Ongoing tariff hikes could threaten political stability
An ongoing trade war prompted by US protectionist policy is providing uncertainty and could possibly derail current global growth if the measures are kept or further escalated, according to a statement from global shipping association BIMCO.
BIMCO’s Chief Shipping Analyst Peter Sand said: “The trade war adds painful uncertainty for the shipping industry, as it distorts the free flow of goods, changes trade lanes and makes it difficult for ship operators and owners to position ships efficiently in the market.
“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.
“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.”
The dry bulk shipping industry will by far be the most affected in terms of volumes, both in scheduled and already implemented tariffs.
However, the dry bulk products targeted so far only represent a minimal amount of the total seaborne dry bulk trade. Similarly, the containerised goods affected also represent a small amount of the total containerised trade.
On 8 March 2018, the US imposed 25% tariffs on steel and 10% tariffs on aluminium citing national security reasons.
At first, temporary exemptions were granted to seven trading partners. However, these were revoked for the EU, Mexico and Canada as of 1 June 2018. Australia, Brazil, Argentina and South Korea remain exempted.
Following failed talks between the US and China which sought to avoid further tariffs, the US announced in late May, that it would proceed with 25% tariffs on US$50 billion worth of Chinese goods.
China responded to the initial US tariffs on steel and aluminium on 2 April 2018, by targeting 128 products worth US$3 billion.
Peter Sand said: “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.”
Read more: US-China Trade War Intensifies