Episode #49: The Washington Summit, Post-Peak Ocean Cooling, and German Strike Threats

So, President Trump and China Xi are set to meet this week in DC.

What are expectations for this meeting and what ramifications could there be for the trade and freight in general?

Yeah, so teams from each side have already been meeting in the days leading up and reports are or it seems that there isn't an attempt to really, you know, rock the boat or change the relationship very drastically or push for things one way or the other, but rather those sides are looking for stability.

Of course, there are big issues or bigger issues that have emerged since their previous meetings, such as how to proceed in terms of AI.

But overall, in terms of trade, there seems to be the desire on both sides to kind of maintain this fragile stability that we've had so far.

If you remember back, there's been a trade agreement that was come to almost a year ago, so last November, but it was extended for one year.

So it expires in November, I believe, on November 10th.

Tariffs were agreed at a certain level, but we know things have changed since then.

We had EPO tariffs that were, you know, used to put tariffs at whatever levels they were for the various countries.

But that was struck down by the Supreme Court early this year.

Since then, the U.S. has restored tariffs on many countries.

For China, it's restored tariffs, but it's about seven and a half percent lower than agreed upon an EPO.

Meanwhile, the U.S. trade representative has reportedly concluded a Section 301 investigation on a number of countries, including China, that is looking into excess manufacturing capacity.

And it is purported to recommend seven and a half percent tariffs on China on this basis, which would, in effect, put tariffs back at the levels they were for EPA.

There were reports that this was going to be announced before the meeting between Trump and Xi Jinping.

But instead, it's been held off.

So either it's being held off not to look like a possible escalation just before these negotiations or maybe to be used as leverage in the current negotiations.

But so far, it hasn't been introduced.

So the other part is reports are saying that the U.S. is prepared to offer a three to six month extension of the current trade agreement.

And in terms of freight, you know, obviously there are changes in tariffs.

If there is a deterioration in that trade relationship, it would have implications probably for trade volumes.

It would depend if there are new tariffs and new tariffs being announced ahead of time.

You can see front loading and who knows.

But the other part we need to keep in mind is that part of that trade agreement was a pause on U.S. port call fees.

So the U.S. had rolled out in mid to late October last year about a million dollar port call fee for any vessel linked to China, either operator owned by China.