Trump victory creates uncertainty for global trade and shipping
Masterbulk chief executive Nick Fisher says Trump could perpetuate US isolationist approach to shipping policies.
DONALD Trump’s surprise victory in the US presidential election sent shockwaves across financial markets on Wednesday, and is likely to have implications for the shipping industry.
Stock markets have seen a global sell-off, investors have bailed out of risky assets such as oil, and prices of safe haven investments such as gold have soared. Clearly, much of the immediate market reaction is due to the uncertainty surrounding a Trump administration’s economic policies.
“That uncertainty stems from several factors, including the lack of specificity that has been provided, the lack of experience Mr Trump has as a policy maker, who would serve in President Trump’s administration and the extent to which Congress allows these policies to be enacted,” analysts at Nomura said in a report.
In the longer term, Mr Trump’s strong inclination towards protectionist trade policies, his support for domestic industries such as fossil fuels and the subsequent impact on global shipping and trade will be things to watch out for. Jeffries warned of the risk of protectionism in a note on Wednesday.
“It is too early to say,” Masterbulk’s chief executive Nicholas Fisher said. He said the US had already disconnected itself from some mainstream international compliance issues at a national and state level, such as ballast water regulations, under existing and previous administrations. “There’s nothing to suggest that a new Trump administration will do anything to improve that at all,” he said.
Mr Fisher said Mr Trump’s rhetoric in the election campaign might suggest that a continued strategy of “going it alone” to make the US better will only perpetuate this isolationist approach and make US trading compliance yet more costly and complex for owners. It could also encourage some owners to “de-select” the US as a trading partner of choice, when not required to trade out of necessity, he added.
Some of Mr Trump’s views on global issues such as Iran have also been of concern for commodity and shipping markets that have viewed Iran’s return as beneficial to trade. “Our immediate response to these thoughts is that Iran’s recent return to international markets upon lifted sanctions could be under pressure, and create yet another internal conflict within Opec and [oil] production levels,” Arctic Securities analyst Erik Nikolai Stavseth said in a note.He said that for tanker companies, “we see stocks in general taking a beating today on the back of sentiment until it becomes clear what the fundamental effects will be”.
On the dry bulk side, Mr Trump has promised to revive US coal mines, though many doubt whether such an initiative can be successfully carried out. Rather, Mr Stavseth said the long-term impact of the Trump presidency “may not be as pronounced” as in other sectors. Even as Mr Trump threatens to impose tariffs on US imports from China, “dry bulk is less focused on exports from China as steel demand is driven primarily by domestic factors and hence iron ore may escape, whereas lower industrial activity may dent coal demand”, he added.