Potential Impacts on the Shipping Industry by China-US Trade War

The way in which the China – US Trade War has played out from the first quarter of 2018, many of the global players have been paying close attention to how this would affect other global markets and the potential impacts on the shipping industry players as well. In this edition of the Transco Cargo blog, we look at the potential impacts on Shipping Industry by the China-US Trade War, along with what to expect in the coming months.

The China and US Trade War has had many players in the world on edge, due to the uncertainty it has brought forward, mostly due to the hindering of the free flow of goods. Due to the fact that there are so many tariffs being imposed by the China-US Trade War, there will be instances where alternates will have to be chosen, thus posing potential impacts on the shipping industry players due to different trade routes being required. One of those concerns would the US imposed tariffs on EU and Chinese goods. These includes 25 percent tariffs on steel, 10 percent tariffs on aluminium for the EU along with imposed 25 percent tariffs on US$200 billion worth of Chinese goods.

Potential impacts on the shipping industry can be anticipated for the dry bulk shipping sector, however not severely in terms of volume. It’s expected that when it comes to Chinese exports with eastbound shipments on the Asia-North America route will incur potential impacts.  It’s also expected that potential impacts on the shipping industry can be expected for crude oil exports from the US as it was demand driven with China in the forefront.

Whilst we have highlighted the US and China in terms of the trade war, the EU has also jumped on the bandwagon with declaring tariff regulations on US products. This would mean that US exports such as bourbon and motorcycles might be affected. Back in 2017, the US exported 1.24million tonnes of goods to the EU, all of which have now been tariffed. Furthermore, it should be noted that Canada and Mexico have also imposed tariffs, but it has not made much of an effect to cause potential impacts on the shipping industry.

Potential impacts on the shipping industry are mostly on the transatlantic and transpacific shipping routes, but other shipping routes such as via Europe and Asia remain as is. The China and US trade war has strengthened trade relations between the likes of Europe and Asia. This was further deepened by China allowing independent investments without the need for joint ventures.

The China-US Trade War has many potential impacts on the shipping industry; however, if you were to look at it from a global standpoint such as European and Asian trade, it would mean more cargo in waiting for maritime shipments between this part of the world. This means that the effect of potential impacts on the shipping industry caused by the China-US trade war would mean that there would be greater Asian significance to the global economy as well as the maritime shipping industry as a whole.