Source: Splash247
Date: 5th February 2025

Amid escalating tensions in an ongoing trade dispute, the anticipated conversation between the US President and Chinese President was scrapped. 

A tariff tit-for-tat has got underway between the world’s two largest economies with the US putting a blanket 10% levy on all Chinese imports, and Beijing responding, saying it will impose a 15% tariff on LNG and coal imported from the US, as well as a 10% tariff on oil, agricultural machinery and large-displacement cars.

In the first month of the Trump administration, the president has threatened – and then dropped – tariffs against Colombia, Canada and Mexico. Only China has felt the wrath of American tariffs to date.

How seriously tariffs alter trade flows has been brought into question. Tariffs have been a feature of Trump’s first administration as well as by his successor and yet data from Linerlytica shows loaded container imports into the US outpaced exports by 2.4 times in 2024, a statistic that analysts at Linerlytica said in a weekly report provides “clear evidence that import tariffs imposed since 2018 have been completely ineffective” in reducing the US trade imbalance.

Total laden imports grew by 24% between 2017 and 2024, the Linerlytica data shows, while laden exports shrunk by 8% over the same period, driving a 54% increase in the number of empty containers repositioned out of the US.

“Trump’s tariff wall might be a stage, but like walls to keep out migrants, it is difficult to achieve much in four years,” the world’s most famous maritime economist told Splash in the wake of Trump’s election win last November.

Trade flows under Trump 1.0 and Biden’s continuation and increasing Trump’s 1.0 into Biden 1.0, have increased, not decreased, trade flows into the US. If the past is any predictor of trade flows, then as we have seen all such disruptions tend to have an immediate, but extremely short-term impact, before leading to increased tonne-mile and increased trade.

Looking at the tanker and dry bulk trades, it has suggested China tariffs on US crude and coal imports are unlikely to impact tonne-miles.

The market is to lose roughly three VLCCs per month of US crude to China, but this slack is likely to be picked up by other importers in Northeast Asia.

On coal, China’s customs data confirms that some 10.7m tonnes of coking coal were imported from the US in 2024, alongside 1.5m tonnes of thermal coal, a combined annual record. For context, however, total coal imports into China last year reached 543m tonnes.

For dry bulk commodities like coal, grains, and iron ore, we don’t anticipate major negative effects.

Ultimately, tariffs are just one factor; geopolitical events play an equally important role. The next six months will be critical as the current administration aims to end conflicts while implementing new trade policies. The outcome of these efforts, and how tariffs interact with global events, remains uncertain. Significant volatility is expected over the next three to six months as the market adjusts to the evolving landscape, making this a pivotal period for global trade and economic stability.