All hands on deck for global shippers as US President Donald Trump’s unilateral 10 per cent import tariff took effect this past weekend, sparking concerns over rate volatility, transport demand, and the threat of a global trade war.
Months of tentative anticipation came to a head on 5 April as US customs agents began collecting the new tariff at seaports and airports. While Trump’s latest move pushed itself to the forefront of world leaders’ agendas, higher levies on goods from 57 major trading partners—including the EU, which will face a 20 per cent rate—are set to take effect next week.
China, however, is poised to bear the brunt of these levies, with tariffs totaling 54 per—a move expected to stifle demand for cargoes from key trading partners including Vietnam, Japan, South Korea, Taiwan, and China itself. According to Bloomberg Intelligence analysts, this could, in turn, frustrate freight rates and earnings for shipping giants such as Maersk, NYK, and COSCO.
Despite the tariffs’ multifaceted impact, an expected proliferation of reroutings of global trade, and thus major shifts in the global demand, are among the gravest consequences to liners in the wake of Trump’s latest move.
“From a shipping perspective, the container sector will be affected the most,” Niels Rasmussen, Chief Shipping Analyst at BIMCO, said.
“Many tanker and dry bulk commodities have so far been exempted from the tariff increases, but most goods shipped in containers will face import tariff increases. In a scenario where the tariff increases would result in zero growth in US container imports, it would reduce global container volume growth by 0.5 percentage points,” Rasmussen continued.
In efforts to mitigate losses in the container world, sufficient front-loading of container volumes and a rush to air freight orders ahead of the tariff announcement were already set, reported Lloyd’s Register. Nonetheless, the true impact on global shipping and freight rates remains contingent on retaliatory measures and remedial negotiations.
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Despite Trump’s self-proclaimed ‘liberation day’ of tariffs, China has struck back with a plethora of countermeasures, including levies of 34 per cent on all US goods.
Meanwhile, South Korea, Japan, and the EU have vowed to retaliate, increasing the cost of global trade, triggering global inflation and risks of economic recession, reported Lloyd’s Register. Amid what many see as the collapse of a decades-long era of trade liberalisation, the international response has been one of widespread condemnation.
“This is an economic revolution, and we will win. Hang tough, it won’t be easy, but the end result will be historic,” Trump said on social media on Saturday.
READ: Trump’s tariffs and their consequences
Global financial markets suffered a dramatic plunge following Trump’s tariff announcement last Wednesday, erasing $5 trillion in S&P 500 market value by Friday’s close, marking the steepest two-day decline on record, according to The Guardian.
“This is the single biggest trade action of our lifetime,” said Kelly Ann Shaw, a trade lawyer at Hogan Lovells and former White House trade adviser during Trump’s first term.
“This is a pretty seismic and significant shift in the way that we trade with every country on Earth.”
