The short story on ports, waterways and tariffs

It is a short story, and little detail is available currently, but there is enough for this story to cause further chaos.  The empire wants to deny China and Russia (shadow fleet) from ports and waterways.

For a quick start, listen to Seun Foo here:  https://sovereignista.com/2025/03/28/as-china-retaliates-against-panama-ports-deal-us-wants-chinese-tech-assets-for-tariff-relief/

The idea is for the US to constrict ports and shipping lanes used by China, as well as Russia’s shadow fleet.  This is untenable for China, and they will not allow it.  The first shot in this fight that was going to drag on was the buyout of two Chinese ports situated as part of the Panama Canal.  Note that China built them as part of the infrastructure of the Panama Canal.  The buyout became huge, and at the end of the day, the deal was set to buy a number of Chinese ports.

The deal, led by BlackRock, the world’s largest asset manager with an enormous pool of $11.6 trillion in assets, was announced earlier this month .  BlackRock agreed to lead a group that would buy Hong Kong firm CK Hutchison’s controlling interest in 43 other ports around the world, comprising 199 berths in 23 countries.

It was expected among the China watchers that China would block the deal.  Chinese antitrust regulators are now investigating, as far as the media goes, only the two ports in the Panama Canal, but actually the whole of the Hong Kong firm, CK Hutchison.  This deal is now delayed, and my expectation is that it will not go through, or perhaps some partial deal will be cut.  (Remember Jack Ma, who did not put China’s requirements first.  After years, he is only now allowed to enter into a room with the Chinese business community).

The closing of this deal was set for next week, and again, among the China watchers, it became an issue of ‘Will China stop it?’ or ‘Won’t China stop it?’.  I would not be surprised if the Chinese did not put money on it for a quick gamble.  (I would have if I only knew where to put a few silver slivers, lol, but then again, I am not a gambler.)

President Donald Trump has incorrectly claimed that China controls the canal (Panama controls it, although China owns ports on both sides of the crucial maritime passage). Trump has threatened to have the United States once again take control of the canal between the Atlantic and Pacific oceans, and at that point, Blackrock and their consortium stepped up with a deal.

This is not the end of the story.

The US wants to break China’s vast economic clout.   China says it is easy to start a trade war, but not easy to win a trade war.  Panama is set to cancel the registration of 128 ships that are sanctioned by the US, its allies, or the United Nations, according to Ramón Franco, the general director of the Panama Maritime Authority.  At least 70 of these vessels, including tankers, have already been removed, and more are expected to follow. This move aligns with Panama’s commitment to penalize blacklisted vessels, though it will result in a loss of up to $2 million in revenue.

Panama, which manages one of the world’s largest flag registries, is responding to growing scrutiny of the “shadow fleet”—ships used to transport sanctioned cargo, particularly in relation to Russia and Iran’s oil and energy sectors. I am not sure how deep Venezuela is into shadow shipping, but with the latest sanctions on Venezuela’s oil trade, I expected them to enter the shadow fleet in a big way.

This is still not the end of the story.

So, if we talk about Trump, we spell that Tariff.  Trump’s plan goes further.  He wants to impose tariffs or port taxes on China-linked vessels operating in US ports.  Of course, this will bring the economic house down.  Competition will be distorted across the whole of the container shipping industry.  And he wants to charge Caricom ports if they receive products from China through the US, which is common.  How is that for a double whammy?

According to estimates, Cosco Shipping, a Chinese state-owned shipping line, would be one of the most affected, facing a 15% increase in costs for transporting containerized goods on the Trans-Pacific route.  This looks like an underestimation to me if all the nickel and diming is added together, and then tariffs must be added as well.

The US says in order to avoid the application of port taxes, shipping companies must meet specific requirements to avoid their port taxes:

• such as operating outside of China,
• maintain a fleet with less than 25% of vessels built in China,
• not having committed construction orders with Chinese shipyards for at least the next two years.
• incentives if you build your cargo ship in the US.  (One cannot help but laugh, and I wonder if Boeing will be building ships).

Increased freight costs, delivery delays, a potential restructuring of trade routes, and cargo diversion to non-US ports will be the order of the day. The shadow shipping fleet will only grow, and other ship registries will be used. Before we can watch this for too long, we will have serious economic consequences that you and I will feel in our pockets and in what we purchase.

I’ve seen this warning:  If anyone wants to buy anything, absolutely anything, that requires a sea shipment, you should do it now. Things are going to get ugly and the only ones who end up paying for all this mess are the end users. 

Trump continually says that the whole world is unfair to the US.  Sure, sure but somehow, that story gets old.

China’s Premier Li Qiang, in a gathering of global executives in Beijing a few days ago, said that China is prepared for possible unexpected shocks from the outside. He urged the business leaders to “resist protectionism” and defend globalization. The US cannot compete as it has lost its manufacturing base. These methods will not bring it closer to rebuilding a manufacturing base if there is no trust.  Li warned that “decoupling and breaking supply chains would only deepen crises” while pledging to further expand market access in various sectors for foreign investors.

If the world returns to the law of the jungle, it will be a step backward in history and a tragedy for humanity.

The old canard that we’ve heard hundreds of times during our lifetime – Iran may not have The Bomb, and the current almost desperate push to get Iran back into some kind of negotiation with the US has much less to do with The Bomb and much more with the Suez Canal.  It also explains the bombing of Yemen.  Iran notified that the requirements from the US for negotiations are suddenly impossible; for example, Iran may not do a whole range of things, and that includes support for the resistance.  In the end analysis, I think the new requirements, if it is written today or not, are for control of the Suez Canal.  Trump believes he is the King of the World, and he wants to get his world under his control.

Michael Hudson spells out the problem:

… sanctions and threats are the only thing that the United States has left. It no longer can offer other countries a win-win situation, and Trump has said that America has to be the net gainer in any international deal it’s made, whether it’s a financial deal or a trade deal. And if America is saying, any deal we make, you lose, I win, that is not a way to attract people into making deals with you.

And Trump’s way of negotiating: when you don’t have very much to offer economically, all you can do is offer not to hurt other countries, not to sanction them, not to do something that will be against their interest. And other countries want to get away from that strategy of American diplomacy.

How soon will this shipping and ports ‘house of cards build with bluster’ of Trump fall apart?  Not even here can it offer other countries a win-win situation.  We still are in a ‘just-in-time’ supply line shipping economy.  If this falls, the results will show very quick in our wallets and on our household shelves.