Trump Second Term Poses ‘Destructive Risk’ to Container Market

The prospect of Donald Trump winning the forthcoming US presidential election ought to put the container shipping industry on alert, new analysis from Drewry Shipping Consultants has concluded, describing a potential second term as a “destructive risk to the container market”.

While many of Mr Trump’s policy proposals appear rambling and disjointed, a new round of import tariffs have featured strongly, while the tariffs he introduced in 2018 continue to have an effect, Drewry manager of container research Simon Heany said. And he noted that China’s share of US loaded imports had fallen from 40% in 2016, to around 27% in the first eight months of this year.

“China’s market-share erosion kicked-in around Trump’s first tariffs and has continued to slide under the Biden administration. Over the same period, Vietnam has doubled its share of US imports,” he said, arguing that changes in sourcing location had little impact on the global shipping market.

“Diversification is a positive for container shipping, because greater fragmentation of production means more shipping or parts, but what would be a problem is if the US decides to take things a step further and retreat into more ‘US-first’ isolationist policies, because loaded imports into US ports are one of the main drivers of the container market,” he said. US import volumes were up 15%, year to date, he noted

Both Mr Trump and Ms Harris have been keen to advertise protectionist tendencies, but Mr Heaney notes that Trump’s views are far more extreme, and his belief that tariffs would help US consumers and industry could be misguided.

“Trump is proposing a 20% universal tariff on all imports into the US, with 60% on ‘made-in-China’, which would ultimately be paid for by US consumers and dampen demand for container imports, and any escalation would further encourage US businesses to search for alternatives, such as Vietnam, India and Mexico.

“More reshoring might boost US exports, but growth in outbound trade is likely to be stymied by tit-for-tat retaliatory tariffs elsewhere in the world,” he added.

As if to underline his point, Germany’s finance minister, Christian Lindner, said in a CNBC interview, on the sidelines of the annual IMF meeting in Washington, that “we need diplomatic efforts to convince whoever enters the White House that it’s not in the best interest of the US to have a trade conflict with [the] European Union. We would have to consider retaliation”.

But that doesn’t mean that Ms Harris is set to be a defender of global free trade, Mr Heany warned.

“Instead of new tariffs, a Harris administration would introduce more subsidies to boost US industries and exports, which arguably will be of concern to other nations and trading blocs.

“However, Harris is more likely to adopt a more traditional, diplomatic approach and, while it’s unlikely that the US and China would become bosom buddies, as the status quo candidate, in our view there’s less opportunity for disruption. Overall ,we think a Trump win promises a more destructive risk for the container market,” he said.

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