#447 — The Unraveling of American Power

Summary of #447 — The Unraveling of American Power

by Sam Harris

20m•December 4, 2025
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Overview of Making Sense — #447 — The Unraveling of American Power

This episode (first segment only; full episode behind subscriber feed) is Sam Harris in conversation with geopolitical analyst Peter Zeihan. They assess the early months of Donald Trump’s second term, arguing U.S. national power is “unraveling” rapidly—driven by tariff policy, deindustrialization, chaotic governance, and aggressive but legally murky foreign operations (notably in Venezuela and against narcotics trafficking). Zeihan outlines macroeconomic and geopolitical consequences, discusses AI/data-center investment and semiconductor constraints, and explains how drug-policy interventions have reshaped criminal markets in Mexico.

Key topics covered

  • Tariff policy and its economic effects
  • Deindustrialization and industrial construction spending
  • Inflation prospects and supply shortages
  • AI/data-center buildout and semiconductor supply chains
  • U.S. posture toward Venezuela and alleged extrajudicial strikes
  • Mexico’s cartel dynamics and unintended consequences of kingpin takedowns
  • Governance, administrative continuity, and investment uncertainty
  • War Powers Act and congressional inaction

Main takeaways

  • Flat, high tariffs favor relocation of simple manufacturing but accelerate deindustrialization of complex, high-value manufacturing (automotive, aerospace, electronics).
  • Industrial construction spending has declined since tariffs were imposed, indicating fewer new industrial projects are starting.
  • The U.S. faces either: (a) high inflation plus productivity (if we successfully rebuild industry), or (b) high inflation plus goods shortages (if deindustrialization continues while imports dry up).
  • AI/data-center investment is a near-term bright spot but likely a speculative bubble; GPUs and many semiconductor steps remain dependent on globalized production.
  • Focusing public policy on building fabs (front-end) misunderstands that many downstream steps (testing, packaging, components) are crucial and currently weak domestically.
  • Venezuela is a weak state with some facilitation of drug flows; recent U.S. strikes/killings at sea raise serious legal and ethical questions and may violate norms or laws (possible war crimes), with Congress not fully briefed.
  • Targeted action against major cartel leaders (e.g., Sinaloa) produced fragmentation and the rise of the far more violent Jalisco New Generation Cartel; fentanyl production dynamics make kingpin removal ineffective as a long-term solution.
  • Policy inconsistency, rapid tariff changes (hundreds since inauguration), vacancies at senior civil service positions, and ideologically driven appointments create pervasive uncertainty that discourages private investment.

Detailed summary by topic

Tariffs, deindustrialization, and manufacturing

  • Flat border tariffs: work better for simple goods with few supply-chain steps (furniture, paints, textiles). These get reshored more easily.
  • Complex manufacturing (automotive, aerospace, electronics) involves thousands of intermediate steps; tariffs on intermediates raise costs dramatically and incentivize moving steps outside the tariff zone or automated/low-value replacement work.
  • Result: contraction of high-value manufacturing jobs and replacement with lower-value or automated production.
  • Evidence: “industrial construction spending” (Fed data) has been negative since tariff day—ongoing projects finishing but few new ones launched.

Inflation, supply chains, and industrial build-out

  • Even before tariffs, Zeihan expected inflation due to the need for a multi-decade industrial rebuild (doubling industrial capacity and expanding power generation).
  • If deindustrialization persists, the U.S. risks simultaneous inflation and goods shortages (worse outcome).
  • Debate framed as: high inflation + productivity (good) versus high inflation + shortages (bad).

AI, data centers, and semiconductors

  • Massive data-center build-out is a market bright spot, but Zeihan calls it “definitely a bubble” though whether catastrophic is unclear.
  • LLMs and AI are evolving rapidly; current architecture may not be the long-term model.
  • GPUs (critical for modern AI computation) are among the most advanced chips and require a globalized supply chain; a breakdown in globalization would make producing future GPUs domestically infeasible.
  • Building out data centers now buys power infrastructure that will be useful regardless of future AI trajectories.
  • Policy emphasis on fab construction is misplaced; many downstream semiconductor steps (testing, packaging, component integration) are higher-value and need focus.

Governance, investment uncertainty, and policy chaos

  • Zeihan emphasizes the Trump administration’s lack of staffing (many top positions unfilled) and the predominance of inexperienced ideologues in key roles.
  • Rapid, unpredictable policy shifts (tariffs, drug policy, foreign military actions, vaccines, etc.) mean businesses can’t plan, which depresses capital investment.
  • “600th tariff change since January 20” cited as an indicator of policy volatility.

Venezuela, maritime strikes, and legal concerns

  • Venezuela: weak state, elements of the Maduro government have facilitated some cocaine flows (minor share, likely under 10% of total), much of which goes to Europe.
  • U.S. claims about interdicted ships have not been formally briefed to Congress; some military sources question the intelligence basis.
  • Zeihan and Harris raise grave concerns over recent maritime actions that may constitute extrajudicial killings and potential war crimes, including reports of bombing boats and killing disarmed people in the water.
  • War Powers Act provides legal limits; Congress has largely not asserted its oversight, allowing executive action to proceed without formal authorization.

Mexico and cartel dynamics

  • Significant disruption of the Sinaloa cartel (El Chapo’s organization) via prosecutions and DEA operations caused fragmentation into many competing groups.
  • The Jalisco New Generation Cartel (CJNG) has risen to prominence—far more violent and aggressive in asserting control (killing mayors, police chiefs, causing public terror).
  • Crackdowns on cocaine and border enforcement have changed smuggling dynamics: fentanyl is easier, cheaper, and produced in different ways (precursors + small-scale synthesis), shrinking the effectiveness of kingpin removals.
  • Stopping illegal migration has also made containerized drug shipment easier.

Notable quotes / insights

  • “I have not seen an unraveling of national power on the scale since the Soviet breakdown.”
  • Tariff program result: “a steady deindustrialization of the value-added, high labor jobs and instead replacing them with much lower value jobs.”
  • On GPUs and semiconductors: “Anything that's installed now is all we have.”
  • On governance: “If this sort of ambient chaos holds... no one's going to put money to put anything in the ground.”

Policy implications and recommended priorities (implicit)

  • Restore administrative capacity and fill senior civil-service positions to provide policy continuity and reduce investment uncertainty.
  • Reassess tariff strategy to avoid destroying high-value domestic manufacturing; consider targeted industrial policy rather than flat border tariffs.
  • Prioritize downstream semiconductor capabilities (testing, packaging, component integration) and resilient logistics rather than fixation on fabs only.
  • Invest in long-term power and industrial capacity with a multi-decade horizon, accepting short-term inflation costs if rebuilding is the chosen path.
  • Congress should exercise War Powers oversight and demand briefings to ensure legal compliance and constrain extrajudicial military actions.
  • Address domestic drug demand as a core driver of transnational narcotics economies; recognize that law-enforcement decapitation strategies can backfire.

What’s unresolved / limitations of this segment

  • This transcript only contains the first part of the episode; later discussion (e.g., the pardoning of a former Honduran president) is cut off.
  • Zeihan’s analysis is a geopolitical perspective emphasizing systemic risks; empirical confirmation of some intelligence claims (e.g., on interdicted ships) is lacking in the public record and was criticized for not being briefed to Congress.

Who should listen to the full episode

  • Policy makers and analysts interested in trade and industrial policy
  • Investors and business leaders assessing risks to manufacturing and capital spending
  • Listeners following U.S. foreign and security policy in Latin America
  • Anyone tracking the economic consequences of tariff regimes, supply-chain restructuring, and the geopolitics of semiconductors and AI infrastructure

If you want the full conversation, Sam Harris notes the remainder is available to subscribers at samharris.org.