Shipping stocks remain under severe pressure today as the world comes to terms with the immensity of Wednesday’s tariff announcements from US president Donald Trump.
The average US tariff rate has now been set at just under 25%, levels not seen since the 1930s and the days of the Great Depression.
The Trump tariffs resulted in the second biggest wipeout of US stock market values in history in dollar terms, $3.1trn, yesterday with stock markets in Asia-Pacific continuing to trade down today.
The scale of the tariffs makes comparisons with Trump’s earlier tariff tactics eight years ago irrelevant, however, some in shipping are pinning their hopes to Trump admitting yesterday he is open to lowering tariffs if other countries can offer something “phenomenal”, signalling the White House is willing to negotiate despite the insistence of some top officials.
The container sector will be affected the most
“There is really no comparing Trump’s trade war this year with the steps he took starting in 2017,” analysis by container booking platform Freightos suggested, adding: “This time, the tariffs are so broad and so high that there are few duty-free alternatives.”
Most economists are now predicting slower and modest US GDP growth, an increased likelihood of recessions in the US and beyond, and therefore a possible contraction of global trade as well.
“Global shipping is expected to be stifled as a result of the broader tariffs,” argued US investment bank Jefferies in a note to clients yesterday.
Jefferies said the container sector was likely to be the most “sensitive” to tariffs, a point of view shared by BIMCO’s chief shipping analyst, Niels Rasmussen.
“From a shipping perspective, the container sector will be affected the most. 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,” Rasmussen said.
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, according to BIMCO estimates.
In related container news, speculation is growing that French liner CMA CGM’s big plans for investment in the US might be put on hold.
On March 6, CMA CGM’s chairman Rodolphe Saadé went to the White House (pictured), unveiling a $20bn planned investment into the US over the coming four years.
Now, however, in the wake of Trump’s 20% tariffs on European Union nations, Saadé’s friend, Emanuel Macron, the French president, has hinted such investments should be reviewed.
“Future investments, investments announced in the last weeks, should be suspended for a time for as long as the situation with the United States is not clarified,” Macron told a group of French politicians and business leaders yesterday.
Wednesday’s tariffs are yet another example of the colossal, upending change brought about in the opening months of the second Trump administration, something broker BRS has neatly encapsulated below.
Up next for global shipping, Trump will make a decision on whether to penalise Chinese-built tonnage calling at US ports.
