The Possible Influence of the US Election on the Shipping Industry

Today, the United States Of America will elect its 46th president. The choice is to extend Donald Trump’s presidency for the next 4 years or to have Democratic Party representative and former Vice President to President Obama, Joe Biden, as the new president. 

The outcome of the USA elections 2020 may have several repercussions on the shipping industry depending on who becomes the president as there are several factors on which the outlook of Trump and Biden are different.  Below, I name a few.

International Relations 

Trade war with China 

If Joe Biden becomes the President of the United States, expect policy reversals that are in sync with American allies. Stark contrast is also seen in perspectives on domestic manufacturing between the two candidates. While Trump wants to return all manufacturing to the USA, Biden wants to build resilience in certain vital industries.  

Throughout the first term, Trump continuously turned to section tariffs intending to reduce the trade deficit as promised in the 2016 election campaign. The effects got seen in July 2018 with the Trump administration imposing additional charges on Chinese goods, which resulted in retaliation from both sides. The `Phase One’ trade agreement signed in January 2020, became the only savior after the Chinese side committed to increasing the purchase of certain goods and services from the US. According to economists, China hasn’t fully adhered to its commitment yet. Therefore, it is more than likely that if Trump is re-elected, he is most likely to push for the next phase of the deal. 

On the other hand, if Biden is elected as the president, it is expected that he will take a more diplomatic approach and might not completely get rid of the tariffs imposed by his predecessor. Many in American policy circuits believe that Biden is more likely to approach China as an ally. After all, Biden has proposed a $400 billion government procurement program for American goods, $300 billion investment in manufacturing and technology R&D, and taking steps to re-shore "critical" supply chains.  

The shipping sector is all set to be overall affected by the decisions and reactions of both countries.  

Iran and Venezuela 

In the past 4 years, the Trump administration advocated several trade sanctions that affected many shipping companies. The tariffs are generally imposed to adjust conditions for imports as a reaction to unfair trade practices with trade partners, according to the statute. The Trump administration used these tariffs that sometimes to pressure countries to change the opposed policies. Foreign policy rivals Venezuela, North Korea, and Iran – serve as ready examples. It is expected that the sanctions will continue if the Trump administration continues. However, the Biden side has not come out clearly how aggressively it wants to pursue trade wars with policy rivals.

Experts suggest that Biden’s win could lead to easing up of imposed sanctions on Venezuela. This could theoretically imply long haul exports from Venezuela to Asia but practically, the financial collapse of the country could limit the export potential.

If the USA sanction on Iran is eased, there might be an increase in the supply of vessels as several Iranian tankers are being used for floating storage and might be technically able to return to service. The increase in the supply of vessels could be negative for the pricing as then the demand curve will eventually flatten out.  

Green Logistics  

The USA elections could pave the way to the future of the shipping decarbonization outlook.  In the next 4 years, critical decisions for shipping decarbonization rules will be taken. These regulations will affect vessel supply and freight charges. 

The Trump administration has already pledged to withdraw from the Paris agreement. IMO’s goal of reducing greenhouse gases by 50% by 2050 is in sync with the Paris agreement. If Biden wins the presidency, the USA would still be a part of it. This might persuade more assertive regulations action by IMO, and Green logistics may become a priority area of the US shipping industry.

To conclude, no matter who wins America and Americans, the international shipping industry is all set to prepare for its next big disruption. It is in a critical state of transformation, as now, much of International trade is driven by a nation’s strategic interests rather than globalization.