The Peter Zeihan Podcast Series - The One Road Propping Up US-Mexico Trade || Peter Zeihan

Episode Date: November 14, 2024

Everyone grab your favorite road trip snack and pick out some good tunes, because today we're talking about the increasingly important I-35 corridor. Join the Patreon here: https://www.patreon.com/PeterZeihan Full Newsletter: https://mailchi.mp/zeihan/the-one-road-propping-up-us-mexico-trade

Everybody, Peter Zion here coming to you from Austin's Hike and Bike Trail around Ladyburg Lake or Town Lake for those of you who haven't been here in a while. Today we're going to talk about that, the Interstate 35 corridor, which I would argue is the most important transport corridor in the United States. The issue is one of geography. It's not so much that the U.S. and Mexico are each other's largest trading partners. It's how you connect the two. Mexico is a very, very rugged area, and so doing large-scale rail. transport isn't really economically viable because if you have a one quarter of one degree increase in the slope of your rail line you can only handle about half the cargo and

the spine of Mexico the middle like basically the northern middle half is all mountainous and most of the population within Mexico City lives over a mile and a half above sea level so getting the sort of thing that you would get in the American Great Plains or Midwest just isn't possible in Mexico and that leaves us with truck in the United States we have a similar constraint but it's because of policy rather than geography. The U.S. has the largest natural navigable waterway system in the world, but because of the Jones Act, we don't use it. We basically made it nearly impossible. We've quadrupled, if not more, the cost of water transport by saying that anything that connects

to any two American ports has to be on a vessel that is American-owned, built, captain, and crude, which again, pushes us towards truck as well. And that's where I-35 comes in. Basically, the transport artery that begins in Mexico City, shoots up to the Texas border, hits three cities in the Texas Triangle, San Antonio here in Austin and then Fort Worth, goes on up to Kansas City with shoots going off along the way, off towards the east and the west coast, and eventually once you get up to, say, yeah, Kansas City, you also have shoots going north, going to, say, Des Moines and Duluth on the Great Lakes and further west towards the Canadian prairie provinces. And so everything is basically shipped by 20-foot container unit.

rather than rail or water, which be far more efficient. And so until we figure out a solution to a road system that in most places is six lanes or less, we have a constraint on how much we can do within the North American system. The smart play would be to invest a trillion dollars in rail infrastructure in Mexico, and the smart play would be to amend the Jones Act so that the Mexicans could ship stuff to Vera Cruz and then up through the American waterway system. But until then, we're stuck with this. Ergo traffic at all hours.

Oh, and one more thing, and yeah, I-35 just around the bend of the river here. The second biggest, most important trade artery in North America is on the opposite side of the country, where Ontario meets Michigan. The ambassador bridge between Windsor, Ontario, and Detroit, Michigan, until very recently was the most important trade way. And basically, a lot of that is automotive trade. Still remains incredibly important today. I'm not suggesting that it's gotten any smaller. it hasn't gotten bigger, just Mexico is overtaken it by a significant margin in the last 10 years.