Donald Trump entered office all guns blazing, threatening massive tariffs, imposing smaller ones and demanding political concessions. Did we get what we expected? Yup. Did he get what he wanted? So far. Watch out Greenland.
Trump take two has panned out the way predicted by analysts who monitored his trade and tariff performance the first time around — although clearing out Gaza for renovation was not on the programme of planned works mentioned on the campaign trail.
A Trump administration is in some ways very predictable, Dan Tadros, the chief operating officer of the American Club, told a debate in Piraeus last week, organised by the protection and industry sector, who know a thing or two about the calculation of risk.
Tariffs, immigration and issues with Canada were all mentioned on the road to the White House and then followed through during the first days in office. “That is one thing that Donald Trump is predictable about,” said Tadros. “He will do what he says he’s going to do.”
Maybe. What he has secured with minimal effort are political concessions from waving around the big tariff stick. He has not yet had to levy the threatened massive tariffs to get what he wants over a sustained period.
He has already secured commitments from neighbours to boost border security and accept US deportation flights using what he calls the “beautiful” tool of tariffs. Panama has also bowed to pressure to end a deal with China over offices at either end of the canal.
Quick gains are one thing, an escalating trade war is another as the US stokes the anger of trading partners and prepares to take on bigger targets, the European Union and China. “They [tariffs] are often an ineffective solution as people try to address deeply rooted problems,” said Sean Dalton from the International Union of Marine Insurance.
Trump sees tariffs as a win-win, boosting American prosperity and security, although most economists say that protectionism will damage the US economy. The extra costs, after all, are shouldered by the importer.
Domestic realities — pressure from the auto industry, for example, which relies on components that repeatedly cross borders before arriving in the US — may temper Trump’s enthusiasm for the most punitive of tariffs.
Lloyd Barton, of advisory firm Oxford Economics, told a recent Marine Money conference that the biggest tariffs would not happen because they would crush key industries that support Trump.
The first term showed that the threat of large tariffs was usually parlayed into political concessions and smaller, specific tariffs.
It’s not necessarily all bad for shipping. Some tariffs can boost shipping by changing trade routes and adding tonne-miles to voyages by diversifying suppliers.
That phenomenon was seen when China turned to Brazil for soybeans in response to the tariffs imposed during the last Trump administration, the Marine Money conference in London heard.
Western Bulk chief executive Torbjorn Gjervik said shipping thrived on inefficiencies and disruption that could happen with tariffs.
“Full-on trade wars are bad for the dry bulk market, but tariffs, to a certain degree, could also be positive,” he said.
But changes to trading patterns also put stress on the supply chain, contributing to congestion at ports from rerouted cargoes and putting storage capacity under pressure. Tariffs don’t create any value, they’re a negative, said Dalton.
Trump’s easy wins will become harder as he turns his attention to the countries less likely to roll over under the threat of protectionism.
Shipping has seen this before. India and China snubbed US attempts at creating a global sanctions coalition to cut Russian revenues from fossil fuels. That has led to an exodus of Western shipping to alternative finance, insurance and regulation outside of the orbit of the G7.
That should be a lesson for the property developer president. Homes and hotels are one thing, building bridges is much harder.
Read more
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- Tanker markets shrug off China’s tit-for-tat US oil tariffs
