens, but both boast valuable economic resources — natural resources, intellectual capital, and more.
• Retaking the Panama Canal, which was built by the US in the 1900s and later gifted to the country, could allow the US to reshape trade across the Americas.

Forward-looking: Trump’s suggestions might be made in jest, sending a message to the globe. But they clearly risk alienating America’s allies, even though many of them have grown dependent on the US and have limited recourse against the global superpower. However, investors are worried about the costs of entertaining these policies. At its latest Federal Open Market Committee meeting, the Fed underscored concerns about possible inflationary pressures from Trump’s economic policies. These worries come after the Fed cut rates by 1% — while investors sent the 10-year up 1% in the opposite direction. That’s not all they’re worried about either, with gold on the rise (more below).