Thought of the Week:
With the 2025-2026 NFL football season kicking off next week, the open question is not whether the Philadelphia Eagles will repeat as Super Bowl champions, whether Baltimore Ravens Quarterback Lamar Jackson can regain his MVP form, or even whether the Dallas Cowboys will finally make their way back to the NFC playoffs; no, the prevailing question in Washington is whether politics lays downstream from culture. While some claim that culture is downstream from politics (consider that the 2008 election of Barack Obama as president set the precedent for many corporate DEI initiatives) or that the two run in tandem with one another (Madonna’s 1984 smash hit “Material Girl” and the 1987 Academy Award winning film Wall Street meshed perfectly with the “go-go 80s,” a decade characterized by yuppies and a culture of materialism), the notion that “politics is downstream from culture” was popularized by conservative icon Andrew Breitbart, who asserted that cultural shifts and narratives ultimately shape political outcomes. Breitbart believed that to change policy and/or political power, one must first change prevailing societal values, beliefs, and storytelling. In his view, evolving cultural shifts through media, narratives, and collective values are the foundational elements that create the atmosphere for political change. Proponents of this philosophy believe that by shaping culture through compelling storytelling, a political movement can form that changes public opinion and, eventually, government itself—consider that among the pre-November 2024 storytelling signs that a cultural shift had been brewing were the surprise popularity of the movie Top Gun: Maverick (2022), the 2023 backlash against the marketing partnership between Bud Light and social media influencer Dylan Mulvaney, and the rising popularity of the country and “tradpop” music genres by artists like Jelly Roll, Morgan Wallen, and Alex Warren. A newcomer to the belief that politics may be downstream from culture through storytelling seems to be the Democratic think tank Third Way. The center-left organization has begun circulating to Congressional offices a memo of words and phrases they say makes Democrats sound extreme, elitist, and the enforcers of wokeness. According to Third Way, the political left uses six categories of words and phrases that place a wall between Democrats and everyday Americans. For instance, “Therapy Speak” uses words like “safe spaces” and “triggering” to convey that those other than enlightened Democrats are callous; “Seminar Room Language” employs such ideas as “subverting norms” and “cultural appropriation” to belittle kitchen-table concerns; terms of “Orientation Correctness” like “birthing person” and “heteronormative” express that traditional views on gender are backward and obsolete; and “Organizer Jargon” (the unhoused for homeless), “Shifting Racial Constructs” (BIPOC and LatinX), and “Explaining Away Crime” (justice-involved in place of convicts) say Democrats are beholden to groups not individuals, that others are racist, and that the criminal is really the victim, respectively. Third Way argues that to please the few, the political left has alienated the many, particularly though cultural narratives. Their memo serves as a beacon to Democrats that the Party is out of touch with the central problems the vast center faces, and it is a small effort to encourage Democrats to talk like normal people. Acknowledging that the Democratic Party brand is extremely toxic across the country with way too many people, and part of the problem is the use of language that literally no normal person uses, Third Way’s idea is to communicate authentically in ways that welcome rather than drive voters away—a hope that politics is downstream from culture. At the same time, President Trump has placed himself in the middle of the effort to bring the NFL’s Commanders home to Northeast, Washington, D.C., from suburban Maryland by threatening to block any stadium deal unless the team changes its name back to the “Redskins.” Just one more example that politics stands downstream from culture.
Thought Leadership from our Consultants, Think Tanks, and Trade Associations
Bloomberg Government Says Fed Chair Powell has Opened the Door to a Rate Cut. Federal Reserve Chair Powell opened the door to an interest-rate cut in September, pointing to labor market risks even as inflation worries remain. His remarks at the Fed’s annual conference in Jackson Hole, WY, came as President Trump threatened to fire another Fed governor, Lisa Cook, if she does not resign. Chair Powell said the labor market is in a “curious kind of balance” resulting from a marked slowdown in both the supply of and demand for workers. He cited employment data for July, which showed substantially weaker jobs growth in recent months than previously reported. Fed officials have been divided over how and when to adjust policy in the coming months. Before Powell’s speech, Federal Reserve Bank of Boston President Collins said a decision on a rate cut isn’t necessarily going to happen. After the speech, James Bullard, former president of the St. Louis Fed, said that Powell’s emphasis on labor indicates a rate cut next month is a “done deal.”
CSIS Offers a Primer on Transshipment. The Center for Strategic and International Studies (CSIS) believes the sleeper issue in the U.S. trade agreements announced so far could be the question of transshipment, a term that appears to be undefined in the agreements. How the term is ultimately defined will have major impacts on not just the agreements themselves but also on the economies of the countries involved. In its simplest form, transshipment refers to moving an item from country A to country C with an intermediate stop in country B. Much of the time intermediate stops are benign; increasingly, however, such stops are anything but. Under existing rules, determining whether a product has been transshipped rests on whether that product has either been substantially transformed by the intermediate country or by the percentage of content from the country of final manufacture (if more than 50% of a product’s content by value comes from a country, the product is considered to have originated in that country; at times, countries impose special rules that go beyond the normal 50% content standard, for example, auto rules under the USMCA). Although neither are operational at present, two new permutations of substantial transformation are under consideration. The first would determine origin based on value-added rather than substantial transformation, which would allocate origin based on the proportion of value contributed by each country. A second would assign origin based on the citizenship of the manufacturer. The fact that “transshipment” appears to be undefined in any of the trade agreements announced thus far opens the door for the U.S. to demand nontraditional approaches, which may conflict with internationally agreed-upon rules. There are two purposes for aggressively attacking transshipment. The first is to force the development of supply chains that exclude China—essentially a forced decoupling strategy. Derisking by Western firms has been going on for some time, and a popular response from China has been creative forms of transshipment. The second is to push back on Chinese overcapacity and force Beijing to eat its own surpluses. Because nobody admits they’re illegally transshipping, the burden will be on customs to identify it and assess relevant duties. This will be difficult, particularly in countries that have close relations with China and no incentive to help American authorities, or in countries where bribery and corruption are common. The essential element of a successful enforcement strategy is clear—detailed definitions of transshipment and substantial transformation. The latter is already well-defined in customs rules, but the former has always been elastic. It would be least disruptive if the administration chose to maintain the existing rules on substantial transformation and focused most of its attention on fraudulent transshipment.
Trade Analyst Laura Chasen Says CFIUS Annual Report Shows Japan and Canada Still Top Investors in the U.S. Last week, the Committee on Foreign Investment in the U.S. (CFIUS) released a public version of its 2024 Annual Report to Congress. Although the 60-page report doesn’t discuss specific cases that it approves or recommends that the President reject, it has sections on covered transactions and transactions involving critical technologies. Parties to a foreign purchase of a U.S. asset can voluntarily ask the CFIUS to review a transaction to identify potential problems and, if needed, propose mitigation measures before it is finalized, or, if the parties haven’t made such a request but the government finds grounds for questioning the transaction on national security grounds, the CFIUS can open an investigation. The report noted that CFIUS continues to process a high volume of transactions, identify transactions that were not submitted to CFIUS that may raise national security considerations, and employ mitigation, monitoring, and enforcement tools to protect national security interests. Elsewhere, the report says that CFIUS dealt with 325 covered transactions last year, consisting of 209 written notices and 116 declarations; one notice of a covered transaction was rejected. In November, Treasury issued two final rules updating Committee regulations—one expands CFIUS jurisdiction over real estate transactions, and the second enhances the Committee’s authority to require the submission of certain information, allows the Committee to set timelines for responding to mitigation proposals, and increases the maximum monetary penalties for violations. The report shows that Canada and Japan remain the top foreign investors in the U.S. According to CFIUS, investors from Japan accounted for the most declarations [16], Canada accounted for the second-most [11], and France and the UK accounted for the third-most with nine declarations each.
“Inside Baseball”
Intel Deal Continues Troubling Precedent for U.S. Business Environment. The Trump administration announced that the federal government will take a 9.9% stake in Intel in exchange for $5.7 billion in undistributed CHIPS Act grants and a $3.2 billion defense program award. Although the deal does not represent a new commitment of capital by the government, it does dilute existing shareholders’ ownership stakes. And while the deal will ease Intel’s access to CHIPS Act money, and government involvement could instill confidence, Intel’s problems are strategic, not financial. Even though the U.S. government will be a passive owner, even a small government share raises the specter of meddling by authorities, adding a layer of political risk to corporate decision making. In fact, the move to strong-arm an equity stake may risk undermining U.S. chip progressmore broadly as Commerce Secretary Lutnick has suggested that other awards could also be converted into equity stakes. The White House did not offer any additional carrots in return for its stake, and even though Intel’s board approved the deal, the rapid negotiation and approval raises the question of what sticks the White House may have employed. The Eurasia Group believes the deal could have negative implications beyond the semiconductor sector. Even if framed as exceptional, aggressive action to take control of companies in strategic sectors could normalize government intervention, which often leads to politicized and less market-friendly decision-making. On the heels of deals with other companies [Nippon Steel, Nvidia, AMD, MP Materials] for equity or revenue, the idea that companies owe payment or equityin exchange for government supportsets a troubling precedent.
In Other Words
“The president has made it clear, all the way back to the campaign, that he thinks that, in the end, it would be great if the U.S. could start to build up a sovereign wealth fund. And, so, I’m sure that at some point there’ll be more transactions, if not in this industry, then in other industries,” National Economic Council director Hassett, speaking on CNBC, on the government’s new stake in Intel.
Did You Know
Over the course of (almost) 119 Congresses, only 13 lawmakers have given birth while serving, until last week, when Rep. Cammack (R-FL) became No. 14. The first, Yvonne Brathwaite Burke (D-CA), was serving in the House when she had a daughter in 1973.
Graph of the Week
Oil Markets Could See a Big Price Slide. Following the summer holiday season, supply is expected to expand significantly amid low or even negative demand growth. Brent crude prices have already dropped from a 2025 high of $82/barrel in January to the mid-$60s/barrel this week, and the U.S. Energy Information Administration (EIA) expects Brent to slide to $58/barrel in the fourth quarter. For 2026, the EIA expects Brent to average just $51/barrel. Although almost all oil market indicators are bearish, there are factors at play that could suddenly raise prices such as the U.S. exerting pressure on India to end its large purchases of discounted Russian oil, or intensifying U.S. sanctions if there is no progress on a cease-fire in Ukraine.
