How the U.S. Election Could Reshape Container Shipping

As the U.S. presidential election nears, Simon Heaney, Senior Manager of Container Shipping at Drewry, has provided insight into how each candidate’s approach to trade and economic policies could influence global container shipping dynamics.

Heaney’s analysis indicates that while container shipping tends to grow consistently despite political changes, the evolving geopolitical tensions between the U.S. and China could further disrupt the market depending on who wins.

Geopolitical Tensions and Trade Diversification

The U.S.-China trade war, initiated under former President Donald Trump, has significantly reshaped trade flows over the past several years. China’s share of U.S. container imports has dropped by around 13 percentage points since 2016, with countries like Vietnam stepping in to fill the gap.

Heaney points out that further trade diversification would generally benefit the container market, as the fragmentation of production typically leads to increased shipping of intermediate parts. However, he cautions that an escalation towards “America-first” isolationist policies could disrupt current growth.

U.S. imports through major ports increased by 15% year-to-date as of August 2024, making them a crucial growth driver for the container shipping sector. Yet, these gains could be jeopardized if more extreme policies are implemented.

Trump’s Protectionist Approach

Donald Trump, known for his protectionist stance, has suggested imposing a universal tariff of 20% on all imports, with a substantial focus on goods made in China. Heaney warns that such tariffs would likely reduce overall demand for containerized imports, as U.S. consumers would bear the additional costs. Any intensification in the trade war would continue pushing U.S. importers to seek alternative sources in countries like Vietnam, India, and Mexico, though the net effect on import volumes remains uncertain.

While reshoring U.S. manufacturing could drive exports, retaliatory tariffs from other nations could stymie growth in outbound trade, Heaney notes.

Harris’s Focus on Subsidies and Diplomatic Trade Policy

Kamala Harris, meanwhile, has criticized Trump’s tariff proposals but may maintain existing tariffs if elected. Instead, Heaney expects a Harris administration to focus on subsidies to bolster U.S. industry and exports, which could still strain relationships with other trading blocs. Although Heaney believes Harris’s trade approach would likely be more measured and diplomatic, she is not expected to soften the U.S. stance on China significantly.

As the “status quo candidate,” Harris is viewed as less disruptive, with her administration likely to maintain current trade policies while encouraging gradual supply chain diversification.

A Slow Shift Away from China, Regardless of Outcome

Heaney’s assessment concludes that regardless of the election’s outcome, the U.S. will likely continue to shift its supply chains away from China, although the pace and disruption level of this shift will vary depending on the next president. Trump’s more aggressive stance would likely accelerate the transition, while Harris’s approach may lead to a steadier evolution.

With container shipping volumes tightly interwoven with global trade policies, the U.S. election could bring about significant changes for the sector. As Heaney put it, “The speed of the transition and how orderly it will be will be heavily dictated by the result.”

Watch: Drewry Freight Loop: US Election Special Container Market Update

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