The ongoing trade war between the major world powers led by the United States and its new tariff policy is a speeding train, accelerating with every trade-restrictive retaliatory measure imposed and becoming ever more difficult to stop, BIMCO said.
The war started to break out in March 2018, when the United States imposed 25 pct tariffs on steel and 10 pct tariffs on aluminium citing national security reasons.
China, one of the key trading partners of the U.S. has been among the mostly affected countries by the tariffs and has already introduced measures to retaliate. Global powers like the EU, Mexico and Canada have not been spared from the tariffs either resulting in growing geopolitical tensions on a global scale as they also turned to retaliation.
“The dry bulk shipping industry has already been affected by the steel and aluminium tariffs and will be hit again when further tariffs come into force in July. However, the impact on the dry bulk shipping industry in terms of volumes remains limited,” BIMCO’s Chief Shipping Analyst, Peter Sand, said. “The same can be said for container shipping, which although containerised goods have been and will be targeted again in July, the number of containers impacted is in the big picture relatively small.”
Nevertheless, the long-term effect of the said developments provides uncertainty and could possibly derail current global growth if the measures are kept or further escalated, according to BIMCO.
The first list of goods targeted by the U.S. tariffs, containing mostly machinery and electronics, worth USD 34 billion, will enter into force on July 6, 2018. The second list, considering Chinese imports valued at USD 16 billion, contains commodities such as plastics and oil products and is currently under review with no date given for its possible entry into force.
As reported earlier, tariffs on USD 50 billion worth of Chinese exports to the US will affect the container shipping industry on the eastbound transpacific trade lane.
If the proposed tariffs, amounting to USD 16 billion, are implemented, the tanker and gas shipping industries can also expect changes to trade lanes. The US crude oil exports are most likely to be affected and these are primarily driven by China, which was responsible for 25 pct of all US seaborne crude oil exports in terms of volumes in 2017.
“China is the centre of shipping for the dry bulk shipping industry but also the crude oil shipping industry. The imposed tariffs will not decrease the Chinese demand for the included commodities, but instead cause changes to trade lanes, making distances the ones to look out for. In the case of China going back to West Africa for sweet crude oil, 1/3 of the sailing distance will be lost on that trade,” Sand said. “Despite the effect on shipping being somewhat limited, the trade between the countries becomes more cumbersome and less prosperous for the involved economies when trade barriers are raised.”