The Voyage of the RB Eden tracks Trump’s trade policy reversals with China.
The bulk carrier RB Eden was loaded with the grain at Archer-Daniels-Midland Co.’s terminal in Corpus Christi, Texas, and was initially bound for Shanghai. When China announced a 179 percent tariff on imports of sorghum in mid-April, it performed a U-turn in the Indian Ocean, according to vessel data tracked by Bloomberg, and sailed back around southern Africa toward Europe.
The vessel’s destination was changed to Cartagena, Spain, but according to the data, it never docked. On May 18, China scrapped its anti-dumping and anti-subsidy probe into sorghum. The same day, the RB Eden began sailing back toward the Atlantic. It’s currently bound for Singapore.
Reversal
Saga of the RB Eden
In response to Trump’s sanctions on Chinese telecom giant ZTE, China put huge tariffs on US agricultural goods. That’s what caused the RB Eden to turn the first time.
Then, just as the RB Eden nearly reached dock in Spain, Trump removed sanctions on ZTE and in turn, China removed tariffs on agricultural goods.
The RB Eden turned around and is headed back to Asia.
Will the RB Eden make it this time?
It’s rather questionable. Trump has again reversed course on China.
Under pressure from Congress, Trump reversed course on ZTE sanctions yesterday, after declaring trade success on Sunday.
If China responds with agricultural tariffs again, the RB Eden will not make it to port in China.
Neither Here Nor There
I made a fitting comment yesterday, unaware of the saga of the RB Eden.
“Trump’s trade policy is like a page from French president Emmanuel Macron. It’s neither here nor there, nor anywhere.“
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Mike “Mish” Shedlock
Mish is right that none is best, but failing that, balanced is essential; sustained unbalanced trade at it’s core is simply a model for exporting one’s own unemployment to trading “partners.” Germany, China and Japan are among the current worst offenders.
Unilateral free trade may be fine in theory, but not so good in the real world. Fully agree that bi-lateral free trade is the nirvana to which we should aspire. But unilateral free trade has negative consequences when the other side of the trade is a country like China, which clearly has no interest in concepts like Comparative Advantage; with policies like “Made in China 2025 Initiative”, China is clearly aiming to take it all.
Theory should always be compared with evidence. The US has had an approximation to unilateral free trade since the end of World War II, with much lower tariffs and non-tariff barriers than our trading partners. (Compare the prejudice in Japan or Korea against driving a foreign car with the joy Democrat elites find in driving cars which are not made by unionized US workers). The longer-term results of that approximation to unilateral free trade are clear — hollowing out of the US economy, loss of manufacturing capabilities, reduced workforce participation, trade deficits, budget deficits. Yes, there are other factors involved (excessive regulation, degraded education, etc), but unbalanced terms of trade are clearly part of the Devil’s Brew.
Based on the real world evidence, unilateral free trade is unsustainable in the long-term versus a mercantilist trader like China. We need a better solution. President Trump deserves credit for finally putting the trade imbalance issue on the table. If we don’t like his negotiating style, it is up to us to suggest something better — something that will work in the real world.
Mish, as you know, I’m on precisely the same page with you on trade, and this story of the ship that seems forever lost at sea with nowhere to go is truly funny.
From a realpolitik standpoint though, I would just adopt a “wait and see” stance. Trump’s flip-flopping often leads to surprisingly positive outcomes (see North Korea).
I answered that question a dozen times already. I would scrap all tariffs and subsidies regardless of what any other nation did. If China is supplying cheap goods to the US we should be grateful. Anything that benefits the consumer is a good deal. Standards of living rise when costs go down. China, not the US loses under current policy. Chinese taxpayers are subsidizing US consumers! And we complain. It’s idiotic!
Nothing wrong with Trump, nor any other of Menken’s downright morons, confronting China. Nor engaging in any other nonsense for that matter. Just leave those of us higher up the evolutionary ladder out of it.
The way to “deal with” anti-something-too-complimecated-for-both-consummate-morons-and-their sycophant-army-to ever-begin-to-understand, hobgoblinistic China; in no way differs from how to best deal with anyone else: Buy that from them which they can offer a good deal on, sell them whatever they want to pay a decent price for, and otherwise grow up and leave others to do the same. It ain’t that hard.
Then end the Fed by noon tomorrow; default on all Federal debt an hour later; again define a dollar as 1/22 ounce of Gold from now until forever no matter how many tanks in the streets, starving children and other imaginary hobgoblins supposedly result from it; and be done. Solved! No more trade problems, debt problems banksters running around robbing and ruining people, overgrown governments nor any other of the currently fashionable pathologies blighting our progressive Dystopia.
That ship’s odyssey is worthy of a Gordon Lightfoot song. “The searches all say they’d have made Cartagena Bay if they’d put fifteen more miles behind her…”
Long Somali pirates. They might be able to raid individual ships multiple times per journey!
The ship should have sailed to Australia, and sell the grain to pig farmers, then wait half a year, buy the pigs and sail to China. Trade in the Trumpian era.
So much Trump Derangement Syndrome, so little understanding of the real world. Hundreds of US soldiers died in a training exercise ahead of World War II’s Normandy landings. Doubtless there were pundits then who said the US should just call the whole invasion off and learn to live with fascist Germany. For the first time, a Western leader (any Western leader!) has confronted China on its mercantilist policies. That is a good thing!
Why not be constructive, Mish? How would Mish deal with an anti-free trade, mercantilist China? It is a real-world question — it needs a real-world answer. Can you point out a smoother path to a mutually-beneficial trade balance?
link to youtube.com
So many of us believed that George W. Bush was the manifestation of the following Mencken wisdom — little did we know that Trump was its fulfillment (or are we to be further victimized in the future by even more impressive morons):
“… when a candidate for public office faces the voters he does not face men of sense; he faces a mob of men whose chief distinguishing mark is the fact that they are quite incapable of weighing ideas, or even of comprehending any save the most elemental — men whose whole thinking is done in terms of emotion, and whose dominant emotion is dread of what they cannot understand.
So confronted, the candidate must either bark with the pack or count himself lost. … All the odds are on the man who is, intrinsically, the most devious and mediocre — the man who can most adeptly disperse the notion that his mind is a virtual vacuum.
The Presidency tends, year by year, to go to such men. As democracy is perfected, the office represents, more and more closely, the inner soul of the people. We move toward a lofty ideal. On some great and glorious day the plain folks of the land will reach their heart’s desire at last, and the White House will be adorned by a downright moron.”
Baltimore Sun (26 July 1920)
The President’s vacillation on trade and other policies will continue to erode the faith of foreign governments and companies is the US as a source of services and materials, a potential customer and international ally. Consider being a foreign company like ZTE who relies on the US as sole supplier for components only to have them summarily shut off. I have no opinion on the justification of the ZTE action – indeed there may be national security considerations that fully justify the action. However, vacillation can only lead to distrust, and firms and countries
do not tend to do business with entities they can not rely on.