WE ARE 19 days and counting into Trump 2.0, and the administration has already packed in more than its fair share of climbdowns, backtracks, retreats and rapid rethinks.

Embarrassed officials are already downplaying the new president’s grandiose proposal to turn Gaza into the riviera of the Middle East. The two-state solution remains a more tenable prospect than the real estate solution.

The Gulf of Mexico is still the Gulf of Mexico as far as the rest of the world is concerned, while the decision to halt postal deliveries from China and Hong Kong was rapidly rescinded. We could list numerous other examples.

It is tempting to see such a flurry of deliberately provocative pronunciamentos as examples of the strategy Trump 1.0 operative Steve Bannon — remember him? —  described as “flooding the zone”. Tempting, but probably wrong.

The most significant U-turn from a shipping perspective is the reversal of the imposition of 25% tariffs on Canada and Mexico, fended off for at least the time being after relatively minor concessions from Trudeau and Sheinbaum. 

But that should not detract attention from the fact that a 10% levy on imports from China has gone ahead, with White House trade apparatchiks are still drawing a bead on the EU. So how should the industry react?

Among those counselling caution has been Vincent Clerc. In an interview with the Financial Times, Maersk’s chief executive insisted: “The reason why we don’t expect a massive impact is what really matters is not tariffs but what the purchasing power of consumers looks like.

“As long as they are not implemented and we cannot assess the impact on customers’ wallets, it’s premature to see it as a major factor.”

But the “as long as they are not implemented” proviso is key here; if hefty impositions on America’s trading partners do go ahead, importers will impose most or all the additional costs on consumers. That cannot but drastically eat into consumer purchasing power.

Clerc’s counterpart at Hapag-Lloyd, Rolf Habben Jansen, proffered a similar appreciation of the dynamics of the situation.

“The 10% on China will not do all that much, because we’ve seen a recent depreciation of the US dollar compared to many currencies. So short term, I don’t expect to see a lot of effects from that, but longer term, of course, tariffs are never good for global trade,” he told Bloomberg.

These are commendably sober takes. The industry does best to avoid a Chicken Licken response when the sky clearly isn’t falling, or at least not now.

As Lloyd’s List argued earlier this week, tariffs — described by Donald Trump as “the most beautiful word in the dictionary” — are a central tenet of Trumpian political thinking. It would appear he genuinely believes this stuff.

The stated goal is to abolish income tax altogether and replace it with import duties collected by an External Revenue Service. The consensus among economists of all leanings is that such an aim is utterly fantastical.

Trump may have in mind the precedents set by the McKinley Tariff of 1890 and the Wilson-Gorman Tariff of 1894, which were important sources of revenue for the US in the late nineteenth century.

But with the expansion of the functions of the state in the intervening 130 years, they could hardly be so now. You can’t pay for 21st century government on a 19th century tax base.

Just as importantly, the consequences of retaliation seem to have been left out of the calculations. There is only so much humble pie that other countries can reasonably be expected to eat before they respond in kind, opening the road to a full-scale tariff war.

Trump’s hoped-for rejuvenation of American manufacturing also looks chimerical. Few investors making decisions with a horizon of decades are going to reshore on account of problem that could be over four years from now.

Then there will be the workarounds, as highlighted by BIMCO’s chief shipping analyst Nils Rasmussen.

Shippers can be expected to at least attempt to circumvent the rules by looking for alternative supply chain options, moving cargoes subject to tariffs through third countries, with all the attendant ramifications for trade flows.

As Sean Dalton of the International Union of Marine Insurance also pointed out this week, there will be a direct impact on marine underwriters. Protectionism will materially alter exposures and insured values and increase accumulation risk.

It comes to something when a Communist Party of China administration in Beijing has to spell out the virtues of free trade to a Republican administration in Washington. But live long enough and you see it all.