Bombing the Houthis won’t help global commerce but Donald Trump’s auto and shipping protectionism will certainly damage it, says the Financial Times’ Alan Beattie.
US President Donald Trump looks on as military strikes are launched against Yemen's Iran-aligned Houthi s over the group's attacks against Red Sea shipping, at an unspecified location in this handout image released Mar 15, 2025. It would be somewhat ironic if Goldberg’s presence resulted from an attempt to loop in the US official responsible for the attack’s supposed goal of easing the world trade system.
Contrary to vice-president JD Vance’s assertion that the closure of Suez affected almost entirely European trade, world container shipping is sufficiently connected that a capacity shortage on one route increases costs everywhere. The Houthis have set up a system of extorting payments from ships for passage. The amount of money raised is disputed, but it’s a nice example of the distinction in economic theory between “stationary bandits”, who exact calibrated bribes to maximise income rather than deterring trade altogether, and “roving bandits” who simply loot everything they can.
Global freight rates shot up again last spring and summer, but shipping industry experts say that appears to have been related to companies globally building inventories to insure against future shocks rather than any fresh news out of the Red Sea.
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