by Lloyd's List

3 April 2025 (Lloyd's List) - GLOBAL trade will be reshaped by Donald Trump’s “Liberation Day” tariffs, that much is evident.

“Clearly this isn’t good news for the global economy, stability, and trade,” noted Maersk’s understated hot take on US reciprocal tariffs that promise to send advanced economies back into industrial recession just at the moment they were set to return to

growth.

But until America’s trading partners respond to the steepest tariffs in a century, the detail of how seaborne trade will re-route and how much more expensive it will get, remains unclear.

The impact on volumes and freight rates is now completely dependent upon what the retaliatory counter-tariffs, or ameliorating negotiations, look like.

Some immediate implications beyond the opening market convulsions and the $2trn wiped off the S&P 500 are already clear enough.

The largest negative impact for shipping will be felt in the container sector and among the car carriers, with limited direct impact on other segments. However, this could change if retaliatory tariffs are introduced.

In containers, there had already been sufficient front-loading of container volumes and a rush to air freight orders ahead of the tariff announcement to know that volume growth in the second half of the year is going to be significantly dented.

The lines are already noting an increase in demand for bonded storage as customers hold off clearing goods in the hope that some certainty emerges, but neither shippers nor liner operators are going to be making drastic alterations until the EU and China have shown their hands.

A tariff of 54% on China and substantial tariffs from other Asian countries should lead to lower imports from the US. A 20% tariff on EU goods is also a substantial number and should impact EU-US volume flows.

A short-term impact on discretionary purchases is now considered inevitable, but any discussion of relocating production is purely theoretical at this point.

Favoured trading partners could see growing transport volumes as trade volumes divert from those countries hardest hit. However, the widespread nature of the tariffs means rerouting of trade to avoid tariffs is effectively a nonstarter until there is more clarity regarding countermeasures.

For the moment, shippers are scrambling to assess immediate options and the dollar cost of landed imports.

On the table will be alternative sourcing locations — including setting up facilities and deals with other manufacturers, in other nations than used currently — to find a smart way to comply with the regulations at the lowest possible cost level.

 “We may see many goods travelling in a less direct way going forward than currently is the case,” explained Xeneta chief analyst Peter Sand.

This will hit companies in very different ways, depending on their ability to absorb the cost or pass along the added expense to the consumer.

“Liberation Day will not feel very liberating for those shippers caught in the eye of the tariff storm… Trump’s tariffs just dialled back decades of gains from globalisation and comparative advantages,” said Sand.

Container lines were left reeling in the wake of the announced tariffs, confirming little beyond a consensus of “uncertainty ahead”.

Hapag-Lloyd noted the tariffs would potentially impact demand, cargo flows and cost, which may require unspecified adjustments to their service network.

Maersk, meanwhile, was already urging agility from its customers, arguing that given several scenarios remain possible, “customers will need the ability to speed up or slow down goods and potentially redirect flows to alternative markets to keep their goods moving efficiently”.

Beyond the immediate uncertainty and general feeling from shaken executives that, as one put it, “we live in a world of turbulence where flexibility and liquidity is king”, the industry focus has been spent comparing this unprecedented round of tariffs with previous ones, to little effect.

In addition to a headline-grabbing 54% swipe at China, other key markets in South East Asia, such as Vietnam and Thailand, have also been hit hard (46% and 36%, respectively). This marks a significant shift from the initial wave of tariffs Trump implemented during his first term.

A good deal of manufacturing had already been repositioned from China to Vietnam and Thailand over the past 10-15 years, but a clear sourcing switch away from China has now effectively been blocked.

By comparison, India remains for now relatively less affected, with 26% tariffs, and may be a “winner” in trade terms. Other countries like Malaysia and Philippines could potentially benefit, at least in the medium term, but economists have already warned that this time will likely be different.

While all industrial sectors will be losers relative to our current baseline, those whose supply chains are long and span international borders (such as automotive, machinery and electronics) will be hardest hit, according to Oxford Economics. Those that serve domestic markets and have less complex supply chains, will suffer less.

In Trump’s first wave, trade shifted, but volumes globally did not decline; it was just new patterns. The fear this time, with such punitive measures  — and given the US is such a major consumer of containerised goods  — is that overall global volumes could be negatively affected.

So, the reality is that there will likely be a major realignment to services and port calls from the liner operators.

This could, in theory, be easier for independent operators like Mediterranean Shipping Co, but perhaps less so for the operators in major alliances where joint decisions are made.

Some major container ports in terms of volumes handled will suffer. There has been massive investment in Vietnam, so this could be a big negative for Ho Chi Minh City, for example.

Should volumes shift to other countries and ports, then the issue of congestion, already looking due to the incoming US port levy proposals, will likely become a major issue.

Should volumes into the US decline overall, deployment of tonnage will be altered, leading to a cascade of tonnage — likely larger ships — into other secondary non-US trades, which might lead to supply/demand imbalances and negative freight rate alterations.

In addition to the headline focus on containerised trades, the tariff on foreign built cars announced on Wednesday is an obvious negative for car carriers and could push earnings and volumes down.

The tariffs are expected to have immediate implications for manufacturers, consumers and markets, but all this comes on top of already struggling sales and, according to Fearnleys, should tip volumes down as Japanese and South Korean exporters become nervous.

The US imported more than 4m cars by sea in 2024, and a 10% decline in sales in the US would have a negative demand effect of approximately 40 car carriers, Fearnley Securities said.

The direct effect on the tanker market will not be great, as imports of oil, gas and refined products were given an exemption from the tariffs. However, the tariffs will likely lead to an economic setback if they are implemented and upheld as proposed, which would impact oil demand adversely.

For dry bulk, the immediate impact will be limited, but retaliatory tariffs against the US will affect cargo volumes more than the US’s own tariffs announced on April 2.

“These are turbulent times for global trade and the shipping industry,” cautioned International Chamber of Shipping secretary-general Guy Platten, speaking between high-level meetings in Beijing on Thursday with Chinese government shipping officials.

“The evidence shows that tariffs will adversely affect all countries. Along with the proposal to charge fees on Chinese ships calling at US ports — which I testified to the USTR hearing in Washington last week has the potential to significantly disrupt global trade — they will also hurt US consumers and exporters,” he continued.

“ICS has long advocated for free trade, as this is the new way to grow all economies.

“We hope calm heads will prevail over the coming months,” added Platten.