Economy

Trump’s Trade War Leaves American Soybeans Parked in the Ocean

JM Ashby
Written by JM Ashby

The economy grew at an annualized rate of over 4 percent during the second quarter of the year becauses businesses rushed to trade as much as they possibly could before Trump's tariffs went into effect.

But not every ship crossing the ocean made it on time. One ship carrying American-grown soybeans, the Peak Pegasus, has been parked in the ocean for over a month because the cargo's owners don't know where to sell the soybeans now

The Peak Pegasus, a 229 metre bulk carrier weighing 43,000 tonnes, has become the reluctant symbol of the potential consequences of this tit-for-tat trade spat.

The ship, owned by JP Morgan Asset Management, was scheduled to unload about 70,000 tonnes of American soya beans in the Chinese port of Dalian on 6 July, shortly after Trump imposed a first round of tariffs on $34bn-worth of goods. [...]

The Amsterdam-based [Louis Dreyfus] company is thought to be paying about $12,500 a day to continue chartering the ship, which is idling in the Yellow Sea off the coast of China, indicating extra costs so far of more than $400,000.

This is obviously a big problem, but the real problem may arrive next season when commodity traders won't even bother buying American soybeans or other crops because they may not be able to sell it.

We currently have no reason to believe Trump will end his trade war next month or even next year and we have plenty of reason to believe he'll continue to escalate it until he's stopped either by Congress or a recession. Or both.

Traders who spoke to The Guardian say it may actually make sense to keep the Peak Pegasus and her soybeans parked in the ocean for months rather than divert it to another market, but that seems to be based on the idea that Trump will eventually moderate or back down allowing the Chinese market to open up.

That's not going to happen. I have no experience in trading commodities, but there's one thing I do know: they should not count on Trump acting in a reasonable manner.

  • muselet

    “Trade wars are good, and easy to win.”

    –alopecia

    • Nefercat

      Yeah, sure, trump. Any minute now, China’s gonna come groveling to you on their knees, begging for the opportunity to kiss your tiny fingers and to sell us everything they make at below cost.

      I wonder when he’ll deny ever making that remarkably stupid comment about trade wars?