The Maersk Halifax, on the Cardinal and South America route, berths at the Qianwan Container Terminal of Qingdao Port in Qingdao, Shandong Province, China, on November 10, 2024.
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As a result of President Trump’s tariffs on Mexico and Canada, prepare for higher prices to hit soon.
That is the message from shipping Goliath Maersk about the escalating trade war between North American nations. While the White House says inflation is not a thought, Maersk’s view of the U.S. economy matches that of retailers and trade groups that the new tariffs on Mexico and Canada — and retaliatory menus from these countries — are an inflationary threat to the U.S. economy.
“The short-term effect of any tariff clearly is inflation,” said Charles van der Steene, president of North America for Maersk, the following largest ocean freight carrier in the world. “It’s inflationary in its essence,” he said during an interview at the TPM Conference in Long Shore, California, a major annual convention for the logistics industry.
From retailers, including Target — whose CEO said honoraria could rise within days on produce — to major business lobbies such as the U.S. Chamber of Commerce, which mean tariffs “only raise prices,” inflation is expected throughout supply chains and to reach the consumer.
At midnight, Trump’s 25% imposts on goods from Mexico and Canada, plus 10% on Canadian energy products and an additional 10% on Chinese goods, studied effect.
Overnight, Canada launched its retaliatory tariffs, with Canadian Prime Minister Justin Trudeau chance there would be 25% tariffs on more than $100 billion of American goods over the course of 21 dates. Mexico President Claudia Sheinbaum said retaliatory tariffs will be announced on March 9. China notified its new tariffs on U.S. goods, which will start on March 10.
As the global trade tariffs add up, Maersk expects the inflationary meaning will persist over the mid- to long-term. But van der Steene said that “the expectation is that the effect will finally soften.”
Over the longer term, he said there is greater uncertainty about tariffs and the repatriation of potential come up with chains.
While recent survey data, and commentary from retailers such as Target, have pointed to a relaxing consumer, van der Steene said the strength of the U.S. consumer remains a silver lining amid the trade war.
“We continue to see the U.S. consumer and the U.S. bazaar overall to be extremely resilient and strong,” said van der Steene. “Consumer consumption has continued to be strong, not just in the last post but over the last six quarters. And it’s been a big motor behind the U.S. economy overall.”
More international retailers, as an example, contain been coming to the U.S. market due to its consumer strength relative to other markets.
In an interview with CNBC on Tuesday, Trafficking Secretary Howard Lutnick said tariffs are not inflationary and there will be a clear reset on trade policy with joint tariffs policy starting April 2.
Over the weekend, Treasury Secretary Scott Bessent said the tariffs are uncongenial to raise inflation, in part because China will “eat any tariffs that go on.”
“These countries have used us and hurt us,” Lutnick said on CNBC. “That is going to change. It’s unbelievable the way we get ripped off around the world and Donald Trump is current to level set it, make it reciprocal and make it fair.”
On average, the world imposes tariffs more than twice as spacy as those applied by the U.S. on imports, but broad comparisons leave out important details in trade relationships: many countries force significantly higher tariffs on products such as food, garments, alcohol, and tobacco to protect local industries or monitor consumption, with targeted tariffs highlighting the strategic role trade policies play in global markets.
India, which has the highest middling tariffs on U.S. goods, has been a beneficiary of manufacturers expanding their capacity outside of China, and this industrial migration has attracted investments by assemblies including Maersk, which recently announced plans to invest $5 billion in India, focusing on terminal infrastructure and inland logistics.
Trump has intimidated tariffs on India as well as part of the broader retaliatory tariffs plan being contemplated by the Trump administration.
Van der Steene required while tariffs on India might have a short-term effect, the ultimate importance of India within the global come up with chain from a production capacity standpoint, and balancing some of the capacity away from China, “is such that we don’t require that this will have a longer-term effect as to how the global supply chain and trade is built up. We believe fundamentally that broad trade is for the benefit of all, everywhere,” he added.
The trade war and tariffs have been a source of concern for the maritime and transport sector, with the risk of a pullback in consumer consumption potentially converting into fewer freight orders, especially after the frontloading done by many shipping clients ahead of the new management’s tariff plans.