The CEO of the world biggest shipping company, AP Moller-Maersk, has predicted that President Trump’s trade war will harm the United States more than any other country.
While speaking at Maersk’s global headquarters in Copenhagen, Denmark, Soren Skou said the US-led trade war is likely to have the biggest downsides in America, because of its outsize reliance on foreign-produced consumer goods. The controversial war has already led to Washington and Beijing exchanging numerous rounds of threats about tariffs.
Skou said that fallout from the tariffs “could easily end up being bigger in the US.” The CEO told the audience of this warning during a presentation in which he argued that while global trade would most likely fall by no more than 0.3%, the negative impact on US trade could be as high as 4%.
“That would definitely not be good,” he said.
He also said that the impact would be particularly outsize if the US started to place tariffs on consumer-focused 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,” he continued. “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.”
So far, the tariffs that have been implemented have focused largely on industrial goods, but it is not impossible that Trump could look to hit more consumer-focused products.
AP Moller-Maersk controls the shipping of about 20% of the world’s seaborne consumer goods. So far, Maersk hasn’t seen any downturn in trade flows, reporting a 4% increase in demand, Skou said.
Should Trump be concerned?