In this blog, Director of External Affairs, Stef Kenyon explores the key issues emerging for the shipping industry;

100 days of change

The first 100 days is always said to be a key marker for any Presidency and - my word - what a rollercoaster it has been since the return of Donald Trump for his second term in the Oval Office.

In the Trumpsy-turvy world of the new regime nothing is quite as it had been, and the pace of change all-consuming; there were no jokes at the Washington Correspondent’s Dinner; meetings in anti-rooms at Papal funerals; and more than enough news to keep the world’s journalists, policymakers and observers occupied for decades rather than a mere hundred days.

Built in the USA

On 8 April, the USTR Ambassador Jamieson Greer appeared at the US Senate Finance Committee session on "The President's 2024 Trade Policy Agenda", followed by an Executive Order from the President, to “restore America’s maritime dominance" the next day.

The USTR has since outlined proposed remedies, such as fees for certain ships/operators calling at US ports and emphasised that these potential remedies were drawn up to address the lack of shipbuilding in the US, and that not all of these potential remedies were going to be implemented. The USTR has invited views and input from stakeholders, stating that "the President will look very carefully to make sure we have the right amount of time and the right incentive to create shipbuilding here (US) without impacting our commodity exports”  and expressing the desire to move the US economy from being based "solely on the financial sector and government spending" to producing "real goods and services".

Another key element where the directions from the USTR for “treaty allies, partners and other like-minded countries around the world” to follow the directives of the President with regards to Chinese shipbuilding.

These proposals, albeit now reduced in scope, will still bring significant impact for sectors like vehicle carriers, large container ships with US imports, and larger vessels transporting dry commodities to the US.

The costs per US port call are estimated to be in the hundreds of thousands to millions of dollars.

This week saw the re-introduction in the US Senate, of the SHIPS for America Act and, Building SHIPS in America Act, which propose sweeping measures to overhaul US maritime policy and provide fiscal incentives to boost domestic ship construction. Importantly, the widely followed the USTR measures to impose fees on vessels owned and operated by Chinese entities are now tied to this new Bill. How both Bills will fare as they pass through the legislative process remains to be seen, but the signal and intent is clear - As the USTR and the President, have both been keen to stress that the “best way to have certainty” of supply chains, and avoid the need to re-route, would be to “build in the US”.

Tariff-ic

Alongside these proposals, the sweeping tariffs introduced by the President, on so-called ‘Liberation Day’, will of course have huge connotations for the sector as trade flows and supply chains adjust.

Notably, the tariffs on imports will have wide-ranging impacts for the UK - cars are the top UK goods export to the US, valued at £8.3 billion. However, UK services exports, such as business services, legal, and accounting, to the US are almost twice as large as goods exports to the US, amounting to £51.8 billion.

In response, businesses with trade exposure to the US will now be reconsidering their markets and suppliers, with reports already indicating increased traffic and congestion in ports across Europe as shipping customers navigate the timing and impact of  the tariffs.

What will the next 100 days bring?

Over time, the impact of fluctuations in trade flows, tariffs and trade diversions, the shift in routes that may transpire could potentially open new markets for British consumers and exporters – but this will depend on how the situation develops including the duration and severity of tariffs and the impact of retaliatory measures.

How vessel operators respond will vary depending on fleet type, trade demand, and corporate structures. Increased US shipbuilding activity - certainly in the near-term - seems unlikely given limited capacity and competition from nations like Japan and Korea.

Adding another layer of complexity for businesses is the political uncertainty: the UK Government is certainly pulling out all the stops to reach a trade agreement with the US, but Starmer and his team will also be acutely aware of the need to tread a balanced line between the US and ongoing dialogue with the EU if they wish to avoid further political tumult, and crucially for business – divergence, barriers and added complexity to trade.

Equally, given the pace of change – and often conflicting messaging from the White House, there may yet be scope for new policies, changes of direction or softening of measures here and internationally, and well as the spectre of retaliatory measures.

While the long-term effects remain uncertain, the industry must navigate a complex and evolving landscape. UK shipping companies will need to remain agile and responsive to shifting trade policies to adapt successfully.