Japan’s largest shipping company warns U.S. tariffs

Japan’s largest shipping company Nippon Yusen (NYK), has raised concerns about the potential impact of new U.S. tariffs, warning that increasing costs of automobiles and consumer goods could weaken demand and slow the transportation of goods worldwide.

Read Also: Navigating Tariff Uncertainty: How Supply Chain Managers Adapt and Prosper

Tariffs and consumer impact

NYK President Takaya Soga emphasized the indirect but significant impact of tariffs on consumers, noting that despite the lack of direct responsibilities of buyers, it ultimately led to higher prices and reduced trade volumes. “This is our biggest concern,” Soga told Reuters in an interview.

The warning is because U.S. President Donald Trump announced plans for 25% of plans for imports of cars and broader mutual trade measures to key partners, a move expected to have a severe impact on Japan’s export-driven economy.

Potential industry transformation

Despite the challenges, NYK still sees potential opportunities in the trade war. Similar to the 199 pandemic disruption, delays in tariff-related procedures could tighten vessel availability, resulting in higher freight rates. Additionally, if China diversifies its raw materials from the United States, NYK can take advantage of new logistics needs.

Soga noted that the temporary surge in cargo movement in December before the Lunar New Year was the rush to push goods to tariffs. However, he has not seen significant changes in material flow since the measures came into effect.

New US shipping restrictions

Making global trade even more complicated, the U.S. government is planning to pay docking fees for ships affiliated with fleets of China or China’s signatures. Washington also urged allies to adopt similar policies or risk-retaliation for trade actions.

Soga commented on NYK’s procurement strategy: “The United States will carefully review the implementation of the policy, so it’s too early to say whether we will stop ordering ships from China.”

Continuous global transport challenges

In addition to tariffs, NYK also deals with geopolitical risks in the Middle East, especially the ongoing destruction of the Red Sea caused by attacks on Houthi militants in Yemen. These threats forced many ships to divert around southern Africa, absorbing additional capacity and increasing transit time.

Meanwhile, traffic congestion in the Panama Canal has been greatly resolved, but NYK urged the Panama Canal to restore priority to liquefied natural gas (LNG) tankers.

Future investment in offshore wind power generation

NYK’s investment plan in offshore wind power projects faces delays in Japan due to slow market growth. However, Soga confirmed that overseas investment in the industry will move forward faster.

As NYK drives these economic and geopolitical uncertainties, shipping giants are cautious and optimistic about emerging business opportunities due to shifting trade dynamics.