Source: Splash247
Date: 3rd February 2025

Global seaborne trade flows are set for choppy conditions in the wake of the new U.S. President’s decision to levy 10% on goods from China starting from 4th February 2025 and delay tariffs for a month for Canada and Mexico. 

China said it would challenge tariffs at the World Trade Organization and take unspecified countermeasures. The new President meanwhile has said the European Union will be up next in his tariffs campaign.

The new President also implied that he will take more trade actions targeting computer chips, pharmaceuticals, steel, aluminum, copper, oil and gas as soon as mid-month.

According to an analysis, Mexico and Canada combined to supply nearly $900bn of US imports in 2023 and about 28% of total US imports through November 2024.

Container shipping is expected to be hit by a contraction in seaborne volumes as the tariffs take hold leading to higher prices and a decrease in demand.

In the tanker markets, the effects are also potentially seismic.

In 2024, analysis by a broker shows that Mexico exported around 500,000 barrels per day of crude and 100,000 barrels per day of fuel oil to the US, and imported around 320,000 barrels per day of gasoline and 160,000 barrels per day of diesel from the US – all by sea. By the end of 2024, Canada was exporting around 330,000 barrels per day of crude oil to the US via seaports in the east and west of the country. It exported another 3.5m barrels per day of crude overland to the US. It exported around 120,000 barrels per day of gasoline and 65,000 barrels per day of diesel to the US via seaports.

The analyst suggests Canada will likely seek to divert its energy exports to China and Europe while US replacement for Canadian pipeline flows to the US Gulf would most likely come from the Middle East and South America, all positive from a tonne-mile perspective.

In the first trade war in the previous decade, the Chinese targeted US farmers and reduced imports of US grain. China can substitute this with more imports from Brazil, with minimal net tonne-mile impact.

According to data from Clarksons Platou Securities, dry bulk, particularly grain and steel products, was the most impacted by the first trade war with China, followed by LNG and LPG.

Overall shipping tonne-mile growth fell 0.5% in 2018, then again by 0.5% in 2019, according to Clarksons’ data.