The Mexico Loophole on China Tariffs 🇲🇽

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The Workaround Keeping Oil Flowing Through Hormuz

Trump posted this week that more than 100 million barrels of oil and roughly 200 commercial ships have moved through the Strait of Hormuz under a quiet US operation. So how is that happening when most major carriers have suspended Gulf transits and 1,550 ships sit idle? Open-source data points to one of the more inventive maritime workarounds in recent memory.

It started with Project Freedom, a US Navy escort operation announced in early May. The formal version was paused within a day, but reporting suggests quieter coordination has continued—with US destroyers, aircraft, drones and autonomous vessels apparently guiding ships through the southern Strait near the Omani coast.

The mechanism, pieced together from satellite imagery and tanker-tracking data, is clever. Off the coast of Oman last weekend, 16 tankers clustered together to transfer millions of barrels of oil stranded in the Persian Gulf—an area that had been entirely empty a month earlier. Tracking firms identified 12 ships conducting transfers outside Hormuz on June 6 alone. Empty tankers then appear to cycle back through the Strait with AIS on to collect new loads from the UAE, Saudi Arabia, Bahrain, Qatar or Iraq. That would explain why Gulf ship counts haven't collapsed—the same vessels are reportedly being reused.

Behind the scenes, the financial scaffolding may matter just as much. Standard protection and indemnity insurance for Gulf transits was cancelled in March, and commercial war risk premiums have surged to multi-year highs—pricing many shipowners out entirely. Washington appears to have stepped into that gap, with war risk cover reportedly underwritten through the US Development Finance Corporation's roughly $40 billion pool. That would help explain Kuwait's recent willingness to sign new long-term oil contracts despite the ongoing crisis: without state-backed insurance, the cargo simply wouldn't move.

The question is sustainability. Pre-crisis flow was around 20 million barrels a day—roughly 20% of global seaborne oil trade. Independent analysts estimate current effective flow is a fraction of that. The workaround appears to work—but it isn't normalisation.

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VIDEO OF THE WEEK

How Tariffs Made MEXICO Great Again

How does a Hisense TV — a Chinese brand, with a label that clearly says Made in Mexico — still cross into the US tariff-free? The answer isn't a scam or a mislabelling. It's a loophole hiding in plain sight, written into the rules of one of the world's biggest trade deals. Here's how Chinese manufacturing quietly became "Made in Mexico" — and why it might not last.

TRADE SNIPPETS

Autonomous sea drone rescues downed Apache pilots near the Strait of Hormuz. A Saronic-built Corsair unmanned surface vessel recovered two US Army pilots after their Apache helicopter was shot down off Oman, marking the military's first publicised use of a sea drone for aircrew rescue.

Saudi Arabia signs rail deal with Turkey to revive Hejaz line and bypass Hormuz. Riyadh and Ankara have signed a railway cooperation deal advancing the revived Hejaz line, envisioned to link Turkey through Syria, Jordan, and Saudi Arabia to Oman as a trade corridor bypassing the Strait of Hormuz.

China shifts from "Made in China" to "Made by China" as factories relocate abroad. Squeezed by Western tariffs and weak domestic demand, Chinese firms like BYD, CATL, and Midea are exporting entire factories overseas, with outbound investment rising 7.1% while domestic investment fell for the first time on record.

Japan's three megabanks team up to launch a jointly issued stablecoin. Mizuho, MUFG, and SMBC have formally agreed to co-issue a shared stablecoin via trust banks, targeting live commercial transactions within fiscal 2026 under a new governance council backed by Japan's Financial Services Agency.

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