Half Of Red Sea Container-Ship Fleet Continue To Avoid This Route As Houthi Attacks Continue

Bloomberg: Half of Red Sea Container-Ship Fleet Avoids Route After Attacks 

Half of the container-ship fleet that regularly transits the Red Sea and Suez Canal is avoiding the route now because of the threat of attacks, according to new industry data. 

The tally compiled by Flexport Inc. shows 299 vessels with a combined capacity to carry 4.3 million containers have either changed course or plan to. That’s about double the number from a week ago and equates to about 18% of global capacity. 

The diverted journeys around Africa can take as much as 25% longer than using the Suez Canal shortcut between Asia and Europe, according to Flexport. Those trips are more costly and may lead to higher prices for consumers on everything from sneakers to food to oil if the longer journeys persist. T

he attacks in the Red Sea are being carried out by Yemen-based Houthis, who say they’re targeting ships linked to Israel in support of the Palestinians. But ships without direct links to Israel also have been targeted, and as the escalation of the war threatens global trade, a US-led task force is trying to bolster security on the key waterway.  

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Update: Hundreds of Ships Diverted as Red Sea Attacks Continue (The Messenger)  

WNU Editor: Expect higher costs for almost everything in the coming weeks .... Red Sea shipping workarounds add costs, delays for suppliers, retailers (Reuters).

US-China Trade War. Who Dominates Global Trade

 

WNU Editor: The above time-lapse video only goes to 2018. And while the global pandemic and China shutting down has impacted China's economy, China is opening up, and I for one would not be surprised if in the next year or two almost every country in the world will be doing more business with China than with the U.S.. 

It is when I see videos and projections like this that I know that the era of the U.S. dollar as the global reserve currency is coming to an end.

US Trade Deficit Tops $1 Trillion For The First Time

FILE PHOTO: Shipping containers are unloaded from ships at a container terminal at the Port of Long Beach-Port of Los Angeles complex, amid the coronavirus disease (COVID-19) pandemic, in Los Angeles, California, U.S., April 7, 2021. REUTERS/Lucy Nicholson/File Photo  

The Hill: Trade deficit tops $1 trillion for first time 

The U.S. trade deficit for goods surpassed $1 trillion for the first time in 2021 as the country saw an economic rebound after months of hardship amid the COVID-19 pandemic. 

The trade gap in goods increased to $1.08 trillion in 2021, according to MarketWatch, which was up from $893.5 billion the year before. 

The international trade deficit rose three percent in December, according to an advanced economic indicators report from the Census Bureau, increasing from $98 billion in November to $101 billion in December. That jump was the largest monthly growth on record, according to MarketWatch, and the first time the statistic has surpassed $100 billion, Reuters noted.  

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WNU Editor: China's trade balance is the exact opposite .... China Exports In 2021 Touches $3.36 Trillion, Trade Surplus At A Record $676.4 Billion Even As Imports Grew by 32.7% (Swarajya).

World Trade Is Trending Towards China

WNU Editor: This is why China is on course to be the economic superpower of the world. 

Here is also something that I learned over the weekend. 

I was told by someone I trust in China that within five years Chinese companies will be asking all of their customers that if they want to be buy their goods, pay in Chinese currency. If true, this will be the first broadside by China to dethrone the US currency as the world's reserve currency. 

I say why wait five years. Looking at the above image of global trading trends, China is well positioned to start asking their clients to pay them in renminbi now.

Study Predicts EU’s Share Of World Trade To Collapse

Express: Disaster for Brussels as study predicts EU’s share of world trade to collapse

THE SHARE of world trade occupied by EU member states is to collapse in the coming decades according to a new study in a dramatic blow to Brussels.

Currently the 28 EU member states make up a little over 22 percent of world gross domestic product (GDP). This is down on the over 36 percent the same nations possessed in 1960.

However according to a new survey this will fall further, to just 9.9 percent in 2100.

The real figure is likely to be even lower as the study doesn’t incorporate the UK upcoming withdrawal from the EU.

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Update: New Study Predicts When EU's Share in World Trade May Meet Its Demise (Sputnik)

WNU Editor: Cannot find the report, but they are giving an analysis that I am sure many in the EU are not going to be happy with.

China Will Not Give Up Its ‘Developing Country’ Status At The WTO

The World Trade Organisation (WTO) headquarters are pictured in Geneva, Switzerland. Photo: Reuters

SCMP: China refuses to give up ‘developing country’ status at WTO, despite US demands

* China calls the special and differential treatment a ‘fundamental right’, saying it will not cede to Trump’s demands on World Trade Organisation reform
* China says it will team with other developing members, including India, South Africa and Venezuela, to win the battle over future of WTO

China will refuse to give up the “special and differential treatment” it enjoys as a developing nation at the World Trade Organisation, in a rebuke to a US proposal that would pare back the privileges China and other nations enjoy on trade.

China is categorised as a developing country at the Geneva-based institution, which affords it “special and differential treatment”. This enables China to provide subsidies in agriculture and set higher barriers to market entry than more developed economies.

The dispute reflects a fundamental divide within the World Trade Organisation (WTO) that has threatened the future of the global multilateral trading system.

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WNU Editor: When China was permitted to enter the WTO with U.S. backing in 2001, critics of the policy were condemned by U.S. President Clinton and free trade advocates that this was the best (and only) policy to pursue .... Was Letting China Into the WTO a Mistake? (Philip Levy, Foreign Affairs). Today .... it is China that is calling the shots, and I predict that they will keep their ‘developing country’ status at the WTO even though they are the world's second largest economy. Sighhh .... it took only 18 years, but for those who criticized China's entry into the WTO 18 years ago and who predicted what was going to happen, they have now been proven right.

Europe Is Warning The U.S. That Proposed Tax Cuts Would Contravene Existing Trade Agreements

Daily Mail: Europe's five biggest economies warn Trump that his tax plan may violate international trade rules and harm the global economy by giving US companies an advantage over foreign rivals

* Trump planning tax reforms that could reshape international business tax rules
* But finance ministers from five EU countries have voiced 'significant concerns'
* Fears reforms could risk 'seriously hampering genuine trade' between US and EU
* Ministries from UK, France, Italy, Spain and Germany issued warning in a letter to US Treasury Secretary Steven Mnuchin

Europe's five biggest economies have warned Donald Trump that plans for massive US tax reforms may end up violating international trade rules.

Finance ministers from Germany, France, Britain, Italy and Spain say they have 'significant concerns' about some of the US President's tax initiatives and fear they could harm the global economy.

In a letter to US Treasury Secretary Steven Mnuchin, the ministers said the tax overhaul could risk 'seriously hampering genuine trade and investment flows' between Europe and America.

Read more ....

Update: Europe doesn't like Trump administration's tax plans (CNN)

WNU Editor: I understand the European point of view .... that they do not want to change their own tax policies when it comes to corporations, and they like to maintain the control that they have now. But these new U.S. rules will change that .... specifically U.S. corporations being forced to keep their investments and monies in the U.S. as well as making the U.S. a more attractive place for other companies and countries to invest their money in. My suggestion is that the Europeans should take a page from the Chinese on what to do. The Chinese have accepted the U.S. moving forward on these changes, and they are adjusting their economy .... China Unveils Plan To Combat Trump Tax Reform: “We’ll Have Tough Battles" (Zero Hedge). But here is an easy prediction, the Europeans are not going to implement anywhere near what the Chinese are doing. Raising interest rates, lowering tax rates, etc. .... there is no political will in the EU to implement such a policy .... hence the protestations and the very real prospect of a trade/finance war between the EU and the U.S.. But if it comes to that .... here is another easy prediction. On this battle, the U.S. will win.

Is President Trump's Tough Talk On Trade Working?

Andrew Malcolm, Hot Air: Shock Report: Trump’s Tough Trade Talk Is Working

As the G-20 summit gets underway in Germany, a shocking study out of Britain suggests — are you sitting down? — President Trump’s aggressive statements on trade may actually be working to the benefit of the United States.

Stay with us because you probably won’t see much about this White House success elsewhere. Critics have long suggested that Trump’s bluntness would alienate trade partners or, worse, even ignite trade wars. True, some like Germany are not happy.

But the Center for Economic Policy Research in London has just reported that the other 19 G-20 economies took 52 steps against United States commercial entities in the first six months of this year.

And that, the Center reports, is — wait for it — down 29% from the first six months of last year when someone, let’s say, more aloof and less outspoken was president of the United States. These actions against U.S. interests include quotas, duties and tariffs on imports from the U.S., measures against dumping and tax incentives for exporters that could adversely U.S. companies.

Read more ....

WNU Editor: I can only speak for Canada .... and in this country all parties are getting ready for negotiations on trade .... trade talks that were not even on the radar last year .... NAFTA talks near for Canada: What’s going on? A guide (Globe and Mail). But President Trump cannot entirely take credit for the U.S. being tough on trade, its been going for a while ....

.... But the Center found the U.S. has been by far the worst protectionist offender against G20 countries during the last eight years. Since 2008, the Center reports, “the U.S. has pushed though nearly 1,250 protectionist measures. During the same period, China struck 265 times and South Korea 145 times.”

On a side note .... tough talk from the U.S. on more defence spending has had an impact .... for Canada .... Canada To Boost Its Military Budget By 70% Over The Next Decade (June 7, 2017), and for NATO .... NATO Members Boosting Defense Spending (June 28, 2017).

President Trump Vows To Start Negotiating NAFTA With Mexico And Canada

Reuters: Trump to begin renegotiating NAFTA pact soon with Mexico, Canada

U.S. President Donald Trump said on Sunday he plans talks soon with the leaders of Canada and Mexico to begin renegotiating the North American Free Trade Agreement.

"We will be starting negotiations having to do with NAFTA," Trump said at a swearing-in ceremony for his top White House advisers. "We are going to start renegotiating on NAFTA, on immigration and on security at the border."

Trump pledged during his presidential campaign that if elected he would renegotiate the NAFTA trade pact to provide more favorable terms to the United States.

NAFTA, which took effect in 1994, and other trade deals became lightning rods for voter anger in the U.S. industrial heartland states that swept Trump to power this month.

Read more ....

WU Editor: According to Canadian media pundits (for those in Canada I am referring to Craig Oliver's response on today's CTV's Question Period) .... we should stall and prolong these talks as long as possible while working with Canada's allies in Congress and on the border states to raise objections to changing this trade agreement. I am also reading the same thing from Mexico .... delay or object to any revision. What's my take .... this is the wrong approach. By announcing his wish to renegotiate the agreement .... President Trump has just killed all future plans by U.S. companies who may want to invest in a place like Mexico because of its cheap labor and easier regulatory environment .... or in Canada because of educated workforce and infrastructure. After-all .... who wants to make an international investment when the rules may change. President-elect Trump knows this .... and I would venture that his policy will be to delay serious negotiations .... since he has already accomplished what he had wanted .... a pause in U.S. companies who are interested in moving their manufacturing facilities to Mexico .... and to a lesser extent .... to Canada. My prediction .... the governments in both Canada and Mexico know that any delay in talks will only hurt their economies .... so do not be surprised if they push for talks sooner rather than later. And when it is over .... I expect a revised agreement near the end of President Trump's term. But in the interim .... starting today .... expect no more announcements of U.S. manufacturing jobs being relocated to Mexico.

The next big trade battle will be with China .... and I predict President Trump's approach will be different. He will be wanting reciprocity .... and if he does not get what he wants, he will impose the same policies on China that China imposes on the U.S.. This .... I fear .... can become very messy.

Update: Yup .... a clear sign (from China of all places) that change is coming .... Foxconn CEO says investment for display plant in U.S. would exceed $7 billion (Reuters).

More News On President Trump Vowing To Start Negotiating NAFTA With Mexico And Canada

Trump: ‘We’re going to start renegotiating NAFTA’ -- The Hill
Trump to begin renegotiating NAFTA with leaders of Mexico, Canada -- CNN
President Trump vows to start renegotiating NAFTA -- CBS News
Trump vows to 'start renegotiating' NAFTA with Mexico, Canada -- AFP
Trump makes it official: He will renegotiate NAFTA -- USA Today
President Trump Promises ‘Good Results’ From Nafta Talks -- Bloomberg
Trump says Nafta 'renegotiations' with Mexico and Canada to start -- BBC

Why The U.S. Will Win Any Trade War

Zero Hedge: Fiat CEO Warns May Shut All Mexico Production If Trump Tariff Too High

Agree with his proposed policies or not, it's difficult to argue that Trump is delivering on his promises to the autoworkers of the Midwest who single-handedly voted him into the White House. Before even taking office, the mere threat of import tariffs has caused Ford to cancel the construction of a $1.6 billion new facility in Mexico, and has automotive CEO's from Toyota to Chrysler walking on eggshells as they carefully try to flaunt all of the capital investments they're making in U.S.-based facilities.

While likely secretly hoping for the status quo, Fiat Chrysler's U.S. CEO, Sergio Marchionne, admitted earlier today that if Trump's import tariffs are "sufficiently large" he would be forced to shutter all of his manufacturing capacity in Mexico as it would be rendered "uneconomical." Per the FT:

Read more ....

WNU Editor: The U.S. market is the biggest in the world .... that is a hell of a lot of leverage when it comes to negotiating trade deals. Not surprising .... countries are getting in line to make a deal. Case in point .... Mexico Pledges Cooperation Not Capitulation in Trump Talks (Bloomberg). Top Canadian officials met Trump team for trade talks: paper (Reuters). And .... Toyota Announces Plans to Invest $10 Billion in the U.S. (Fortune). But the real action is when this happens .... Trump Is Set To Label China A "Currency Manipulator": What Happens Then? (Zero Hedge).

President-Elect Trump: U.S. Companies That Offshore Jobs Will Face A 35% Tariff

The U.S. is going to substantialy reduce taxes and regulations on businesses, but any business that leaves our country for another country,

— Donald J. Trump (@realDonaldTrump) December 4, 2016

without retribution or consequence, is WRONG! There will be a tax on our soon to be strong border of 35% for these companies ......

— Donald J. Trump (@realDonaldTrump) December 4, 2016

Washington Post: Trump warns of ‘retribution’ for companies that offshore jobs, threatening 35 percent tariff

President-elect Donald Trump fired another warning shot Sunday at U.S. companies considering moving their operations out of the country, threatening "retributions or consequences" such as a hefty border tax if they do.

The pronouncements came in a string of early morning tweets. Trump declared that he intends to incentivize businesses to stay in America by lowering corporate taxes and slashing regulations, two key components of his economic agenda. But he also warned that companies with offshore factories would face a 35 percent tariff on goods sold back to the United States.

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WNU Editor: If this is going to be U.S. policy .... expect a harsh reaction from countries that have benefitted from the U.S. outsorcing of jobs, trade organizations that promote free trade, U.S. businesses who want to send their operations overseas, the media .... especially mainstream media that covers the business news, and pro-free tarders in Congress. As to who will support this Trump policy .... probably every American worker.

More News On President-Elect Trump Threatening U.S. Companies That Offshore Jobs That They Will Be Facing A 35% Tariff

Trump Takes Twitter Aim at Companies Looking to Move Jobs Abroad -- NYT
Trump Repeats Threat to Seek 35% Import Tariff for Companies Moving Jobs Overseas -- WSJ
Trump: Companies that leave the US will face 'retribution' -- The Hill
Trump renews threat of tariffs on companies that move jobs overseas -- USA Today
Trump launches Twitter blast about outsourcing of jobs -- Politico

White House Is Conceding That The Trans-Pacific Partnership Trade Deal Is Dead

U.S. President Barack Obama meets with President-elect Donald Trump to discuss transition plans in the White House Oval Office in Washington, U.S., November 10, 2016. © Kevin Lamarque / Reuters

Wall Street Journal: Obama Administration Gives Up on Pacific Trade Deal

Congressional GOP leaders indicated they wouldn’t consider Trans-Pacific Partnership in lame-duck session

A sweeping Pacific trade pact meant to bind the U.S.and Asia effectively died Friday, as Republican and Democratic leaders in Congress told the White House they won’t advance it in the election’s aftermath, and Obama administration officials acknowledged it has no way forward now.

The failure to pass the 12-nation Trans-Pacific Partnership—by far the biggest trade agreement in more than a decade—is a bitter defeat for President Barack Obama, whose belated but fervent support for freer trade divided his party and complicated the campaign of Democratic nominee Hillary Clinton.

Read more ....

More News On The White House Conceding That The Trans-Pacific Partnership Trade Deal Is Dead

White House gives up on passing the TPP -- The Hill
Congress will abandon Trans-Pacific Partnership deal, White House concedes -- The Guardian
Obama Isn't Expected To Push Congress On Trans-Pacific Partnership Trade Deal -- NPR
Donald Trump promised to rip up trade deals. TPP is the first casualty. -- Washington Post