The Council on Foreign Relations summarizes the monumental reshaping of global trade that could take place due to tariffs: “Nearly half of all U.S. imports—more than $1.3 trillion—come from Canada, China, and Mexico. However, analysis by Bloomberg Economics shows that the new tariffs could reduce overall U.S. imports by 15 percent. While the Washington, DC-based Tax Foundation estimates that the tariffs will generate around $100 billion per year in extra federal tax revenue, they could also impose significant costs on the broader economy: disrupting supply chains, raising costs for businesses, eliminating hundreds of thousands of jobs, and ultimately driving up consumer prices.”
The tariffs are likely to prompt further shifts in manufacturing and sourcing strategies.
The maritime ecosystem will feel this impact almost immediately. Chinese ports such as Shanghai and Ningbo – currently among the busiest in the world – may see reduced U.S.-bound cargo volumes. Instead, alternative manufacturing hubs in Southeast Asia and India could experience growth. For example, Vietnam’s exports to the U.S. surged by 36% during the height of the U.S.-China trade war in 2019. A similar pattern is likely to repeat, further diversifying global shipping routes.
The geopolitical tensions between the U.S. and China have already prompted many Chinese manufacturers to establish plants in Mexico, basically turning Mexico into a huge transshipment hub to maintain China’s market presence in North America – but President Trump’s threats against Mexico likely nullify this strategy.
Trump’s tariffs are expected to accelerate supply chain diversification efforts, outside of Canada and Mexico. Companies reliant on China for manufacturing may increasingly look to “China+1” strategies, where production is distributed across multiple countries to mitigate risks. This strategy was more widely adapted pre-COVID. Diversification reduces vulnerability to geopolitical tensions, but it also introduces complexity.
From a cost perspective, the tariffs are likely to raise shipping expenses, as longer routes and increased transshipments become necessary. For example, moving goods from Vietnam or India to the U.S. often requires additional transshipment points compared to direct shipping from China. These added layers increase costs, which may be passed on to consumers, worsening inflationary pressures.
Traders and shippers need to ensure that they understand how tariffs will affect pricing, the expected lengths of shipments, and the availability of vessels.
And bunkering companies will want to know where the new hot spots are, as shipping and trade routes quickly evolve.
