OSLO: A potential trade war, which could emerge on the back of US’ recently unveiled tariffs on imported steel and aluminum, would be harmful for the global shipping industry, according to BIMCO.
Although the impact of US steel and aluminium tariffs, revealed on March 1 and scheduled to enter into force on March 23, 2018, on shipping is still unknown, a major trade action against China is now also likely to come from the US.
As steel and aluminium import barriers are set by the US, trading partners like the EU, Japan and China, may set their own import barriers against e.g. agricultural products in general or more politically targeted products hitting Trump’s constituency.
“All trade-restrictive measures are in principle bad for shipping,” Peter Sand, BIMCO’s Chief Shipping Analyst, said.
“Open economies are all better off from trading, as they make use of their resources in the most optimal way.
The result of a trade war is more expensive goods of lower quality and little variety. This goes for all products and commodities,” Sand added.
Under the American President’s metals tariff plan the US would put a 25% tariff on imports of steel and a 10% tariff on imports of aluminium.
The international atmosphere is full of threats of retaliation and it appears likely that major trading partners with the US, like the EU and China, will hit back to draw a line in the sand for the US Administration and President Trump.
Since 2009, implementation of trade-restrictive measures among global trading partners has become more widespread according to World Trade Organisation (WTO).
The African Continental Free Trade Area (ACFTA) proved to be the latest of its kind. Leaders of 44 African countries created one of the world’s largest free trade deals on March 21 to remove barriers to trade and allow the free flow of goods and services between the members.
“Overall we are seeing more trade-restrictive measures introduced. Some more high profile than others. This is a worrying trend that limits demand for shipping globally.”
“Even worse for shipping could be short-sighted political positions that may have lasting consequences for everyone involved in global industries like shipping if a largescale trade war emerges,” Sand concludes.