What industries will less or more impacted by the trade war?
--Oct 10, 2018
The U.S. imports more than $500 billion per annum from China, and the Trump administration has so far imposed tariffs on approximately half of those imports, with further threats for escalation to impose tariffs on all imports in 2019. Computers, electronics, electrical equipment, apparel and textiles, furniture, plastics, and general manufacturing are the main imports – and all these products ship in containers, and all of them should be expected to see adjustments. Taking one step further down to the supply chain, if exports of these products to the U.S. are impacted, then, Chinese imports of raw materials and commodities that are used as input should be expected to decline, negatively impacting the tanker and dry bulk segments of the shipping industry.
On the other hand, China imports approximately $190 billion per annum from the U.S., mainly airplanes, machinery and equipment, agricultural products (prominently soybean), and vehicles. More recently, China has also developed into a major energy importer of shale oil and natural gas from the U.S. Obviously, China is outnumbered when it comes to imposing tariffs to U.S. products. However, most interestingly, so far China has imposed tariffs surgically on raw material imported from the U.S. – most notably soybeans and agricultural products, designed to have maximum political impact in the Corn Belt in the U.S. There has been little direct impact on the dry bulk market so far due to tariffs on American agricultural products. There have been no tariffs on U.S. energy imports so far (crude oil and natural gas), but there is increased talk that in an escalating trade war, the U.S. energy industry will likely be impacted, which will have negative implications not only for the tanker industry, but also on developing (and financing) energy infrastructure in the U.S. geared for a burgeoning energy export trade.