Go it alone approach: What price durability?

What’s new in the Trump presidency is the go-it-alone approach of the US. The recent calls for free passage through the Panama and Suez Canal of US ships, as well as the announced fees in US ports on Chinese build ships exemplify this approach. But in my view this approach is bound to fail. Countering Chinese dominance is a world scale challenge and cannot be remedied focused on the US. There are plenty of countries that are well positioned to compete with China in shipbuilding, including Korea, India, Vietnam, the Philippines and the Middle East. But the aim to revive shipbuilding in the US goes against the US comparative advantages and is unlikely to bring major successes.

Likewise, there are plenty of international players in ports and shipping that are positioned to do well against Chinese state-owned competitors, especially on a fair playing field. But this competition plays out internationally, not in the US. The risk of dominance is especially relevant in specific global commodity chains, such as food, energy commodities and minerals like lithium. These commodity chains are global, so it is hard to see how US-centered policies can be effective. Developing and expanding partnerships with countries like Chile, Brazil and India are needed to secure competitive access across countries and companies to such commodities. It is hard to see how aiming for preferential treatment of US ships in the Panama and Suez Canal is helpful in that respect.

Finally, the unintended consequence of the current US policy ideas and actions is a huge increase in market uncertainty, while higher levels of uncertainty play in the hands of SOEs (especially from China and the Middle East), which have a strong focus of long-term strategic objectives, especially when compared to stock-listed competitors.

Thus, probably like many in the shipping and ports industries, I eagerly await ‘signposts’ that the US is softening its go-it-alone approach.