How Trump’s Trade War Can Stymie the Shipping Industry in 2025

President Trump’s tariffs on goods imported from China (20%), the European Union and others are estimated to affect well over $1 trillion worth of goods being moved by U.S. trading partners.

President Trump’s tariffs or planned tariffs on goods imported from China (20%), the European Union (25%), Mexico (25%), Canada (25%), and other countries are bringing back the serious concerns usually associated with Trade Wars. His tariffs are estimated to affect well over $1 trillion worth of goods being moved by U.S. trading partners to America.

Historical perspectives

Trade wars have always caused a sudden spike in shipping costs and derailed international maritime operations. During World War I and World War II, trade conflicts and supplies’ blockades had significantly led to disruptions in the shipping routes and resulted in unimpressive maritime performance.

In modern times, the EU-US trade disputes that occurred in 2018 following President Trump’s imposition of 25% tariffs on steel and 10% tariffs on aluminium products from the EU and Japan-South Korea trade disputes between July 2019 and March 2023 demonstrated how trade conflicts can negatively impact global maritime operations. Japan suffered huge losses as its main food exports such as beer, instant noodles, snacks, seasoning sauces, etc. were massively boycotted by the Korean consumers, disrupting shipping operations in the Far Eastern Asian region.

Supply Chain Disruptions

An unforeseen increase in tariffs often results in supply chain disruptions, which entails that the movements of goods from one country to the other will be restricted due to a number of factors. For example, the affected importers may shun expensive goods or products that they believe their customers may not be able to afford or willing to pay for. Instead, consumers will find cheaper alternatives in the market and reject those goods made expensive by tariffs. In the wake of President Trump’s 2018 tariffs on several foreign goods, Americans were at the receiving end, paying more for goods such as electronics, clothing, smartphones, furniture, laptops, etc., they used to enjoy before at an affordable rate.

Rerouting and Delays in Shipping Operations

Merchants that want to avoid shipping their cargoes through tariffed territories may opt for other alternative routes. This action can cripple operations at ports as the problems of port congestion, increased customs inspections, delays, and increased shipping costs may arise. Rerouting to other ports may lead to longer shipping times, failing to meet scheduled delivery of goods to the final consumers, an issue that can threaten the survival of many merchants’ businesses.

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Fluctuations in Trade Volumes and their Impact on Ports

As tariffs make goods unaffordable to the end-users or consumers, merchants will have no apparent option but to seek to import from tariff-free countries. This indicates that the trade volumes from tariffed countries will eventually dwindle, and ports that used to handle huge trade flows from the tariffed countries will become redundant in no time.

Ports are mostly affected by an unexpected decrease in trade volumes among nations. They will lose a tangible percentage of their revenue as fewer goods pass through the ports, losing on shipping fees, docking fees, and other sources of income for rendering diverse maritime services to shippers. The local economy where the ports are situated may also be threatened as many port employees will lose their jobs. If this persists for a long time, the ports’ infrastructure and equipment may suffer a prolonged decay that may be expensive to maintain or repair.

In order to save on their cost of operating, ports may resort to cutting their operating hours, consolidating their shipping schedules, and laying off hardworking employees. All of these adjustments will definitely have a significant dent on the performance or efficiency of the affected ports.

Sharp increase in the shipping fees: When President Trump, in his first term, escalated his trade war with China, the average shipping freight rates sharply increased for goods that were shipped from China to the US West Coast between July 2018 and January 2019, when the tariffs became effective.

Shippers faced an unexpected 70% hike in shipping rates during those times and they expect a similar situation to come into play as the President returns to office in 2025. During President Biden’s tenure, the average cost of shipping goods from China and other U.S. trade partners has stabilized, but with the new introduction of widespread tariffs, the global maritime condition is only expected to be worsened, at least in 2025.

Global Economic Impacts

It is on record that by the end of 2018, the tariffs by Trump’s America led to U.S. real income being reduced by $1.4 billion per month, as Americans avoided foreign goods due to their high, unsustainable prices. No doubt, the new wave of retaliatory tariffs among countries is making the condition of global economies worse. To be effective from March 20, 2025, the Chinese Ministry of Commerce imposed a 100% tariff on Canadian rapeseed oil, oil cakes, and pea imports and a 25% duty on Canadian aquatic products and port. This was done to retaliate Canada’s October 2024 tariffs on Chinese electric cars (100%) and Chinese steel and aluminium products (25%).

If President Trump eventually imposes 25% tariffs on the European goods and services as expected, the European Union projected a massive trade deficit that will be in favour of the United States. According to the Eurostat data, in 2023, the EU had a €109 billion deficit in services with the US, and this pattern is expected to continue with the imposition of new U.S tariffs on the European Union’s exports.

Trade wars have the capability of resulting in trade tensions that can affect merchants and consumers in the countries engaging in trade conflicts. More importantly, it creates a high-level of uncertainty and chaos in the shipping/maritime industry worldwide as shippers scramble to find the best solutions to the problems created by the latest wave of trade disputes.

The Takeaways

As nations continue to slam tariffs on one another, 2025 is already shaping up to be a very challenging year for the shipping/maritime industry. This year, it is likely that both the shippers and merchants may be confronted with high costs of operation and sluggish performance, if the tariffs are kept in place.

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