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President Donald Trump will need a “10 or 2 year effort” to redraw the global supply chain using tariffs.
Vincent Clerc, CEO of Ap Møller-Maersk, told the Financial Times that trade volume between the US and China fell 30-40% in April as a result of Trump’s swing tariffs, but other routes, such as between Asia and other emerging markets, are strong.
“Supply chains around the world today have been built for decades, and if you want to overturn that or change it in a deeper way, it takes decades,” he said. “It takes time for businesses to make decisions and it takes time for factories to build. It’s very unrealistic that tariffs will change the supply chain very quickly.”
Maersk is a pioneer in world trade, transporting one across the ocean into five containers, and its views on the supply chain are closely monitored.
The Danish group warned on Thursday that global trade could be contracted this year, reducing previous forecasts for around 4% container demand growth to grow to the range of minus 1% to 4%.
“It’s bumpy today, but so far it has largely affected the relationship and volume between China and the US,” Krelk said.
He added that the decline so far is around 2% of that total, as China-US trade accounts for around 5% of Maersk’s volume. “We responded by moving almost 20% of China and the US’s capabilities to other routes, particularly other emerging markets. That has proven good,” he said.
Maersk’s chief executive said the greater threat could be the impact of tariff knock-ons on the economy. “If things get entrenched, we see that inflation will continue to increase and there will be a risk of a recession in the US. Volume will suffer in the second half.
Trump has repeatedly hoped that American companies will take their manufacturing home and foreign groups will produce more American production.
However, Krelk was skeptical and claimed that the US lacked labor. “There is no production of snowboard boots outside of China. If you want to change that, you will need to take time or stop snowboarding. The US will not overestimate the weights in terms of global trade,” he added.
Consultations between us and Chinese officials, as well as the planned signature of the US-UK trade agreement on Thursday, were a potential sign of potential emissions, said Maersk CEO.
His comments came as Maersk reported first quarter results ahead of analyst expectations and maintained full-year guidance.
Revenues rose 8% to $13.3 billion, and operating profits exceeded seven times to $1.2 billion. Maersk expects to generate an underlying operating profit of $3 billion this year.
