WHEN you fall prey to the anchoring bias, you view new information in relation to the “anchor”, not objectively.

If you normally spend $10 for a product, then the seller says it’s now $100 and you balk, then the seller responds OK, let’s make it $20, you may think you got a good deal because your mind is anchored on $100, but you should really be thinking: my cost just doubled.

Which brings us to the trade war.

The US set the tariff on Chinese goods at 145%, on top of previous tariffs, bringing the total to 155% to 165%, depending on whose numbers you use.

Whether you believe it was an intentional, clever ploy or the product of impulsive, ad hoc decision-making, US President Donald Trump set the anchor extremely high.

Now we have US tariffs on China all the way back down to 30%, i.e., a total of 40% to 50%. There were sighs of relief all around. The stock market has surged, as if the coast is clear.

In fact, US tariffs on China are much higher than they used to be. America’s average weighted global tariff rate is still around 15%, the highest since the tail end of the Great Depression (excluding the past month).

The latest reversal echoes the drama over so-called reciprocal tariffs. On Liberation Day, Trump set incremental tariffs on Vietnam at 46%, Thailand at 36%, Taiwan at 32%, India at 26%, South Korea at 25% and Japan at 24%.

Those were the anchors, so when they were all temporarily brought down to 10%, it may have looked like the world was getting a break, but the reality is: tariffs on these countries have risen by 10%.

If none of the Sturm und Drang of the past month had occurred, and Trump had just set global tariffs at 10% and China tariffs at 30% at the onset, there would have been no sense of relief.

Take away the anchors and the objective outcome is: Tariffs are negative for shipping demand, and tariffs are much higher than they used to be.

The same pattern emerged with the US Trade Representative decision on China-built ships. The initial plan would have charged $1m or more for every US port call of any ship of any operator that had any China-built ships in its fleet or any orders at Chinese yards.

The final outcome was considered an enormous win for shipping because it was so watered-down compared to the anchor plan. But shipping faces a much more complicated trading environment than it did before.

Many ships will have to be redeployed. Charter, newbuilding and recycling markets will be affected. China’s Cosco is one of the largest providers of liner service to the US, and the final plan is highly negative for Cosco.

We are still in the early innings of the Trump 2.0 administration, but one lesson is already crystal clear: beware the anchoring bias.

Greg Miller
Senior maritime reporter, Lloyd’s List

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