Tue, Aug 21, 2018 - Page 10 News List

Americans will bear the brunt of tariffs: Maersk

Bloomberg

The US economy will be hit many times harder than the rest of the world by an escalating global trade war, AP Moller-Maersk A/S chief executive Soren Skou said.

Skou, who runs the world’s biggest shipping company from Copenhagen, said that the fallout of the current protectionist wave “could easily end up being bigger in the US.”

Tariffs could slow global annual trade growth by 0.1 to 0.3 percent, but for the US, the effect could be “perhaps 3 or 4 percent,” he said at a presentation at Maersk headquarters on Friday. “And that would definitely not be good.”

The company transports about 20 percent of the world’s seaborne consumer goods, putting it in a unique position to gauge the fallout of tariffs on trade flows. Maersk has in the past broken with its culture of steering clear of any political debate to criticize the trade policies of US President Donald Trump’s administration.

Maersk focuses on trade flows between Europe and Asia, and so far its industry has not been directly hurt by tariffs, with demand growing 4 percent in the second quarter of the year.

However, Skou said that could change if the US starts targeting consumer goods.

“The first thing the American importers would do if tariffs are put on Chinese consumer goods would be to buy in Vietnam, in Indonesia or elsewhere in Asia,” Skou said. “Big US consumer brands like Nike produce in all of Asia, not just in one country, so there will be a substitution effect.”

The US put duties on US$34 billion of Chinese goods last month, citing unfair trade practices by the world’s second-biggest economy.

The Trump administration has said that it will impose tariffs on a further US$16 billion on Thursday, and even signaled that it would not shy away from targeting all US$500 billion of Chinese exports to the US.

“The other factor is that there’s a lot of stuff that’s now imported into the US that just isn’t produced anywhere within the US,” Skou said. “You can’t get Nike sneakers or iPhones that are produced in the US, so it will end up being pushed on to the consumer.”

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