Snake Oil

Trump has an infantile view of trade and investment. MBS seemed very much amused.

To Trump, money coming in means America (read: Trump) is “winning,” while money going out means it is “losing.” It is a grade-school view of economics, which may explain his multiple bankruptcies after being set up in business with many millions from his dad. It also explains his obsession with the trade balance, which has led to the damaging and illegal tariffs disaster. And in that spirit, this week he’s trumpeting Saudi Arabia’s supposed pledge to funnel a trillion dollars into the US economy, as though Riyadh has just pulled up a truck full of cash and is dumping it onto the National Mall.

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Investment is generally good, and I hope this creates some jobs. But we need not be naive: This is a political transaction in which America pays a real price (and oddly, the down payment is coming from Israel). Start with the number itself. Saudi Arabia’s GDP is just over a trillion dollars, the result of an oil economy that it’s now trying to diversify. The idea that it could invest a comparable sum in the United States is, on its face, absurd. Even the earlier “$600 billion” commitment already strained credibility, but Trump needed the number to be bigger, so the Crown Prince obligingly rounded it up during his Tuesday visit to the Oval Office.

What’s the explanation? It is an obvious huckster’s trick: Make a claim that will be understood as annual but will in fact attach (at best) to a deniable and potentially limitless timeframe (give me a million years and I, too, might raise a trillion). Then hope no one asks whether the check will ever clear (which, with these kinds of pledges, it often does not). The Crown Prince says the figure aligns with Saudi Arabia’s longterm business strategy, which itself was a way of signaling aspiration without promising cash in hand.

Since Trump’s method is to double down, he claimed this is part of his amazing, huge and wonderful success at “bringing in” $21 trillion dollars (which Biden could never have done and definitely not Obama). This is the Big Lie writ large. The number is pretty close to the entire US annual GDP and about a fifth of the global one. Moreover, at another point, with the Prince suppressing many smiles, Trump seemed attach it to his tariff scheme; but the tariffs (which will net the government billions, yes) “bring in” to the US zero dollars since they are paid by US importers and consumers, and are thus a domestic tax.

Putting aside such insults to the intelligence, though, yes: There will be large-scale Saudi incomings. But if the sums end up being anywhere near true, this creates a serious dependence on a dictatorship (and we already have a pretty damaging case with China). And Trump is selling something real up front, in return. Within hours, he elevated Saudi Arabia to the status of “Major Non-NATO Ally,” a designation usually reserved for democratic partners, not absolute monarchies with troubling human rights records. He also announced that he would sell them F-35 stealth fighters, the crown jewel of US military technology. This directly undermines Israel’s legally protected qualitative military edge, which previous administrations treated as sacrosanct. Happy yet, Netanyahu?

Trump has given away that leverage without extracting what was hoped: Saudi normalization with Israel, which would be a game-changer in the world. To be fair, Mohammed bin Salman did finally say with clarity that he wants Saudi Arabia to join the Abraham Accords, and that is unquestionably a welcome development (which I praised below on I24). But he also conditioned it on a path to Palestinian statehood, which the current Israeli government rejects and even a more moderate one would chafe at as long as Hamas is armed (an issue that is burning and that went sadly unaddressed).

So in negotiation terms, Trump has already surrendered the card normalization was supposed to help win. Riyadh no longer needs to offer anything meaningful because the US has already paid the price: strategic alignment, elite weapons systems, and diplomatic elevation.

And even when money does flow, it cannot be considered “profit” for the United States in the way Trump pretends. Consider the F-35 itself, which costs roughly $100 million per plane. The Saudis paying that price does not mean the US “made” $100 million. The aircraft is staggeringly expensive to design, manufacture, and maintain. A large fraction of the revenue is consumed by production costs, subcontractors, and long-term commitments. This isn’t “money coming in” in the simple sense Trump imagines but a complex industrial process. It is fuzzy math at best.

The Saudis, for their part, are investing where it suits them: artificial intelligence, chip development, cloud computing, energy transition technologies, and perhaps civil nuclear cooperation, all sectors they have targeted for their Vision 2030 ambitions. Some of these projects could benefit the US — but foreign direct investment from a dictatorship is not neutral capital.

And it isn’t only Saudi Arabia, or just about business. A great deal of the capital pouring into the United States comes from Qatar, the UAE, and other Gulf monarchies, and much of it has nothing to do with productive investment at all. It flows instead into universities, research centers, cultural institutions, and think tanks — the soft-power arteries through which long-term influence is cultivated.

Qatar alone has funneled at least $4.7 billion into US universities in recent years, making it one of the largest foreign donors to American higher education. Arab states in total have given nearly $15 billion to US colleges and universities since the early 1980s — with Saudi Arabia contributing almost $4 billion. In 2024 alone, foreign gifts and contracts from Qatar to US institutions totaled $342.8 million, according to Department of Education data analyzed by watchdogs. And much — by some estimates up to half — goes under-reported (see study here).

All this is buying influence, as Qatari-state proxies funnel money into programs with political and cultural weight, with donor-backed centers and faculty appointments shaping the intellectual environment. This is a big reason why we no longer teach Western Civilization and why so many young people are inclined to favor Hamas, which would hang the homosexuals among them from lampposts.

Last, to state the obvious, another cloud hangs over all of this: Trump’s business and that of his family seem implicated too. The Trump Organization has leased its brand for real estate developments in Saudi Arabia — for instance partnering with Dar Global on projects in Riyadh and Jeddah, earning tens of millions in licensing fees. At the same time, Jared Kushner, Trump’s son-in-law, secured a reported $2 billion from the Saudi sovereign wealth fund for his private equity firm, Affinity Partners. To use language Trump might understand, it looks really bad, I don’t like it at all, and a lotta people are talking.

What makes all of this so troubling is not merely the incoherence. A political class is only likely to be as smart as the electorate, and we have been underinvesting in education. Rather, it is the bullshit.