The Price of Political Theater

NOTES FROM MILAN

May 7, 2025

Markets can absorb a lot—debt, inflation, geopolitical tension—but what they absorb most poorly is a government that treats policy like performance.

The Trump administration’s latest act—threatening sweeping tariffs, only to walk them back under pressure from bond markets—isn’t an isolated incident. It’s just the most recent entry in a long, bipartisan tradition of political theater at the expense of long-term national coherence.

This isn’t about Trump, or even tariffs. It’s about a governing culture in the U.S. that increasingly favors headlines over strategy, showmanship over systems, and drama over design.

Policy by Pulse, Not Plan

In mid-April, the administration floated new tariff measures targeting everything from Chinese tech to European cars. The reaction was swift—bond markets recoiled, volatility spiked, and just days later, the threats were paused, rephrased, or abandoned altogether.

That’s not leadership. It’s governance by impulse.

But what’s crucial is that this isn’t new.

We’ve seen Democrats and Republicans alike use performative brinkmanship—debt ceiling standoffs, stimulus battles, government shutdowns, and foreign policy reversals—not as tools of diplomacy or governance, but as weapons of short-term political narrative.

Each act damages trust. Each show weakens credibility.

And while the U.S. economy continues to show resilience, American institutions—legal, diplomatic, and procedural—absorb real long-term cost.

Europe: A Different Kind of Strategy

Across the Atlantic, Europe is no stranger to bureaucracy. But what it lacks in speed, it increasingly makes up for in strategic patience.

As Washington dramatized tariff threats, Germany and its EU partners quietly advanced defense integration and tech sovereignty plans. Not with tweets, but with procurement. Not with press conferences, but with budgets and timelines.

Europe is acting like a bloc with a memory. The U.S. is acting like a campaign in search of a plot twist.

What I’m Watching

• The shift from spectacle to structure: Markets are learning to separate noise from signal—and they’re flowing to places that offer the latter.

• European defense, logistics, and cybersecurity remain high-conviction themes—not just for growth, but for their alignment with real-world strategy.

• American political risk is no longer just about party control—it’s about process instability itself.

Final Word

This isn’t about left or right. It’s about a system that increasingly treats policy like content and voters like an audience.

In that environment, the consequences aren’t theatrical—they’re structural.

More next week.

— Dylan