Trump’s Reciprocal Tariff Plan Plunges Shipping Companies Into Chaos & Confusion

The new tariffs planned by the U.S. President Trump could lead to a trade war and affect companies severely. The administration’s reciprocal tariffs would target countries that have put duties on U.S. items.

This comes after the U.S put import levies on goods from Canada, China and Mexico and goods including steel and autos.

Principal container shipping companies including Maersk, MSC, CMA CGM and Hapag-Lloyd transport several containers filled with goods for U.S Customers including Home Depot, Target and Walmart.

They have a vital role in the $14 trillion a year ocean shipping industry which deals with around 80% of international trade and they depend on companies which are getting affected by the incoming tariffs.

Blake Harden, the Retail Industry Leaders Association’s vice president of international trade said that stacked tariffs have led to confusions, with companies not given proper time and guidance on how to comply with these changes.

Trump has used emergency powers to rapidly bring about or retract and then reinstate tariffs and importers are uncertain how much their duties would be, said Kit Johnson, director of import compliance at John S. James Co., a U.S. customs broker and freight forwarder.

Johnson also informed about the rise in customers choosing air transport for autos and other items which are usually transported via seaways.

U.S. container imports have risen to unprecedented levels in the past few months as companies went towards bedding, machines, toys and parts from China, which is the number one exporter in the world to avoid Trump’s tariffs.

More ships and airplanes are being called to aid U.S. companies to get cars from Far East and Europe, Wine and Cheese from Italy and prescription drugs from Ireland.

However, companies’ front-loading plan is only a temporary solution, as retaliatory tariffs can start trade wars which could decrease demand.

These tariffs come amidst Trump’s other plan which includes imposing massive port fees on ships connected to China, a move that could negatively affect agriculture and energy exporters whom Trump had once promised to help and support.

It could also lead to chaos, a reminder of the pandemic-era, where vessel operators could fill certain ports with cargo while other ports remain empty, in order to avoid fees.

Combined with tariffs, companies are unable to make decisions about how to source, sell and move their products.

Peter Sand, Xeneta’s chief analyst said that one cannot make decisions on their supply chains when the rules of the game keep changing.

A Greek container shipping executive on the request of anonymity said that these measures can negatively impact businesses. Presently, customers are backing out and not loading cargo, fearing a massive levy might be imposed when the voyage ends.

Experts have also started analysing the harm from these tariffs amidst U.S. Customs and Border Protection scrambles to test their new systems for collecting and calculating new tariffs.

References: Market Screener, India Seatrade News

Source: Maritime Shipping News