Shipping industry blows off media's 'trade war' hysteria
The press has been having a field day with claims of a global "trade war" as a means of casting blame on President Trump on the economics front. Drudge has assembled some choice headlines being put out at the top corner of his page. Get a load:
Oh, and don't forget Paul Krugman, who's a trade specialist when he however briefly takes his New York Times dunce cap off and puts his economist cap back on. He's got plenty to say, too.
Someone at Bloomberg went out and asked shippers and their analysts how things are going and got a big yawn.
Will somebody please tell commodity shippers there's a trade war going on?
Whether it's the price of hiring giant freighters to haul hundreds of millions of tons a year of iron ore and coal, or smaller carriers moving grains, there's a theme emerging: dry-bulk shipping rates are rallying despite an escalating trade war that may yet damage China's economy.
"Freight traders don't believe in that," said Eirik Haavaldsen, a shipping analyst at Pareto Securities AS in Oslo. "They don't see that weakness. They are not afraid of China slowing down, or a massive drawdown in inventories."
That lede, while just a literary device of the writer's, pretty well tells us the problem here: we are all supposed to be shuddering over President Trump's trade tariffs on goods that aren't taxed reciprocally, yet the people closest to the action just aren't doing it.
Now, I am one of the world's biggest free-traders. Free trade is such a powerful tonic to an economy that a nation can do it one way and still make off. Chile's unilateral declaration of free trade to all comers during the late Pinochet era and then the 1990s that followed was one of the big factors that made that country a formerly third-world country. It went to first. It was that, and the country's privatized "Chilean Model" pension reform, that took care of business smartly. There are all kinds of reasons to support free trade, and I support them. Free trade is the only thing all economists agree on: it's good. Consider what it really is: little bureaucrats at border and port checkpoints can't collect customs fees and foist paperwork on companies making stuff people want here. So I am not a fan of protectionism, which is so favored by radical leftists who run uncompetitive unions. President Trump's position on trade is probably the only thing I disagree with him on.
That said, I can buy into his argument that trade deals should be reciprocal. If a country taxes our cars or rice at 100%, well, we should do the same to that country's. I can even tolerate his tariffs, given that they add an expense to trade but do not forbid it altogether. Yes, it drives costs up, and businesses must then find a way to offset them. It's not great, but it's not impossible to deal with.
This is why I think the shipping trade is going on its business as usual, best it can. Bloomberg cites analysts who say it's because China has a big economy and China has a resilient economy. Makes sense. In my reporting career, I've covered a lot of financial and economic meltdowns, and in every case, people learn to adapt if not bounce back. We have some new costs baked into the cake, but we can always get rid of them if the U.S. and its partners figure out a way to ensure that things are equal.
The trade war hysteria is simply overblown, and the shippers show it.