The Great Tariff Boat Race

IMAGE: Peak Pegasus. Photo by Jackie Pritchard, Marine Traffic.

Peak Pegasus is a bulk cargo ship, built in 2013, and, like so many commercial vessels, flagged in Liberia. At 229 metres long and 32.26 metres broad, she is Panamax-sized (the maximum width that can squeak through the canal is 32.31 metres), and she can carry a little more than 82,000 tons of whatever you need to move. For her owner, JP Morgan Global Maritime, that has most recently meant commodity crops such as sorghum and soybeans. And that, thanks to the imbecile currently installed in the White House, has made her last couple of voyages more interesting than usual.

For those who have switched off the news in despair, a quick update: the United States recently imposed tariffs on $34 billion worth of Chinese goods; the Chinese responded by levying an equal amount on American imports; and, just today, the White House has threatened to tax an additional $200 billion of Chinese tilapia, handbags, and chemicals.

The majority of farmers across the American Midwest voted for the current President. They also export more than half their soybean harvest to China, as livestock feed. In Kansas, Texas, Colorado, and Oklahoma, farmers also grow tens of thousands of acres of sorghum, specifically for export to China, where it is fed to pigs and distilled into baiju. What could possibly go wrong?

This is where the recent adventures of Peak Pegasus are instructive. According to Reuters, back in April, the Peak Pegasus took on 58,503 tonnes of sorghum from an Archer Daniels Midland grain elevator in Corpus Christi, Texas, and set off for Guangzhou, in southern China. En route, officials in Beijing announced that they were launching an anti-dumping probe into U.S. sorghum exports, in retaliation for new U.S. tariffs on imported Chinese washing machines and solar panels.

Peak Pegasus changed direction, heading instead for South Korea. It was, Reuters reported, one of twelve cargo ships full of sorghum headed to China, whose importers, faced with losses of millions of dollars, were frantically trying to resell the grain elsewhere. “Four cargoes have been resold to Saudi Arabia and Japan, and another is heading to Spain,” Reuters continued, but at “steep discounts.”

IMAGE: Peak Pegasus en route, via Bloomberg.

Fast forward a couple of months, and the Peak Pegasus was in Seattle, loading up with 70,000 tonnes of American soybeans. It left on June 8, headed to Dalian, in northeast China. China’s new 25 percent levy on the cargo was scheduled to take effect at noon on Friday, July 6; three weeks into its month-long journey, Peak Pegasus was scheduled to land with a few hours to spare—long enough, according to an anonymous source quoted by Bloomberg, to clear customs before the tariffs took effect.

As it neared China, Peak Pegasus accelerated—and also began trending on Chinese social media. According to Reuters, on Friday, July 6, the ship’s progress was the 34th-highest ranked topic on Weibo, with users wishing it luck. “You are no ordinary soybean!” cheered one user.

And then, tragedy. Peak Pegasus finally arrived in Dalian at 5.07 p.m. local time. On Weibo, Reuters reported, one user wondered whether letting the beans sprout might offer a loophole, another offered to take the soy on a romantic trip to Turkey instead. As of today, Peak Pegasus is still a few miles offshore, lying at anchor amidst a cluster of ships.

IMAGE: Peak Pegasus’s position on July 11, according to Marine Traffic.

In an interview with the Communist Party’s official newspaper, the People’s Daily, on Wednesday, Yu Xubo, the president of state grain trader COFCO, said that, going forward, China will feed its pigs with soybean imports from South America instead, as well as increased imports of rapeseed, sunflower seed, and fishmeal. Meanwhile, much of the 90 million acres of the American Midwest—an area almost the same size as California—that is currently planted with soybeans will likely switch to crops with lower profit margins, such as corn or wheat, instead. And, no doubt, the Peak Pegasus’s future voyages will look quite different.

(Thanks to Geoff Manaugh for the tip.)

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