Why Trump’s return is neither good nor bad for shipping

Donald Trump will soon be back in the Oval Office. Pierre Aury wonders whether we are entering a time loop.

A 78-year-old man will soon be the 47th president of the US. He will be replacing an outgoing president who was also 78 when he moved into 1,600 Pennsylvania Avenue back in January 2021.

If the election of Donald Trump was a shock for many as the election of Kamala Harris was predicted to be a formality it was very good news for many others. The attitude in both cases is dictated by the idea that the election of a single man can change things for the worse or for the best depending on where you sit on the political spectrum.

Many articles published shortly after the result was known mentioned the drop of China’s yuan against the dollar or the fall of the Hong Kong stock exchange as evidence that the next president was likely to open a four-year period of trade wars, which, of course, is bad for the world economy. A month later the Hong Kong stock exchange is down 5%, which is not exactly a dramatic fall for a highly volatile exchange. By the way, stock exchanges are most of the time poor indicators of what is about to hit us.

Back in 2008, just before the great financial crisis, most world stock exchanges were at historically high levels.

As far as the yuan versus the dollar is concerned, the yuan is down 1% since the election which is not exactly a significant drop.

Now is the election of Donald Trump a good or a bad thing for shipping?

The first comment coming to mind is that there is no such thing as a good thing or a bad thing. A market dropping like a stone is a good thing for a trader being net short and a bad thing for an owner trading his ships on the spot market.

Secondly, simple things are usually more complicated than what they look at first. On Ukraine, for example, the common wisdom is that Trump will end the war in a couple days which would be bullish for cement and steel seaborne trades but very bearish on wet as the inefficiencies created to go around the sanctions will disappear quickly. Inefficiencies like having Russian crude oil going to India to be refined being then re-exported to northern Europe instead of having refined products being exported directly from Russia to Europe. That is, of course, if the Russia Ukraine war has not become much messier before the president elect moves into the White House. It seems that efforts are being made to make it much messier so that Trump will not be able to stop the war quite so quickly.

On the Middle East front, which is potentially very relevant to shipping, the situation is very hard to predict. Trump is the man who fostered the Abraham Accords, but at the same time had the US embassy in Israel moved from Tel Aviv to Jerusalem. Who knows what his next move will be.

Finally, there’s plenty of discussion surrounding the dollar potentially losing its status as the world trade and reserve currency.

There’s not much Trump can do against a growing group of countries working hard to wean themselves from their dollar addiction except of course using the 20 aircraft carriers at his disposal. The above mentioned group of countries only has eight flattops.