A second term for Trump could represent a significant threat to the stability of the container market
2 weeks ago
A second term for Trump could represent a significant threat to the stability of the container market
According to a recent analysis by Drewry Shipping Consultants, the potential re-election of Donald Trump as US president should raise alarms for the container shipping industry, with the firm labeling a second term as a “destructive risk to the container market.”
While Trump's policy proposals often seem erratic, the reintroduction of import tariffs has been a central theme. Drewry's container research manager, Simon Heany, highlighted that Trump's tariffs from 2018 are still impacting the market, with China's share of US imports plummeting from 40% in 2016 to approximately 27% in the first eight months of this year. He noted that as China’s market share has declined since the implementation of these tariffs, Vietnam's share has effectively doubled during the same timeframe, suggesting a shift in sourcing that has yet to significantly affect global shipping.
Heany explained that diversification in sourcing can benefit container shipping due to the increased demand for shipping services. However, he warned that a deeper retreat into isolationist policies, such as a more pronounced “US-first” approach, could severely disrupt the container market, as loaded imports to US ports are vital to its health. He pointed out that US import volumes have risen by 15% year-to-date, indicating a robust demand that could be threatened by such policies.
Both Trump and Kamala Harris have shown protectionist tendencies, but Heany emphasized that Trump's proposals are markedly more extreme. He pointed to Trump’s plan for a sweeping 20% tariff on all imports, with an eye-popping 60% on goods made in China. He argued that this would ultimately burden US consumers and diminish demand for container imports, driving businesses to seek alternatives in countries like Vietnam, India, and Mexico. While some reshoring might enhance US exports, retaliatory tariffs from other nations could hinder overall trade growth.
In a recent CNBC interview, Germany's finance minister Christian Lindner remarked on the need for diplomatic efforts to prevent trade conflicts, signaling potential retaliation if tensions escalate.
On the other hand, Heany cautioned that while Harris may not impose new tariffs, her administration could rely on increased subsidies to support US industries and exports, which may still alarm other nations and trading partners. However, he anticipates that Harris would adopt a more conventional diplomatic approach, making her administration less likely to cause major disruptions in trade. Ultimately, Heany concluded that a Trump victory would pose a far greater threat to the stability of the container market.
Source: The Loadstar