Bolder Trump injects new volatility into container shipping

Even before starting his second term, Donald Trump gave the shipping industry a taste of the unpredictability he will inject over the next four years, first by upending longshore labor contract negotiations and then threatening to take over the Panama Canal.

Upon taking office Jan. 20, Trump surprised again by holding back on his widely anticipated threat to slap higher tariffs on Chinese goods on his first day back in the White House. Still, he pledged tariffs were on the way during his inauguration speech and has threatened to put them at 100% if a deal over Chinese-owned TikTok isn’t reached. Trump also said that a 25% tariff on goods coming from Canada and Mexico could come as soon as Feb. 1.

The tariffs Trump implemented against China during his first four years in office brought some unpredictability to the shipping industry. Section 301 tariffs hit US importers, who frontloaded cargo as they could beat deadlines for the tariffs and ultimately shifted even more manufacturing out of China. Broader escalatory tensions with China, coupled with an emboldened Trump administration, promise an even more volatile second term.

Closer to home, Trump injected himself into negotiations between the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) when he publicly backed the union’s opposition to automation. With that reality hanging over the contract talks, the major carriers and terminal operators that comprise the USMX knew they would only risk the new president’s ire if they dug in on the automation question and a second longshore strike occurred as a result.

Trump’s support of prohibitions on automation at marine terminals surprised the shipping industry, as it defied the conventions of traditional Republican support for corporations over unions, Peter Friedmann, executive director of the Agriculture Transportation Coalition, said at a shipping conference in December.

“It is simply unprecedented, at least for the last 200 years, for a president so obviously making the policy objectives and decisions on his own, seemingly without input by staff and the federal bureaucracy, and certainly without deference to them,” said Friedmann, who added that the Trump administration was rushing into policy changes rather than coasting the first three months similar to other new administrations.

Trump wasted little time in elevating Louis Sola from commissioner to chairman of the Federal Maritime Commission (FMC) just hours after taking the oath of office on Monday. Joe Biden only tapped Daniel Maffei for the chairman role after three months in office.

A bid to limit Chinese influence

Trump’s threat to take back the Panama Canal over “ridiculous, highly unfair” fees may not ultimately result in US troops swooping in as occurred during the 1989 US invasion to depose Panamanian military leader Manuel Noriega. But it does speak to the president wanting to expand regional control, whether it’s in Greenland — or even more improbably, Canada — to limit Chinese and Russian influence in the Western Hemisphere.

In November 2024, China-based Cosco Shipping opened a $1.3 billion mega-terminal in Peru. Cosco created the terminal — a major gateway for the Pacific Coast of South America — in a joint venture with Peruvian miner Volcan, which is owned by Argentina-based Integra Capital.

Hutchinson Port Holdings, based in Hong Kong, operates a port on each side of the Panama Canal. On the day of Trump’s inauguration, during which he accused China of “operating the critical waterway,” the Panamanian government posted a video on X showing inspectors heading to begin an audit at Hutchinson’s local offices, seemingly a move to placate Trump. The Panama Canal Authority, a government agency, has operated and managed the canal since the United States returned full oversight to the country in 1999.

The container shipping industry is second only to the semiconductor industry in the economic and military struggle between China and the United States, said Carl Bentzel, a former FMC commissioner and now president of the National Association of Waterfront Employers. That fuels bipartisan support for shoring up US maritime capacities — ranging from ambitious legislation to expand the US-flag commercial fleet to the Biden administration warning that Chinese-built cranes at US ports pose a cyberthreat, Bentzel told the Journal of Commerce.

On Jan. 7, the US Department of Defense published its annual listing of companies that it determines are tied to the Chinese military, revealing the addition of Cosco Shipping. While the designation prevents the US government from contracting with the ocean carrier, it has no impact on Cosco’s ability to serve the US commercial market.

On the heels of that designation, the Biden administration announced on Jan. 15 that China was manipulating market policies and practices to support its shipbuilding and shipping equipment production. While an FMC commissioner, Bentzel highlighted China’s dominance in the manufacturing of chassis and containers in a 2022 report.

“This is the first time I have seen such an alignment against China’s maritime dominance,” Bentzel, a Hill veteran who was senior counsel to the Senate’s transportation and commerce committee, including on maritime policy, said Jan. 15. “I’ve never seen this in my entire career.”

Subscribe now(opens in a new tab) or sign up for a free trial(opens in a new tab) to the Journal of Commerce and gain access to breaking industry news, in-depth analysis, and actionable data for container shipping and international supply chain professionals.     

Subscribe to our monthly Insights Newsletter(opens in a new tab)