THERE were no Russian or Chinese ships off the coast of Greenland on Monday.

There haven’t been for several years.

Donald Trump’s repeated claims that the waters around Greenland are “crawling with Russian and Chinese ships or submarines” are not true.

There are plenty of Russian- and Chinese-owned, operated and linked vessels in the Arctic, where there is an undeniable race for geopolitical strategic dominance, but not inside Greenland’s waters.

The verifiable detail of vessel movements is not going to be examined in the political positioning that follows, but the impact will be felt there assuming Trump follows through with the tariffs he is threatening supposed allies as punishment for their failure to support his territorial expansion plans.

All of which is to say that shipping continues to nervously sail through the turbulence, desperately repeating the mantra: inefficiencies historically have benefited shipping.

But how long will that hold true?

While the tanker traders remain convinced that a Trump view of the world is only positive and the shadow fleet is cracking, the nerves are finally starting to show elsewhere.

Greenland’s invading armada of Russian and Chinese ships may be imagined. But the risk of tariffs and policy uncertainty being a larger drag on the global economy than many had hoped for, are real.

The policy wonks at Oxford Economics have today calculated that, if the US carries out its threat and imposes an additional 25% tariff on European countries, and if there's like-for-like retaliation, it would lower US GDP by 1% relative to their baseline at peak impact. The peak hit to the Eurozone would be similar, but more drawn out. The inflationary impact would be only modestly positive.

Given the size of both markets, this would lead to moderate spillovers to growth elsewhere, pushing global GDP growth down to 2.6% — the worst growth rate since 2009, excluding pandemic-era 2020.

For shipping, car carrier trades on EU exports to US will be hit, grain flows from US to EU are at risk and let’s not forget that the EU is heavily reliant on US LNG imports.

On the transatlantic box trades, however, the impact could be devastating.

Long-running pressures of overcapacity, falling rates and chronic port congestion were already hurting, but the prospect of EU leaders triggering the bloc’s so-called trade “bazooka” and shutting the US out of EU markets in response, is not the happy new year that the lines were wishing for.

Geopolitical-induced volatility may become more the norm, rather than the exception, but there are limits to how far inefficiencies will benefit shipping. 

Richard Meade
Editor-in-chief, Lloyd’s List

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