Looking Backwards
LB #1
It was about a month ago when I read a piece that made me think, that couldn’t happen could it? That topic is being met with yeses more often than not lately. Mike Schuler wrote for G Captain that an increase in post fees on Chinese ships could drastically affect trade. “Major maritime industry stakeholders are voicing strong opposition to the U.S. Trade Representative’s proposed Section 301 actions targeting Chinese-built and operated vessels, warning of potentially catastrophic effects on U.S. trade and consumer prices.
The USTR’s proposed measures aim to counter China’s growing dominance in maritime sectors by imposing port entrance fees of up to $1.5 million on Chinese-built ships and operators, while promoting U.S. vessel usage. A public hearing is scheduled for March 24, 2025, at the International Trade Commission.
A public comment period is also currently open, giving industry stakeholders a chance to voice their opinion on the proposed measures.
The International Chamber of Shipping (ICS), representing over 80% of the global merchant fleet, warns that the proposed fees could severely disrupt U.S. trade and increase consumer prices. Current data shows China builds 61% of the world’s new merchant vessels, with the proposed fees potentially affecting 98% of container ships calling at U.S. ports. “The proposed remedies could have an overall net negative impact on the U.S. economy, and result in a decline in U.S. exports,” states ICS in their submission.
Atlantic Container Line (ACL), a specialized carrier, projects dramatic cost increases: export container rates could surge from $500 to $2,500, while import rates could jump from $2,500 to $4,500. ACL warns they would be forced to “terminate its US service, close its American offices, lay off its American staff and redeploy its ships to non-US trades…The East Coast Stevedore Company warns that implementing the fees as written would “destroy trade across the entire United States.” This sentiment is echoed across the industry, with particular concerns about impacts on agricultural exports, energy trade, and regional shipping services.
BIMCO, another major industry voice, warns that the fees would severely increase shipping costs, reduce U.S. trade competitiveness, harm American consumers, and disrupt global maritime supply chains without addressing China’s underlying policies.”
That is a lot to unpack, but if ships stop unloading at US Ports, we are going to see huge business dislocations. Entire cities of warehouses are built to store inventory coming off boats and being shipped around the country. The costs of building new supply lines could take months and have much higher costs to the consumer. This would be a shipping equivalent of Covid. We saw what a disaster that was.
Charles Kennedy wrote last week for oilprice.com, “The U.S. move to penalize China-built and China-owned vessels calling at U.S. ports could lead to an oil supertanker made in China and operated by a Chinese company facing a fee of up to $5.2 million per call at a U.S. port, shipbrokers have estimated.
The U.S. last week announced fees on vessel owners and operators of China based on net tonnage per U.S. voyage. The previous proposal was a per-port-entry fee of up to $1.5 million on Chinese-built vessels, and up to a $1 million per-port-entry fee on any vessel (Chinese-built or non-Chinese-built) for operators that have any Chinese-built vessels in their fleet or orderbook.
Now, the Office of the United States Trade Representative (USTR) plans to impose fees on operators of Chinese-built ships based on net tonnage or containers, increasing incrementally over the following years.
Commenting on the new USTR move, U.S. Trade Representative Jamieson Greer said, “Ships and shipping are vital to American economic security and the free flow of commerce.”
“The Trump administration’s actions will begin to reverse Chinese dominance, address threats to the U.S. supply chain, and send a demand signal for U.S.-built ships,” Greer added.”
This is not nightly news, but it could end up in your living room. Some lines are not going to ship to the US anymore. This would lead to a large reduction in freight volume jeopardizing jobs, freight companies, and port adjacent economies.
LB #2
Isolating Chinese ships for increased fees and it looks like the Trump administration is willing to reduce trade with China for the opportunity to produce domestically. However, there is a new storm cloud heading to the US. The ships carrying freight are not. That creates a very serious situation. Gord Magill writes for the American Truckers Untied via ZeroHedge, “The American trucking industry continues to face a growing number of challenges in 2025, with economic turbulence downstream of President Trump’s tariff reforms merely the latest bump on a very poorly maintained road. Many within the freight, logistics, and supply chain industries are predicting the ride to get even bumpier, with thousands of trucking companies at risk along the way. Will small-time trucking businesses survive?
An aspect of supply chain shocks experienced during Covid is known as the ‘accordion effect’, where a disruption in one part of the chain take time to be felt in another, but then the shock arrives at speed, good and hard. This tweet offers an explanation of Trump’s tariffs and how that shock is expected to affect trucking.
“The White House has put itself and the country in a bad situation but doesn’t realize it yet. Around April 10th China to USA trade shut down. It takes ~30 days for containers to go from China to LA. 45 to Houston by sea, 45 to Chicago by train. 55 to New York by sea. That means that there are no economic effects of what was done on April 10th until about May 10th.
“Around that time (it’s already started to happen) trucking work is going to dry up. Warehouses will start doing layoffs because no labor is needed to unload containers and some products will be out of stock, reducing the need for shipping labor.” He was referencing a tweet from Molson Hart on Twitter.
We are getting more headwinds than we might be capable of handling soon. This adds to more people being foreclosed, more people needing unemployment, more government expense. We can’t afford a recession, but the signs are everywhere that we are getting a worse and worse one every day.
LB #3
We are starting to see cracks in the real economy, but think what would happen to the huge consumer economies if TikTok doesn’t get banned. That’s right, TikTok is a huge threat to American stock market independence. James Hickman writes for Schiff Sovereign, “China is starting to do the same thing in this economic war with the United States. And they’re targeting America’s youth.
For example, TikTok’s ‘Blackout Challenge’ encourages the app’s young users to asphyxiate themselves until they lose consciousness, which led to the death of a 13-year old California boy in February of this year. A 15-year old in Oklahoma died from the ‘Benadryl Challenge’. Concussions and other serious injuries have resulted from the ‘Skullbreaker Challenge’ where kids ‘prank’ others by kicking their legs out from under them as they jump. Curiously, Chinese teens haven’t succumbed to the same contests. Instead, viral math problems challenging users’ problem-solving skills regularly trend on Douyin, China’s version of TikTok. One popular influencer is a 12-year-old girl who has gone viral for teaching college-level math, explaining complex problems in a simplified manner. Last week, we got another look at how TikTok figures into China’s guerrilla economic warfare arsenal. Chinese influencers began pointing American consumers toward a new app: DHgate— a Beijing-based e-commerce platform that sells items directly from the Chinese factories which manufacture brand-name goods.
Their pitch: why pay $120 for name-brand yoga pants when the same exact item, just without a brand label, can be yours for $15? Within days, DHgate exploded in popularity—climbing to the #2 spot on Apple’s App Store in the US, just behind Temu (another Chinese-owned e-commerce app) and ahead of ChatGPT. Yoga pants, handbags, sunglasses, sneakers, you name it—products stripped of their logos and exposed for what they are: glorified drop-shipped Chinese goods with a 700% markup.
Of course, the sudden surge in popularity wasn’t organic; it was orchestrated. Chinese influencers produced videos explaining how major Western brands were bilking their consumers and outsourcing production to these very same factories. TikTok made sure those videos went viral in the US.
Even 145% tariffs would only push the price of $15 yoga pants up to $36.75— still much less expensive than buying from Lululemon. China’s guerrilla strategy is clear: They want US consumers to question who is the enemy— the ones selling you affordable clothing, or the ones increasing your cost of living?
This drives a wedge between consumers and the US government— why would my government prevent me from buying affordable goods? Tariffs could quickly become as unpopular among Americans as the Vietnam War was in the 1960s. China is weaponizing TikTok to turn US consumers against the government… and against major US brands.
They pulled back the curtain on how the economy really makes the sausage—exposing that a $2,000 handbag comes from the same factory, made of the same materials, with the same quality stitching as the $40 knockoff. Americans are paying thousands for a label, not for a superior product. American consumers may quickly feel that China is not the enemy robbing them blind; instead, they may view China as the ones offering a better deal. The US government, on the other hand, suddenly looks like the bad guy for keeping prices high and products out of reach. And this is just the beginning.
What happens when a billion-dollar marketing machine—fueled by foreign data, run through a CCP-influenced algorithm, and distributed on the most addictive app in the world—starts targeting not just consumer wallets, but the foundations of America’s consumer-centric economy?
An erosion of trust in American brands. A growing resentment toward US trade policy. A subtle, creeping, deliberate narrative that China gives you value, while your own government gives you inflation. This is now the guerrilla phase of the economic war.”
I always struggled learning about brand at university. I don’t overly concern myself with what others find popular or cool. I write about history, finance and economics for goodness sakes. However, I was always amazed at talk of brand. Nike has a brand that is worth so much, I saw a shoe company that made comfortable athletic shoes. Starbucks is a brand that welcomes you into the store and invites you to sit and work with your third hangout after work and home. I saw it as a tasty dark beverage. Tiktok is pulling back the curtain on desgnier brands, clothing brands, and profit margins. I will take the yoga pants for $11 made in the next batch after the $100 pair made for Lululemon. Same exact materials and same exact thing without a brand. I will and it turns out many more Americans will take the brandless option. I am not buying into your lifestyle or whatever your marketing department is telling you. I just need a rain jacket. This is at the youth levels and seems to be prominent, if this shifts to middle aged or older Americans, then this is a S&P 500 consumer sector profit margin killer courtesy of China using a delivery device that Americans have already outlawed. They must love negotiating against the US.
Looking Forwards…
LF#1
One of the reasons why we are starting a trade war with China is that they own almost a trillion of our bonds and we send them hundreds of billions a dollar in interest and hundreds of billions more in the trade imbalance that Trump is trying to correct. One of the reasons this imbalance is in vogue to talk about today is that we have so much debt that we need to be congnizant of how we are going to sell more. Here’s why we need to.
This was written by Portfolio Armor, and here is the tweet he is talking about.” Brian Wesbury tweets, Just consider the New York State Medicaid-funded program for paying people to stay home with aging relatives. Back in 2014, only 20,000 people were paid by the program. When eligibility rules changed in 2015 during the outgoing Obama administration the number of jumped to 250,000. Today, the figure is more than 620,000 people. This taxpayer-funded program now makes up 12% of New York City’s private sector jobs, according to Bloomberg.
All U.S. dollars ultimately have to be spent in America. Countries that have trade surpluses with us, like China, can’t find enough goods or services of ours they want to buy. So what else can they do with their dollars? They can buy U.S. securities, of which the largest, putatively safest, and most liquid are U.S. Treasury bonds. Or they can buy U.S. real estate. But how long would our Treasuries remain attractive to them, if we keep running massive fiscal deficits (suggesting we’ll need to inflate away our debt)? And how long would our real estate remain attractive to them, if the current trajectories of our cities and theirs continue? Whatever the answers to the questions above, the picture in the near term seems clearer. It seems likely that we are already in a recession. The DOGE cuts alone probably kicked that off (even wasteful government spending stimulates the economy), and the DeepSeek Sputnik moment in January probably added to it, by cooling big tech capex.”
Trump blinked, but China hasn’t yet. The drama continues…
LF#2
Big tech had its Sputnik moment with DeepSeek and I wrote that Microsoft was cancelling leases on future data centers. They tried to deny it probably because it would hurt an industry that they are deeply invested in. Here is more information that blows a hole in the AI data center boom. Jordan Novet writes for CNBC, “Amazon has delayed some commitments around new data center leases, Wells Fargo analysts said Monday, the latest sign that economic concerns may be affecting tech companies’ spending plans.
A week ago, a Microsoft executive said the software company was slowing down or temporarily holding off on advancing early build-outs. Amazon Web Services (AWS) and Microsoft are the leading providers of cloud infrastructure, and both have ramped up their capital expenditures in recent quarters to meet the demands of the generative artificial intelligence boom. That was before the announcement on tariffs earlier this month. Microsoft and Amazon both report quarterly results next week. Their stock prices were down on Monday, bringing Amazon’s decline for the year to 25% and Microsoft’s drop to 15%.
Earlier this month, Amazon CEO Andy Jassy told CNBC’s Andrew Ross Sorkin that he did not see the company cutting down on data center construction.”
It’s always been tough getting a straight answer out of Trump, but to see Amazon and Microsoft playing coy seems very different.
LF#3
One thing that isn’t getting nearly enough attention is the situation in Gaza. I don’t know why, but bought and paid for media is my hypothesis. Brit McCandless Farmer writes for CBS news, “Since Hamas attacked Israel on Oct. 7, 2023, destruction and devastation in Gaza have been widespread. So has death: 45,000 people have been killed in this conflict, including more than 300 aid workers and more than 1,000 medical professionals, according to tallies by the United Nations.
It has also been especially deadly for the people documenting it.
At least 160 journalists, translators, fixers, and others who help with newsgathering have been killed, according to the Committee to Protect Journalists. It has been the deadliest period for reporters since the organization began keeping track in 1992, and the vast majority of those killed have been Palestinian.”
We seem to have conversation and air time for Ukraine, tariffs, and even war against Iran, but the war and continued bombing of Palestinians continues. I am not surprised since Jews and Arabs don’t care for each other and haven’t for thousands of years, what is surprising me is why there is so little coverage for an area that was covered relentlessly for 18m months before. Some things I will never understand I reckon…
Sincerely Yours,
C Thomas Printer
The Dow Jones finished trading …at 40,113.
The 10-year Treasury bond is at …4.249%
The price of Brent Crude is … at $67.04 per barrel .
The price of gold is … at $3,320/oz.
The price of silver is … at $32.89/oz.
I leave you with this from the information superhighway, what is the difference between a teacher and a train? One says “spit out your gum” and the other says “choo choo choo.”
Thank you for listening today and you can find all of our articles and more on our website cthomasprinter.com.