Economists have been left flabbergasted by the opening months of Donald Trump’s return to power in the US, the international rulebook torn up, policies raining in and often being rescinded by the hour. Making a call on how the global economy plays out in the coming months has rarely been more tricky, or down to the whims of one man.
At no point since tracking began on the subject have global trade policies been more uncertain than right now, according to one index developed in the US.
I’ve rarely seen a year start with more uncertainty
The Trade Policy Uncertainty (TPU) Index developed by four employees at the Federal Reserve Board analyses the frequency of joint occurrences of trade policy and uncertainty terms in major newspapers, firms’ earnings conference calls, and aggregate data on tariff rates in a way that is similar to existing volatility indices in mainstream financial markets, spanning equities and derivatives.
Since Donald Trump returned to the White House on January 20, the index, which goes back to 1960, has spiked to record levels, twice as high as previous peaks registered during Trump’s first term in office.
A paper submitted by the creators of the TPU index documents that increases in trade policy uncertainty reduce investment and activity using both firm-level and aggregate data.
Trump’s first months back in the White House have dominated shipping headlines for tariffs, a push for peace in Ukraine, a renewed ‘maximum pressure’ strategy on Iran, the creation of a National Energy Dominance Council, and a planned tax on Chinese-built tonnage calling US ports.
The war of tariffs is beginning to make its way into the macroeconomic forecasts. As an example, Goldman Sachs just revised their US Q4 2025 GDP growth downwards from 2.2% to 1.7% whilst at the same time increasing their likelihood for a US recession within 12 months from 15% to 20%.
“As the Trump 2.0 reality show unfolds, as it does daily, often with singular market-moving tweets, we might as well suspend trying to make credible forecasts of future supply-demand balance across shipping sectors. Underwhelming spot earnings render shipping sentiment downbeat while we seek greater clarity on today’s geopolitical, trade and social threats,” notes a recent report from broker Hartland Shipping.
“I’ve rarely seen a year start with more uncertainty,” says Tim Huxley, the veteran head of Hong Kong shipowner Mandarin Shipping, adding: “Both the US and China want to see growth and they will do everything they can to achieve that. A stronger domestic economy in China will probably see the target of 5% growth met, in the USA, tariffs could lead to inflation and that could preocupy the new administration.”
If shipping markets in the 2020s can be characterised by disruption, then the two decades prior could similarly be defined with one word – China.
Without the growth in Chinese demand for commodities, manufactured exports and shipbuilding capacity witnessed since the start of the millennium, the shipping world would be an entirely different place.
China’s demand has been a solid factor supporting shipping markets amid economic and political upheaval, pandemic and war. But this drive was, at least initially, itself a disruptive factor.
Snakes like big ideas and understanding how things work
The opening of China’s economy, often marked by the country’s accession to the WTO in the early 2000s, changed the shipping game. Since then, the industry has become in large part dependent on ever-expanding Chinese demand.
For large oil tankers and dry bulk carriers, this is put in stark relief when we consider that Chinese imports of crude oil and iron ore do not just constitute the majority of global incremental import growth in these sectors over the period 2000-2024. Due in part to declines elsewhere, they exceed it.
Could this era of expansion go into reverse? In Maritime Strategies International’s view, the answer is yes.
There are structural shifts in China’s economy, MSI analysts point out, which will reduce demand for some of the major commodity types it will import. Perhaps the two of the most important of these trends are reduced rates of urbanisation and increased vehicle electrification.
John Michael Radziwill, a high profile owner who chairs Monaco-based C Transport Maritime, concedes that China has domestic challenges to its economy that it must address or risk slowing growth and internal discontent.
“We see the Chinese government as willing to drip feed support without really enacting enough policies that could turnaround the situation quickly,” Radziwill tells Splash.
The full ramifications for how relations between China and the US, the world’s two largest economies, will develop between Trump and his counterpart, Xi Jinping, still remain unclear.
“While we are all kept guessing as to what Mr Trump has in mind for US-China relations, let’s consider the Chinese astrological Snake: it is wise, mysterious and thoughtful,” says Mark Williams, who heads up consultancy Shipping Strategy: “Snakes like big ideas and understanding how things work. In this Year of the Snake, we could all do with some of these characteristics if we are to come out the other side in better shape.”
As well as markets coverage, this new magazine also covers pressing regulatory issues and likely tech breakthroughs. Click here to access the full magazine.
