House Tariff Override, India Deals, EU-China Tension, and the Return of the Suez

Summary

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The Trade Guys — Episode Summary

Podcast: The Trade Guys (CSIS)
Episode Title: House Tariff Override, India Deals, EU-China Tension, and the Return of the Suez
Date: February 17, 2026
Hosts/Experts: Scott Miller (A), Bill Reinsch (B), Alex Kisling (C)

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Overview

This episode of The Trade Guys unpacks four major developments in global trade:

• The U.S. House of Representatives' symbolic vote to rescind President Trump's tariffs on Canada.
• New trade agreements between India and both the United States and the European Union.
• Evolving trade tensions (and possible thaw) between the EU and China.
• Geopolitical shifts affecting shipping lanes in the Suez Canal following the Red Sea crisis.

Scott Miller and Bill Reinsch provide context, analysis, and predictions—balancing deep policy insights with practical implications for global commerce.

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1. House Vote to Rescind Trump's Canada Tariffs

[00:56–11:40]

Key Points

• Historical Vote:
  The House voted, with six Republicans joining Democrats, to rescind tariffs imposed on Canada by President Trump. This is the first time Congress has formally voted to unwind a presidential tariff action.

• Political Symbolism:
  While the move is largely symbolic (a presidential veto is expected), it's an assertive gesture by Congress to reclaim trade policy authority as given in Article I, Section 8 of the Constitution.

  “There is some sign that some of them [Congress] are developing a spine… Congress is standing up and saying, ‘Look, Article 1, Section 8 gives us authority here and we’re going to exercise that authority.’”
  —Bill Reinsch [01:41]

• Congressional Dynamics:
  The six Republicans who crossed the aisle did so for reasons ranging from retirement, redistricting, or representing districts with unique pressures. Many of these districts (especially those with agricultural interests) have constituents negatively impacted by tariffs.

• Supreme Court Connection:
  Some House members hesitated to act, citing the upcoming Supreme Court decision on the legality of the president’s use of emergency powers for tariffs, but this “shield” didn’t prevent the vote.

• Implications for the White House and Party Unity:

  • The vote isn’t expected to alter White House policy or deter further tariff activity.

  • However, the episode signals possible weakening of the president’s grip on congressional Republicans.

    “It’s never a good thing when a Speaker loses a vote on the world…It’s important that Congress realizes that tariff policy is a political question. It ought to be handled by the elected representatives of the people.”
    —Scott Miller [06:58]

• Public Opinion:

  • Tariffs remain unpopular with much of the public (recent polling ~60/40 against), but partisan dynamics dominate congressional actions.
  • Dissatisfaction is rising since tariffs aren’t producing promised benefits, particularly in affordability, a key voter concern.

• Possible Next Steps:
  The Senate, having previously passed similar measures, might act again. New votes on tariffs affecting Mexico and Brazil could follow soon, depending on legal outcomes and congressional recess timelines.

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2. US-India and EU-India Trade Agreements

[12:13–20:39]

Key Points

• India’s Strategic Importance:
  Both experts underscore India’s demographic edge (youthful population), setting it up as “the future of Asia’s middle class”—a key location for international trade engagement.

• EU-India Agreement:

  • A classic, comprehensive, “win-win” trade deal with focus on tariff and barrier reduction.

  • Highlights:

    • 96.6% of EU exports to India and 99.5% of Indian exports to the EU will ultimately be duty-free or face reduced duties, with phased implementation.
    • Sensitive sectors (autos, food, services) remain protected with gradual phase-outs and quotas.

    “The EU India agreement strikes me as a classic win-win trade agreement... focused on barrier reduction, tariff reduction, market access.”
    —Bill Reinsch [15:26]

• US-India Agreement ("Trumpian" Approach):

  • India gives up far more than it gains; US tariffs mostly stay, India’s are reduced.

  • Trump has agreed to lower certain tariffs (e.g., on Indian products) in two tranches in exchange for Indian commitments on industrial goods and a range of US agricultural products.

  • Many details are still vague, with language focusing on upcoming “reviews” and “possible reductions,” typical of recent US administration trade deals.

    “The US Agreement is much more Trumpian... where we maintain tariffs, India reduces them. It focuses on a few key highlight issues, but it looks like overall kind of what we wanted from India.”
    —Scott Miller [13:23]

    “There’s a lot of squishy language in this... It’s Trump in the sense that he’s bullied them into submission, and it’s Trump in the sense that there’s a lot of details left to be fleshed out…”
    —Bill Reinsch [20:11]

• Implementation Remains Uncertain:
  The “big caveat,” as both experts agree, is that actual implementation—what gets done, what gets slow-rolled, and what’s ignored—will be critical and is far from guaranteed.

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3. EU-China Tariff Tensions and Thaw

[20:39–25:21]

Key Points

• Recent Developments:
  China is reducing tariffs on EU dairy products after an 18-month anti-dumping investigation, following earlier reductions on European pork. This is seen as reciprocation for EU tariffs on Chinese electric vehicles.

• Tit-for-Tat Tactics:

  • The move is an old example of economic coercion and retaliatory trade policy.

  • China uses standard anti-dumping laws—starting with aggressive provisional duties and then dialing them back as negotiations progress.

    “It’s an old trick of economic coercion, which is you have these very high provisional duties that wind up getting dialed back. So it happens frequently… This is the way China plays the game.”
    —Scott Miller [21:14]

    “The Chinese go through all these steps… I wouldn’t say that their process is the one that has the most integrity… but they’re following the rulebook… in a way that is similar to the United States…”
    —Bill Reinsch [22:40]

• Bigger Picture:

  • Reduction of tariffs from high initial rates to single/low double digits reflects efforts to defuse trade friction.

  • Chinese trade with the US has fallen significantly (mostly due to tariffs), making the EU an ever more essential trading partner.

  • The steps do not necessarily signal a genuine “thaw,” but rather a tactical easing to avoid escalation.

    “Is that a sign of a warming relationship? I think at a minimum, it’s a sign that they’re trying to defuse a difficult situation with Europe and not make things worse.”
    —Bill Reinsch [24:55]

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4. Suez Canal Shipping and Maritime Trade Shift

[25:21–28:51]

Key Points

• Context:
  After Houthi attacks on shipping through the Red Sea in 2023, global shipping routes had to circumvent the Suez Canal, causing time delays and added expense.

• Encouraging Shifts:
  Container giants like Maersk and Hapag-Lloyd report increasing volumes returning to the Suez Canal route, suggesting stability and renewed confidence.

  “There are reports from the major container shipping companies… that they are seeing more volume through the Eastern Mediterranean… It was a serious penalty both in time and cost to avoid the conflict. I think what this is an indication of is that the settlement in Gaza is holding, whatever it amounts to.”
  —Scott Miller [25:54]

• Capital Investment as Security:
  The experts note that Gaza’s stability comes from multi-party investment agreements, not traditional peacekeeping mechanisms—highlighting how commerce can promote regional security more effectively than diplomatic signatures.

  “When you can secure something with partners, invested capital, you’re often better off than with signed names on a piece of parchment.”
  —Scott Miller [27:10]

• Economic Implications:

  • Insurance premiums and rerouting costs had driven the earlier shift away from Suez.

  • If the new voyages succeed without incident, it may further lower insurance and restore cost-efficient trade routes.

    “If these initial voyages… make it successfully, then I think what you will see is more companies following suit… All of which will be good.”
    —Bill Reinsch [27:46]

• Possible Port Congestion:
  Some shippers worry of European port congestion—but this is considered a “good problem” after past disruptions.

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Notable Quotes & Timestamps

• On Congressional Action:
  “Congress is standing up… Article 1, Section 8 gives us authority here and we're going to exercise that authority.” —Bill Reinsch [01:41]

• On Tariff Votes as Political Statements:
  “It's important that Congress realizes that tariff policy is a political question. It ought to be handled by the elected representatives of the people.” —Scott Miller [06:58]

• On India’s Future:
  “India is the future of Asia… It's going to be where the middle class of Asia resides.” —Scott Miller [12:26]

• On US-India Deal:
  “The US Agreement is much more Trumpian… where we maintain tariffs, India reduces them.” —Scott Miller [13:23]
  “There’s a lot of squishy language in this… It’s Trump in the sense that he’s bullied them into submission…” —Bill Reinsch [20:11]

• On EU-China Trade Moves:
  “It’s an old trick of economic coercion, which is you have these very high provisional duties that wind up getting dialed back.” —Scott Miller [21:14]

• On Suez Canal Restabilization:
  “When you can secure something with partners, invested capital, you’re often better off than with signed names on a piece of parchment.” —Scott Miller [27:10]

• On Constant Challenges in Trade:
  “There's always something to worry about, no matter what happens… Nobody’s ever happy.” —Bill Reinsch [28:39]

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Key Timestamps for Segments

• House Vote on Tariffs: [00:56–11:40]
• US-India and EU-India Agreements: [12:13–20:39]
• EU-China Tariff Reductions: [20:39–25:21]
• Suez Canal Shipping Returns: [25:21–28:51]

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Takeaways

• Congressional action to push back on presidential tariffs is symbolically significant, if not immediately impactful.
• Trade deals with India signal recognition of its growing global economic clout, but substance and implementation remain to be seen.
• EU-China trade tensions are taking the familiar shape of tit-for-tat tariffs, but there are signs of pragmatic de-escalation.
• Restoration of Suez Canal shipping routes—facilitated by capital investment and stabilized insurance risk—demonstrates how commercial interests and geopolitical stability can align.

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Transcript

[A]

I'm Scott.

[B]

I'm Bill and we're the Trade Guys.

[C]

You're listening to the Trade Guys, a podcast produced by CSIS where we talk about trade in terms that everyone can understand. I'm Alex Kisling and I'm here with Scott Miller and Bill Reinsch, the CSIS Trade Guys. Thanks for listening to the Trade Guys. On today's episode, we unpack the implications of the House vote to rescind President Trump's tariffs on Canada. Then we break down the latest trade developments, including new agreements between India and the United States in the European Union, as well as recent shifts in the EU China trade relationship. All that and more on today's Trade guides. All right, Bill and Scott, we're going to start this week on Capitol Hill, where on Wednesday the House of Representatives voted to rescind President Trump's tariffs on Canada, with six House Republicans joining Democrats on the vote. This came despite Speaker Johnson's year long effort to prevent such a vote from reaching the floor of the House. The measure is largely symbolic. President Trump will certainly veto the measure, but it does mark a significant political moment. It's the first time the House has formally voted to unwind one of the President's tariff actions, and it may not be the last. So, guys, there's clearly a major political dimension here, but let's begin with the policy implications. Bill, give our listeners your take on what exactly happened on the Hill and what does the signal about what could come next for the president's agenda?

[B]

Well, I spent 20 years there, so it's nice to be back, even though it's back from a distance. But the podcast has been remarkable about how little time we spent on the Hill.

[C]

We may be spending more now.

[B]

Well, that I think is one of the messages here. There is some sign that some of them are developing a spine, and I think that's a good thing institutionally, regardless of what you think about the tariffs, the fact that Congress is standing up and saying, Look, Article 1, Section 8 gives us authority here and we're going to exercise their authority. What they actually voted on was a clause in IPA that says Congress can overturn a declaration of emergency. And in this case, they voted only on the emergency with respect to Canada. Rumor has it that there will be more votes coming. They're in recess next week, the President's Day holiday. But after that, we're expecting to vote on Mexico and maybe a vote on Brazil and maybe a vote on all of the Liberation Day tariffs.

[C]

Do they have to do it one by one?

[B]

No, I think they did Canada because that's the easiest one to win.

[C]

Yeah.

[B]

You know, most people like Canada, and it's very hard to say we have a national emergency because of Canada. The Senate, you know, has voted on emergencies on Canada, on Brazil, and on all of the tariffs at various times last year. So they're on record, which suggests that when this version goes over to the Senate, which is the next stop for it, I imagine the Senate will pass it because they passed it before, and then it will go to the president and it will be vetoed, as you said. But I think the symbolism is important. It's Congress standing up. And it's also, I think, a reflection of the fact. Growing disquiet about the tariffs and the economic theory that underlies them and think a reality that for a growing number of members, there is simply not having the promised impact. The six Republicans that voted with the Democrats, all of the Democrats, as it turns out.

[C]

There was one Democrat, I think, that deny. I think it was Jerry golden of Maine.

[B]

I think in the end, they were solid on this.

[C]

I have to fact check us. Okay.

[B]

I have to go back and check. Yeah. But the six fell into categories. Bacon and Newhouse are retiring, so the they can do whatever they want. Massie is already well known to be at war with Trump, so I don't think he's too concerned about what might happen because Trump has already threatened all kinds of things against him. Congressman Kylie from California has been redistricted, so he's at high risk because of the California redistricting response. So his days may be numbered anyway. And then the more interesting ones are Congressman Fitzpatrick from Bucks County, Pennsylvania, and Congressman Heard from Colorado, both of whom represent districts that are fairly closely divided, I guess you'd call them purple these days. And I think there's probably some feeling that Fitzpatrick's been able to hold it for quite a long time because they are personally popular in the district. If you run a Trump candidate against them, which he threatened to do, and that candidate wins, both seats will probably flip to the Democrats. There's an advantage of incumbency in those two cases. Sure. They probably know it, and this is a way of them asserting their independence. Frankly, I'm surprised there weren't a few more, because if you talk to members of Congress, there's a lot of grumbling about the tariffs, particularly in the agriculture states. In fact, there's an agriculture coalition that was just formed this week to promote continuation of Usbaka, which in part is because of the zero tariffs. So the farm belt is Big on free trade. One of the ironies of this debate on the House is that Congressman Adrian Smith, who's the chair of the trade subcommittee, was interested in one of the more vocal defenders of the president and defenders of the tariff. I think it is fair to say that privately he has said other things, and his district, which is geographically most of Nebraska, is very much a farm district. So, you know, good on him for standing up for his party and the president. But I, you know, I would say here's the guy who took one for the team.

[C]

I mean, there were a lot of members, Bill, who I think were using the Supreme Court IPA decision as a bit of a shield here, saying they didn't want to jump the gun on any sort of vote before the Supreme Court made a decision, whenever that comes.

[B]

And interesting that that didn't work. The earliest time that it could come is next week, the 20th. It may not come then. You know, like last three times we said it was coming.

[C]

We're standing by to do that emergency episode. Whenever you're ready. Scotus.

[B]

Yes, well, we are ready to do it, but we have to wait for the court. It may well have happened by the time they come back and they may not have to vote on future ones. But it's important that they stood up. I think it's important for the institution, and it's a signal to the President that maybe his grip is loosening a little bit on the Republicans. Mean, six isn't very many, but it didn't, you know, in the current makeup of the institution, it doesn't take very many to produce a victory for the other side.

[C]

Yeah, he's not going to like this, but I mean, Scott, maybe that that's kind of the question here. Does this vote give the White House any pause on further actions it may take on tariffs?

[A]

I think not in the least. Look, it's a House vote that it was highly partisan House vote, so. But be careful about too much analysis because often votes in the House, particularly on rules or where there's sharply partisan message, they are, you know, pulled by an idiot, full of sound and fury, signifying nothing at the end of it. Macbeth was right, so. Or Shakespeare was right. Now, a couple things.

[B]

Yeah, but look what happened to Macbeth.

[A]

And look what happened to him. Didn't work out well, anyway, now it's never a good thing when a Speaker loses a vote on the world. So this was not a good day for Speaker Johnson. And I think it's important to note that although there really isn't, as Bill pointed Out. Not an obvious path forward. Even if there's a affirmative vote in the Senate, there's nowhere close to two thirds that you'd need to get past the president's veto. But two things make it, I think, interesting and worth noting. The first is this is the first time the Congress has realized that tariff policy is a political question. You know, it ought to be handled by the elected representatives of the people. It really should. I mean, IAEIPA is really not about these individual countries. To me, the fight over AIPA is Congress created a statute that was directed toward adversaries. The first usage of IEBA was against the Iranians for taking over our embassy in Tehran. That was the initial AIPA declaration under this law. But almost all of it is focused on adversaries, and Trump had the imagination to use it as leverage on friends, allies, neighbors. And it's different. But the solution to that is not to petition nine lawyers and get their opinion of what the words mean. It's for Congress to amend the statute to hold hearings, to do the things that Congress does when they created the statute in the first place. Okay. Which is exercise political judgment. So that's, I think, important. I wish they'd get on with that. I have a little bit of a contrary view on what this may mean, the politics, because what I've seen from the House Democrats since President Trump took office, the second time is they've been the resistance, okay? Whatever President Trump is for, they're against it, and they get together. When they get together, it's usually something that unites Democrats, often divides Republicans. But the President has had this uncanny ability to pick issues that are kind of 80, 20 for the American people, and get his opponents to side with the 20. They're doing it this week on voter ID, by the way, which Gallup says is like 81% of Americans think it's the right thing to do. And. And they're standing just as firmly against voter ID as they are against tariffs on Canada. So they gotta be careful with that. But. And this may mean that tariffs are getting popular. I don't know, but I'd love to see the research on that.

[B]

Well, the polling on tariffs is not 80, 20. It's the 60, 40 against them. I mean, I think Scott's right that this is a partisan vote. There was a very interesting poll that was done last summer post Liberation Day, that fascinated me. It asked each party if they would support the terrorists if they were imposed by a president of their own party and if they were imposed by a president of the other party. And the divide was partisan and predictable. Republicans said they would support tariffs if a Republican president imposed them, but they would oppose the same tariffs if a Democratic president imposed them. And the Democratic voters said the reverse. So there is an element of partisanship to this always, definitely.

[A]

But that polling is not current. And what I'm sensing is the issue may be changing.

[B]

Oh, I think the 6040 is current. That's last week.

[A]

Oh, okay.

[B]

If anything, I think the dissatisfaction with the tariffs is growing because it's not producing the benefits that were promised. You know, the administration's rhetoric on this is that prosperity is just around the corner. I think, to quote somebody else.

[A]

Well, they've had a good jobs report. They've had progress on revenue. Certainly the tariff is changing, the budget and deficit revenues. There's a lot of things at play here, and we may not be asking.

[C]

The right question, but that's the political problem for the president now. Right. Is that the fundamentals of the economy. Gosh, not to steal a line from John McCain here, but the fundamentals of the economy are fairly strong, yet Americans are not feeling it. And they still cite affordability as the number one issue that's driving their views, and that's ultimately driving down the president's point numbers. And that was clearly why the number of these Republicans felt comfortable jumping in. To some degrees, that affordability is hurting them back home.

[B]

I wonder if it'll be interesting to see if the Supreme Court strikes down the tariffs and then the House goes and have another vote whether more Republicans will join in on the theory that they're supporting the court. I hadn't thought about that.

[A]

It's a fluid issue. I mean, I understand why members are having a difficult time with it, but look, that's why they get the job. That's why they ran for office. And I'd much rather have this in the hands of the political branches of the people elected to do this work than just trying to get lucky with a. With a court decision.

[C]

Well, let's see how it plays out over the next couple of weeks. As Bill mentioned, we could have a Supreme Court decision here on February 20th. We don't know that for sure, of course, but that may change the dynamics, and if not, we may have other House votes coming up here over the next few weeks on Mexico and Brazil. So we'll stay on it and we'll report back as more developments over the next few weeks. But let's turn next to a topic we touched upon briefly last week. Scott, I want to get into the details of the EU India and the US India trade agreements. We, we learned some more details over the past week. So can you get us up to speed here?

[A]

Well, let me start with some general comments and Bill's done a lot of work here as well. But first, I think India is important in and of itself because to my mind, India is the future of Asia. If you look at it from a total population standpoint, but more importantly from a demographic standpoint, it's the large economy that has the positive demographics. It has the young people today that will turn into a big middle class into the future. Unlike China and certainly unlike the big industrial powerhouse countries of Korea and Japan, which are both getting quite old demographically. So the very different futures that you can assign, but certainly India is going to be where the middle class of Asia resides. Keep in mind, Asia is half the world in terms of just sheer population. So it's a very important economy from that standpoint. It's also one that's had a, shall we say, checkered history of trade agreements and trade liberalization. Over the years. It's been a very difficult place to secure sort of lasting agreements on particularly goods imports and goods exports for that matter. Now India, it's a tough place for politicians too. It is a multi party, a multi ethnic democracy that to win an election you have to put together several hundred million votes. And they do have a strong federal system that puts a lot of the power at the states rather than at the national level. There's a lot of intricacies in working with India. And as Bill has frequently noted on the podcast, India has a history of being the last to agree to anything in multilateral trade agreements, often the one most willing to take hostages and later execute them. So when it comes to policy issues, they're not a lot of fun in Geneva, but they're very important. And so I think that's worth saying that both the United States and Europe are reaching out and trying to, trying to engage. The European agreement for me looks a lot like their typical association agreement. Keep in mind the EU27 has many so called, what they call association agreements, which are partial free trade agreements with neighboring countries, with sort of countries on the periphery of Europe. Many of those are large and important for part of their manufacturing supply chains, Turkey being a prime example of that. So it's a similar agreement to that. It carries with it very fairly strong levels of openness on both sides. Eventually phase in periods to be agreed to or to be determined. But at the end point, almost everything is liberalized. There's a lot of the European rules that get read into the program. The US Agreement is much more Trumpian where we maintain tariffs, India reduces them. It focuses on a few key highlight issues, but it looks like overall kind of what we wanted from India. So I think both agreements are useful to their parties. I think the US Agreement looks like what this administration tries to achieve and we'll see about compliance and implementation. That's always the question mark, but always worth the effort in my view because of what India represents in terms of the future of the world.

[C]

Bill, what's your take?

[B]

Well, big caveat which Scott just said implementation is the key and there's always the question of what will actually be done, what will be ignored and and what will be slow rolled. I think his general Description of the two is apt. The EU India agreement strikes me as a classic win win trade agreement in a traditional sense. It's focused on barrier reduction, tariff reduction, market access. So the Indians have indicated that 96.6% of EU exports to India and 99.5% of India's exports to the European Union will be either duty free or reduced duties. And that's the catch there is that not all of that happens at once. Yes, the Indians think that 90.7% of their exports will benefit from immediate zero annual tariffs, including stuff that actually matters to them. Textiles, apparel, leather, footwear, chemicals, gems, jewelry, which are big Indian exports, toys. But India also says that only 49.6% of its tariff lines will immediately go to zero. The rest of them are subject to five, seven or ten year phase outs and in some cases not always zero. Autos, for example, they're going to go down eventually from 110% to 10% which is still fairly high over five years. But there will also be a 250,000 vehicle annual quota. So it's not USMCA in terms of zeroing everything out. But for India, big step forward. And likewise on services. They basically agreed to provide for enhanced access to each other's services markets. I think at the margin probably the EU has done a little bit better on the services side and the Indians a little bit better on the on the tariff side. But it's a fair agreement. Both sides protected stuff that matters to them. The EU CBAM stays in effect. Its food and sanitary standards remain in effect. They did not reduce tariffs on beef, poultry, rice and sugar. So you know, everybody was taking care of their own. It's very traditional. As Scott said, the US India one is Trumpian. And the Indians, I think the Indians gave More than they got. It was not 0 for 0 by any means. Trump agreed to lower the 50% to 18%, which he's doing in two tranches. He immediately took them, went from 50 to 25, which was the extra that he bumped up over the Russian oil issue a few months ago, which, by the way, Russian oil is not addressed in the joint statement on this, so we don't really know its status.

[A]

That was a surprise for me.

[B]

Well, who knows? Trump said they promised to stop buying it. The Indians have said nothing, so, you know, we'll find out. They've gone down to 25 and he says he'll go down to 18 when the agreement is actually signed, which is supposed to be next month. And there are some categories, generic pharmaceuticals, gems, diamonds and aircraft parts, where they may actually go down to zero once the agreement is signed as well, along with a promised but not specified in numbers preferential tariff rate quota on auto parts, with a possibility of a further deal on pharmaceuticals, meaning not, not the generic pharmaceuticals, but branded pharmaceuticals and their ingredients. India, in turn has promised to, and it's the word, it is very interesting. India has promised to eliminate or reduce tariffs on all US India's industrial goods and a wide range of US Food and agricultural products, including distiller, dried distiller grains, sorghum, tree nuts, fresh and processed fruit, soybean oil, wine and spirits, and additional products.

[C]

Sounds like Bill's typical lunch.

[B]

Yeah, afraid not. The typical commodity crops, you know, soybeans, corn, wheat, not mentioned here. So it's not clear to me exactly what they're going to do there. The phrase or reduce as opposed to the word eliminate suggests that there may be more reductions than eliminations and that therefore the United States may be getting less than it expects. In which case I'm sure we'll hear from Trump again and have another episode like we're having with the Koreans right now. There's also a commitment by the Indians to address non tariff barriers, including areas that we care about that have been longtime points of contention. So good on Trump for tackling these medical devices, ict, you know, information and communication technology goods. A review to determine whether U.S. or international standards will be accepted to allow products to enter India instead of their own special standards that are basically protectionist. Reviewing their NTBs on US food and agricultural products. Now, in fairness, a lot of the language says they're going to review, they're going to address doesn't really say exactly how they're going to address or what the result of the review is going to be. So there's a lot of squishy language in this, which is also typical of Trump agreements. So Scott's right on two levels. It's Trump in the sense that he's, you know, he's bullied them into submission, and it's Trump in the sense that there's a lot of details left to be fleshed out and they may not end up being fleshed out quite the way the administration thinks.

[C]

Yeah, a lot of ambiguity there. I want to stick with, with the EU for a minute here and focus on EU China relations because on Thursday China announced it would be reducing tariffs on EU dairy products after an 18 month anti dumping investigation it launched after the EU imposed tariffs on Chinese made electric vehicles. So basically a tit for tat move. And this step follows a reduction in tariff rates for European pork products that was made late last year. Scott, turn to you again here just to get us up to speed on what's happening here and whether or not this signals a thaw in economic relations between China and the eu. Seems like it to some degree.

[A]

Well, it does, but it's an old trick of economic coercion, which is you have these very high provisional duties that wind up getting dialed back. So it happens frequently. It happens a lot with China. This comes the way China plays the game and so we'll see how long it sticks. And certainly China can use the export market and has a clear idea of what it wants and relieved enough pressure to get back to a program that they were comfortable with.

[B]

So small wonky lesson here. For those of you that are trade nerds on this, this is an interesting case because China's really using a very old tool. It's using its own anti countervailing and anti dumping laws. Most countries have these laws. Our dumping law is more than 100 years old. China's is younger than that, but it's not new. And these laws, which are WTO consistent by the way, at least on paper, follow a general pattern. I mean, each country does it a little bit differently, but essentially you have to determine two things in each case. You have to determine that a crime has occurred, that is that the country has dumped, meaning sold below home market price or sold below cost of production or that it's been subsidized. So you have to figure out that that's happened. You also have to determine that somebody in your country has been injured by that and that the injury is due to the dumping or the subsidization. It's not due to recession or some domestic policy or demand Shift.

[A]

It's unfair trade, in other words. Yes.

[B]

So the Chinese go through all these steps. I wouldn't say that their process is the one that has the most integrity. I think Scott's statement that this is pretty much retaliatory steps, what the Europeans have done is correct. But they're following the rule book. And I mean, there is a rule book and it's a WTO sanctioned rulebook, and they're following it and they're actually doing it in a way that is similar to the way the United States has done this. And that is these cases tend to proceed in two steps in terms of determining the crime, if you will, and generally governments determine that the other side is guilty. This is not going to be a surprise. The United States does this most of the time. Not all the time, but most of the time. The Chinese do it most of the time as well. And then you could debate whether it's really a considered decision or something that was cooked up in advance. But they then assess a duty, a tariff that is supposed to be based on the amount of the dumping or the amount of the subsidy. And they usually start out with a big number. And the Chinese did this in a number of, of their retaliatory cases this time around. They usually start out with a big number. And I think that's a fair point, that it's a leverage move designed to intimidate the, in this case the EU and to say, you know, we're really going to hit you on this. What then happens under the rules is there's pushback, you know, and the other guys can come in and say, your number is too big. And in the United States, you know, the other thing that happens is the domestic parties come in into the Commerce Department say, your number's too small, you know, it really should be bigger. So there's a second round of debate about this, and often times the result is a smaller number and not a zero number, but a smaller number. And that seems to be what's happened in these cases, that the Chinese have fallen off the original numbers, some of which were in the, you know, 40 plus percent category, and have come up with numbers now that are in the single digits or low double digits. Still not insignificant, but a big improvement. Is that a sign of a warming relationship? I think at a minimum, it's a sign that they're trying to defuse a difficult situation with Europe and not make things worse. They are, as Scott said, they now have a trillion dollar surplus. But keep in mind that despite all that, their trade with US has declined significantly for a variety of reasons, but mostly the tariffs. So they are looking for more markets. And the European market is more important to them in 2026. It's more important to them in 2025 than it was in 2023 and 2024. It's going to continue to be more important. So defusing this kind of thing is probably a smart move on their part.

[C]

All right, well, let's close today. What I think is a really interesting geopolitical and security story. But of course, there's a major trade dimension here because there are some pretty big developments in the shipping world. After the Houthi attacks on commercial vessels in the red Sea in 2023, many shipping companies decided to reroute around Africa instead of transiting through the Suez Canal, a move that's obviously more time consuming and costly. And According to the UN, 12 to 15% of global maritime trade passed through the suez Canal in 2023. But, Scott, there have been some shifts recently that are worth taking a look at.

[A]

So what's, what's going on here? Yes, it's encouraging. It's early and it's tentative, but it's encouraging. There are reports from the major container shipping companies, Maersk and Hazbeck Lloyd, that they are seeing more volume through the Eastern Mediterranean. That would be the Suez Canal Red Sea route, where the previously a lot of trade was, as you said, rerouted around the Cape of Good Hope, which adds 20 days from a shipment, say from Shanghai to Rotterdam. So it was a serious penalty both in time and cost to avoid the conflict. I think what this is an indication of is that the settlement in Gaza is holding whatever it amounts to. And I find that interesting because Gaza was settled not through UN agencies or bilateral donors, but through a basically a capital investment agreement among a number of parties. And what that capital investment is doing is securing trade through the very important Eastern Mediterranean corridors. There are land and sea corridors that connect the Middle East, Europe and Asia that run through the eastern Med. And to the extent those corridors become active and safe for goods transit, the processes that they are engaging in is, is likely to work out very well. And for those of us from the commercial world, we know that when you can secure something with partners, invested capital, you're often better off than with signed names on a piece of parchment. Okay. Or some agency that's trying to make a solution that got forced onto one of the other parties to make it work. So I do think there's something encouraging here. As I said, tentative early days worth watching Very interesting.

[C]

Bill, are you going through the Suez Canal anytime soon?

[B]

No. Plans. Haven't ever seen it. Keep in mind, though, that a lot of this is insurance companies, too. You know, the. Yes, the Houthi strikes raised insurance rates dramatically, which was one thing. I mean, the ships started going around Africa for protection reasons, but also because it was becoming much more expensive not to do it that way. If these initial voyages, I think there's two now that have been scheduled, if they make it successfully, then I think what you will see is more companies following scoop in efficiency gains and decline in insurance rates, all of which will be good. Of course, the other lessons of these is, you know, there's always something to worry about no matter what happens. And in this case, the shippers are saying, well, you know, if we come, if things go back to the way they were through the canal, the we're going to have congestion at European ports, you know, so that sounds like a.

[A]

Kind of good problem to have after what we live through.

[B]

I'm not too worried about that. You know, at best, it's a transition problem, but it's also just comments. Nobody's ever happy. You know, there's always some new thing that you can complain about, you know.

[A]

Something to complain about.

[C]

Well, guys, I think it's a fascinating story. Thanks for briefing us on it. So we'll leave it there for today, guys. Again, for our listeners, if there is a Supreme court decision on February 20th around the IEPA case, we we will be here to cover it. Otherwise, we will continue to join you in our regularly scheduled time. So thanks everybody for joining us. Talk to you soon.

[B]

Thank you.

[A]

Thanks.

[C]

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