During the U.S. presidential campaign, then-candidate and now-president-elect Donald Trump proposed implementing 10-20% across-the-board tariffs on most imports, reaching a minimum of 60% for products from China. Uncertainty about the exact magnitude, timing, and location of these tariffs suggests a potential increase in demand for shipping, which could translate into higher freight rates, especially on routes from Asia to the US.
According to Judah Levine, head of research at Freightos, tariffs were a central part of the Trump administration's trade policy during his first term, especially towards China. This included tariffs on $200 billion worth of goods imported from the Asian country, which were announced in July 2018 and implemented as a 10% tariff in September that was increased to 25% on January 1, 2019. As a result, many importers rushed to ship their goods from China to the US before the tariffs went into effect. This resulted in a significant increase in ocean container rates from Asia to the US West Coast, which doubled by mid-November 2018.
Importers, seeking to dodge tariffs, accelerated their orders regardless of whether their shipments were directly affected by the tariffs, as the increase in freight costs was smaller than the potential increase in tariff costs. This led to a build-up of inventories and a decrease in container volumes in 2019, breaking a nine-year annual container import volume growth streak since 2009.
The economic consequences of these tariffs could extend beyond a temporary increase in freight rates, hitting importers with higher costs and potentially resulting in higher prices for consumers. In addition, possible retaliatory tariffs could impact the demand for US exports. According to Judah Levine, Trump's proposed tariffs could have a more significant impact on shipping flows and tariffs than they did in 2018.
Source: mundomaritimo.cl