The US Tariff regime has changed. What if any are the impacts on shipping?

The Tariff Situation

The Trump administration introduced import tariffs on 2 April 2025, so-called Liberation Day.  These were immediately challenged in the courts.   In Learning Resources v Trump, decided 20 February 2026, the US Supreme Court held that the relevant law, the International Emergency Economic Powers Act of 1977 (IEEPA) does not authorise the President to impose tariffs; tariff power sits with Congress, not inherent executive authority. The administration’s workaround has been to use other statutory hooks, especially Section 122 of the Trade Act of 1974, under which the White House imposed a temporary 10% ad valorem import duty for 150 days, effective 24 February 2026.

With the Section 122 tariffs coming to an end, on 24 July 2026, the US introduced new 10% or 12.5% tariffs on imports from 60 trading partners, including China, the EU and the UK, citing those countries’ alleged failure to prevent imports made with forced labour.  For a full list of which tariffs apply to which countries, readers may refer to this note from Maritime London members Norton Rose Fulbright.

The new duties cover a wide range of imports into the US, but are subject to a range of exclusions. Section 301 of the Trade Act of 1974 has a more established procedural basis than IEEPA or Section 122: investigation, determinations, comments, hearings and responsive action.  The US Trade Representative says it held consultations, hearings and gathered comments before finalising the action.

In addition to these new tariffs, on 20 July 2026, the US announced 50% tariffs on selected Canadian imports using Section 338 of the Tariff Act of 1930, a throwback to the Smoot-Hawley era of post-1929 protectionism. The tariffs are aimed at alleged Canadian discrimination against US exports in cars, alcohol and dairy. Targeted goods include wine, cement and ice hockey gear, with affected import value of around $20bn. Exempt goods include potash, energy, fish, some minerals and goods already subject to Section 232 duties. Against the background of the President’s repeated comments about Canada’s relationship with the US, critics may interpret the tariffs as an instrument of wider political pressure as well as trade policy.

Meanwhile, Mr Trump’s displeasure with Brazil, South America’s largest economy, is evident in a 25% Section 301 tariff on all Brazilian goods, with some exemptions, following an investigation into digital trade, electronic payments, preferential tariffs, anti-corruption enforcement, intellectual property, ethanol market access and illegal deforestation.

The Macro-Economic Consequences

The Supreme Court curtailed the President’s ability to use IEEPA as a general tariff-making power. It did not prevent the administration from using more specifically delegated authorities contained in other legislation, provided the applicable statutory conditions and procedures are satisfied. The judgment has shifted tariff policy away from the open-ended use of emergency powers and towards statutory mechanisms containing more specific procedures, conditions and limitations. Those measures may themselves be subject to legal challenge, but the judgment did not preclude their use.

Tariffs therefore appear likely to remain a significant feature of US economic policy during the present administration. The extent to which a future administration would reverse them is uncertain: recent experience suggests that tariffs can prove politically easier to impose than to remove.

The main macro-economic impact, according to most economists, is most likely to be a lasting drag on growth as sellers and buyers absorb extra costs. Although tariffs are sometimes presented politically as a payment made by the exporting country, the duty is collected from the US importer. Its ultimate economic incidence may be divided between importers, consumers, retailers and overseas suppliers.

According to economics writer Wolfgang Munchau, “the value of Japanese cars sold in the US fell by 24.7% in May last year, compared to the previous year [after “Liberation Day” tariffs were first imposed]. Yet the number of Japanese cars sold was down only by 3.9%. So the Japanese car companies took a hit on their profits.”
In this regard, Mr Trump could argue that the tariffs are working: they force overseas companies to cut prices on their exports to the US. He could argue that this benefits US buyers and US sellers, whose overseas competitors face tougher US trading conditions.

A secondary consequence may be that US trading partners, facing such tougher trading conditions in the US, focus less on the US and more on trade between themselves. As a sub-heading, bilateral trade with the US has been and will continue to be diverted from high-tariff exporting nations via lower-tariff exporting nations.
A further consequence is that there will be more regional and bilateral trade deals which exclude the US and potentially exclude trading in US dollars. More regional and bilateral agreements may develop outside US-led trade structures. Some may make greater use of non-dollar settlement, although the scale and speed of any resulting dedollarisation remain contested.

The Maritime Consequences

Tariffs affect shipping through four different mechanisms:

1. Cargo demand: higher landed prices can reduce US import volumes.
2. Cargo substitution: US buyers may source the same goods from different countries.
3. Trade diversion: affected exporters may seek alternative markets outside the US.
4. Timing and volatility: importers may front-load cargoes before implementation dates and then run down inventories.

Those effects can pull shipping demand in opposite directions. A decline in bilateral trade does not necessarily mean a corresponding decline in seaborne demand. Substitution may increase sailing distances and tonne-mile demand, while weaker economic growth may reduce cargo demand overall.

Their effect is therefore unlikely to be uniform across vessel types or trades. Higher duties may reduce some bilateral cargo flows, but sourcing substitution and trade diversion can create different—and sometimes longer—voyages elsewhere.

Container shipping is likely to experience the broadest effects because the new duties cover extensive categories of manufactured and consumer goods. US importers may reduce purchases, seek alternative suppliers or encourage manufacturers to relocate part of their production. Exporters facing less competitive access to the US may, meanwhile, redirect goods towards Europe, Latin America, the Middle East or other Asian markets.

This process has already been visible in the changing composition of US imports, with China losing share in some product categories while manufacturing centres in Southeast Asia and elsewhere have gained. The shipping effect is not necessarily a straightforward reduction in demand: changing sourcing patterns can alter port calls, feeder networks, transshipment activity, equipment positioning and sailing distances.

There is, however, an important customs distinction between the relocation of production and the rerouting of cargo. Passing goods through a lower-tariff country does not ordinarily change their origin. To qualify as products of that country, goods will generally have to undergo sufficient processing under the applicable rules of origin. Greater scrutiny of origin declarations, cargo documentation and supply chains may therefore accompany the new tariff regime.

Tariff changes can also produce pronounced short-term volatility. Importers may accelerate shipments ahead of an implementation date, followed by a period of inventory reduction. For carriers and ports, this can mean temporary surges in bookings and congestion, followed by weaker volumes. Uncertainty may also shorten customers’ planning horizons and complicate capacity deployment.

The effect on dry bulk and energy shipping is likely to be more selective. Many energy products, agricultural commodities and industrial raw materials are covered by exemptions, reflecting US concerns about domestic availability and wider economic disruption. Nevertheless, the measures against Canada and Brazil may affect particular cargoes, including cement, wine, ethanol and other agricultural or manufactured products. Retaliatory action by trading partners could have wider consequences for grain, energy and other bulk trades even where the initial US tariff does not directly cover those cargoes.

The Canadian measures are politically significant, although their deep-sea shipping impact may be comparatively limited. Much US–Canada trade moves by pipeline, rail and road, while energy and potash are excluded from the new Section 338 tariffs. The more direct maritime effects are likely to be concentrated in the Great Lakes–St Lawrence system, short-sea movements and particular products such as cement and wine.

Brazil presents a different shipping exposure. A broad additional tariff may encourage US buyers to seek alternative suppliers while Brazilian exporters pursue other markets. Depending on the products affected and the availability of substitutes, this could alter container, agricultural, forest-product and minor-bulk flows. Diversion to more distant markets could preserve or increase tonne-mile demand even if US–Brazil cargo volumes decline.

For shipping companies and their customers, tariffs also create contractual and operational questions. Parties may need to establish who bears additional duties under the sale contract and the applicable Incoterms; whether tariff changes trigger price-adjustment, hardship or termination provisions; and how customs delays affect storage, demurrage and delivery obligations. Cargo origin, customs classification, valuation and documentary accuracy will become increasingly important.

The wider consequence is likely to be a less predictable trading environment. Tariffs, possible retaliation, geopolitical conflict and changing sanctions regimes are increasing the frequency with which shipping companies must reroute cargoes, revise contractual arrangements and reassess counterparty and supply-chain risk. This creates challenges for carriers and cargo interests, but also greater demand for the legal, insurance, broking, financial, technical and compliance expertise represented within Maritime London’s membership.