Copenhagen: The US economy will be hit many times harder than the rest of the world by an escalating global trade war, according the chief executive officer of A.P. Moller-Maersk A/S.
Soren Skou, who runs the world’s biggest shipping company from Copenhagen, said the fallout of the current protectionist wave “could easily end up being bigger in the US”.
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.”
- Soren Skou | Chief executive of A.P. Moller-Maersk
Tariffs could slow global annual trade growth by 0.1 to 0.3 per cent, though for the US the effect could be “perhaps 3 or 4 per cent,” he said at Maersk’s headquarters on Friday. “And that would definitely not be good.”
The company transports about 20 per cent 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 criticise the trade policies of US President Donald Trump.
Maersk focuses on trade flows between Europe and Asia and so far its industry hasn’t been directly hurt by tariffs. In fact, demand grew 4 per cent in the second quarter. But Skou says that may 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 $34 billion (Dh124.78 billion) of Chinese goods last month, citing unfair trade practices by the world’s second-biggest economy. The Trump administration has said it will impose tariffs on a further $16 billion on August 23, and even signalled it won’t shy away from targeting the entire $500 billion in 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.”