Global Trade This Week – Episode 182
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Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug Draper,
Doug Draper 0:09
Hello everyone, and welcome to a special edition of global trade this week. My name is Doug Draper. I'm coming to you from my 2018 month in a parking lot, and on the other side of the country is my good friend and co host, Mr. Pete. Mento Pete, how's it going
Pete Mento 0:30
going, good buddy, I'm actually in Dallas right now. I was in San Antonio, in Austin yesterday. I'll be in Dallas the next two days, and then San Diego and Mexico, and then to LA. So crazy week, but crazy week,
Doug Draper 0:46
all of that is in a week. Yep, gosh, when, when you got your trip booked to Mars? That's what I want to know. I
Pete Mento 0:54
don't know, but I think we had this conversation. I think if I was younger, I would have been brave enough to do it, but I don't think I'm in any sort of shape to do that now, pal,
Doug Draper 1:04
yeah, yeah. Cool. All right. Well, we got a tight schedule on this one. So either some listeners will say yes and some listeners will say, Why is it only going to be 20 minutes? But regardless, we're going to press forward. So I think we're going to tag team some topics. Lots of noon has transpired in the last 48 hours. So let's jump into it. Pete, you can start off, and then I have some comments to chime in.
Pete Mento 1:27
Yeah. So, I mean, everybody's talking about this, right? So over the weekend, President Trump had threatened three countries, Canada, Mexico and China, with tariffs under the International Economic Powers Act and the the the threat, look, it's very credible, right? He was preparing to do all of this. And last minute, right? Last minute, two of those countries, two very important countries, Canada and Mexico, came to terms with the United States for to push this out for a month. So it hasn't gone away, which I think is super important for people to realize we've just kicked the can down the road for another month. But what came out of this was a pretty substantial presence at the border in both Mexico and Canada, as well as commitments to put money behind the securing of both of those borders. The International Economic Powers Act was used because of fentanyl overdoses in the US, as well as a migration crisis that President Trump is concerned with, as well as the base of his party. So when you begin to look at what came out of this, it's really it was a move to put tariffs in play, to more or less keep a promise to his base, 10,000 troops at the southern border of Mexico were put into place, or will be put into place. And what I find absolutely amazing. Doug is one of the most wanted fugitives from the narcos was found within an hour of this agreement on the southern border. So that's pretty incredible. One more thing I'd like to add is overnight last night, that there's open source intelligence, right? Oz net is something that geeks like me really enjoy, and there are Twitter feeds of it all over the place. And so last night, there was a bunch of open source intelligence nerds freaking out because some of the most advanced surveillance aircraft that America has was patrolling within Mexican airspace. So ones that gather electronic intelligence are able to actually identify where certain signals are coming from. So we've really stepped up identifying the actual positions of these people. Now, along with that, as well, Mexico has been firing on American personnel, and they have also been sending suicide drones after them. Both of these are a terrifying idea, and what I'm concerned with is the escalation of that, where that will end up on the Canadian side, of course, you just got a significant commitment by Mr. Trudeau and his economy's government to push more security up there and also go after what are being considered these super laboratories manufacturing synthetic opioids like fentanyl. Today, the President has a call with Xi Xiaoping in China, and I guess they're going to have a chat as well. The Chinese have put retaliatory tariffs of their own in there, not nearly as big as I thought it would be. Doug like they didn't really. They didn't go as hard as I thought they would. So there is an opportunity for what we call an off ramp, a way for us to move away from these tariffs. But I guess we'll find out later on today whether or not that's realistic. I don't know, Doug this. This is a wild topic, man. I mean, talk about, yeah, I think it was a longer trade war than Colombia, but, you know, not too much longer. Yeah,
Doug Draper 4:37
that's funny that you say that because I was thinking in the last 24 hours, how things have, you know, been a world whirlwind on it, and you bring some great points and things that I was not aware of down on the Mexican border. Love the apprehension within an hour of the bad authors down there. That's pretty amazing stuff. So. Up. My take on this is a little more gentler, if you will, and it's more of just the mindset, right? So literally, in the last four days, right? We basically had quote, unquote, trade wars that ended quickly with Colombia, Canada, Mexico, China and over, over, Panama. Talk about that here in but I mean the amount of chaos in the news feeds that came about, like, oh my god, the world's gonna implode. I wanted everybody to say, listen, we're going to react appropriately, we're going to adjust and potentially break for impact, right? But the bottom line is, costs more money than patients, and so we've seen that when these new classes come out, and they will come out again, right? There's other trade partners we have in the world, you know, Germany and the UK, you know, maybe those are the next ones that come into play. But as far as the people in the countries that we dealt with in the last four days are pretty much our top, great trade partners who are the top five, even the top three, we just, we just covered them all. So everybody, take a deep breath. Basic advice in life, it will come, but we can control how we react to it, right? And that's something we tell our kids. That's something we tell ourselves, and I think it's important away from the topic of trade, and what does that do to impact us? Everybody needs to calm down and just understand the situation, because a kind of like I said, is way more costly than or a panic cost more than patient. So you have the blocking and tackling. I have the softer, gentler take on it, but it will be interesting. It's a roller coaster, and there will be more to come, and we'll be talking about it here on Golden parade. Yeah,
Pete Mento 7:02
I was in calls and meetings on Thursday and Friday in Chicago, like face to face client calls, and they were freaking out. And I said, there's a real good chance that these tariffs will be announced. What I need everyone to do is what you just said, take a breath, let it sort itself out. Have a Plan B. Absolutely always have a plan B, a Plan C, even, but wait until all the parties have had an opportunity to have a conversation about this before we break the glass and pull out the emergency fire extinguisher in the ax and start dealing with it. Just let it all sort out. And I would say that as we go into the next couple of years, that's probably the best advice I can give anyone, is until Customs has been told how to manage it, until you've seen the Federal Register, until the executive orders are out, there's going to be a cadence to how this happens. So take a breath, consider what's happening and then move on from there.
Doug Draper 7:52
Yeah, I love it. Well, normally we count them until our halftime, but this episode is really condensed. Rescheduled it twice. I'm doing it from my car. This is certainly not our day job, right? This is a work of Captain. So we're going to keep it short this week, and we're going to skip the half time, but I do want to call out the cap logistics that sponsor half time, and they put their show on, and we really appreciate their support week in and week out. So I'm gonna jump in with my second topic, Keenan. You can chime in. I was, this is related to Panama, right? There's an influence that's been extended down there, not a trade war, but I was doing some research, and then this, this entity called Hutchinson, popped up multiple signs. And I'm like, okay, is that an artist? Is it an author like crew and CJ Hutchinson? And it's not a person. It's a Hong Kong based company that has a 25 year contract to operate the Panama Canal. And they operate both ends, the East and the West, as far as access points, and the fact that in Hong Kong, and technically, that's part of China, and everybody's freaking out, right? I think Marco Rubio in the last couple of days really, really sparked. So what happens if there's a trade situation and unstable trade impact, and all of a sudden trying to make the phone call to CK and say, shut it down, right? Not only does that impact trade, it impacts the, you know, the military aspects and everything of our of our great nation. So it is interesting. I think that Panama, I think the spotlight will focus a little bit more down there, and that's a topic that will continue the next, the next couple of days, but it's supposed to be a sovereign location, right? No influence. That was one of the caveats whenever, I think it was Carter gave everything back to Panama. Control as it needs to be uninfluential and open access to everybody. But yet yesterday, there was some applied pressure that basically said you need to make sure that the US Navy fleet can get there, get through that port with free access. So I guess rules are very important to follow Pete unless they're no longer convenient. And so just another example, not a trade war, but applying pressure to what's supposed to be, you know, a sovereign, if you will, position down there and say, no influence in the Panama Canal. But yes, what just happened yesterday? So anyway, I didn't know who c k Hutson was. I now have a good understanding, and that topic will continue to fester and come up again. And Mark my words. We'll hear a lot more about it in the upcoming week.
Pete Mento 10:54
Mr. Rubio apparently has secured some kind of a deal right where the Bucha now will be under the influence of the United States. It's fascinating, right? So, you know, staying non political here, I've transited the canal when I was a young man, and I've spent some time at Panama when I was Cadet shipping with Crowley. It was a fascinating experience, first of all, and second of all, what I don't think most Americans understand is that every time a ship goes through there, there are harbor pilots. There are very specific types of people who are trained to transit the canal, and the the responsibility is still with a captain, but the transit is being done by this harbor pilot. They're all trained in America, all those harbor pilots that actually manage the ships coming through. They attend us merchant marine academies, and then they go back home and make a ungodly amount of money handling those ships all the way through there. The point I'm trying to make here is that we have always supported the operation of the canal. We've supported it to the point where we're training the people who help ships to transit and the forays that were done through our international relations over the last couple of days, reminded them and told them how we're solidifying that, how we're managing that our investment that was made to create it, and I think there was probably also some conversations about what we can do, maybe use it more, and then also the amount of costs that we've been paying to transit. It's a lot of money. It's hundreds of 1000s dollars for container ships to go through there. So it's about trying to find some equity, trying to bring it back into balance, and from everything that was reported in the media yesterday, we apparently have come to a point where our State Department is satisfied with the outcome. We'll see how it all shakes out. I don't think this one's overdue, but I think we're at least in a better position than we were a few days ago. So, yeah, I guess we're gonna have to watch this pretty closely.
Doug Draper 12:46
Yeah, interesting times. Man, yeah, after uh January, after the inauguration. Man, things that put into uh fifth year and over the
Pete Mento 12:58
put down. This has been the wildest month of my career, and I'm sure it's the same way for you, but I I had a call with our marketing folks yesterday real quick, and they said, How's your day going? And I said, I've had and I counted on my phone. I've had 41 phone calls since 330 this morning, and I left to drive from Dallas to San Antonio at five o'clock in the morning, and I just sat there on the phone, talking to people in China, talking to people in Europe, then talking to people in America. And it's like, as the sun went across the country, the phones started ringing at oh 800 their time. And then I had meetings with people who were very dependent on Mexican trade. And during one of the meetings, the announcement came up, which was nice, you know, to be able to give somebody some great advice, and then later on in the day, similarly, I was talking to someone nervous about Canada. Said, Oh, I got some good news here. It's not over, but we seem to have pushed it out a month, and hopefully they can find a way to make it work between them. But wow, Doc, it's, it's a Mad, Mad time of our careers right now.
Doug Draper 13:59
Yeah, yeah. I'll let you sign off. But the last thing I want to say you and I spoke about how crazy January is going to be. I don't remember what it was, but rewind back to early December, and we were like, look out between the ports, prize, Tiktok, band inauguration. Watch out. January is going to knock your stock off, and it certainly has.
Pete Mento 14:22
Yeah, deliberate man. Well, in this abbreviated version of global trade this week, we want to thank all of our listeners, and certainly our sponsor cap logistics for their unending support of the show, for loaning us Keenan when he's not in seventh grade, making macaroni paintings for his mom on Mother's Day. And want to thank all of you for listening, of course, and if it happens to global trade next week, actually, if it happens to global trade, we'll be talking about on global trade this week. Take care, everybody. Thanks, dad. All
Unknown Speaker 14:50
right. Take care. Bye.
Transcribed by https://otter.ai