A YEAR ago, when US President Donald Trump had only been in office for a month, speakers at the TPM25 conference in California were already warning of the consequences.

The US had long been a facilitator of world trade, not a disruptor, and a protector of allies in Europe and Asia.

Former US national security adviser John Bolton warned at the time of a “more unstable world, a more chaotic world”, a situation that could have “an incredible ripple effect” on shipping as “order breaks down all across the globe”.

Fast-forward to today. The disorder is more extreme than anyone at TPM25 predicted.

“The American-dominated liberal world order is over,” Brookings Institution senior fellow Robert Kagan recently wrote.

Geopolitics is returning a pre-1945 “cycle of conflict” state, he said. “In a multipolar world, everything is up for grabs, and the flash points for potential conflict proliferate.”

If so, shipping faces more sharp and unpredictable rate moves ahead, and a more bifurcated fleet with more compliance issues.

On the tariff front, Trump’s loss at the Supreme Court has done nothing to alter the administration’s course. The nullified emergency tariffs will ultimately be replaced by levies with firm legal backing.

The new tariffs “are actually probably better, leading to a solution that will be even stronger than before”, said Trump in his State of the Union address on Tuesday night.

US importers had hoped that a Supreme Court ruling against emergency tariffs would provide more clarity. It has done nothing of the sort.

The transitional Section 122 tariffs, which last 150 days, were set at 10% on Friday. Trump said they would be 15% on Saturday, but they were confirmed by US Customs and Border Protection to be 10% on Monday. An administration official told the New York Times on Tuesday that the eventual plan was to bring them to 15%, but there was no timetable.

The scale of permanent tariffs to come after the transition period, under Section 301 (targeting countries) and Section 232 (targeting product segments) is completely unknown.

The timing of these new levies will depend on how quickly the US Trade Representative can expedite the required administration procedures, which include investigations, public comments and public hearings.

Future tariff rates won’t be determined until these administrative procedures conclude, which won’t be until later this year at the earliest.

Uncertainty, whether on tariffs or geopolitics, is increasing.

Tariff uncertainty is negative for US container shipping demand, but global box markets can reflow, and in general, the shipping industry thrives amid geopolitical disruptions.

Shipping has been battle-tested by the market upheavals of Covid, the Red Sea crisis and the Ukraine-Russia war and is ready for “the more chaotic world” Bolton warned about.

Greg Miller
Senior maritime reporter, Lloyd’s List

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