By Stefanos N. Roulakis
In what has become a quadrennial tradition, I am taking a look at how shipping could be affected by the U.S. Presidential Election. I am surprised to be writing that this is my third analysis of Donald Trump’s candidacy for President. In 2016, his campaign predictions were subdued due to his lack of a policy track record. As I noted to Tradewinds, it was clear that Iran would likely be a focal point, despite some moderate positions espoused on the campaign trail. In 2020, I predicted that the Biden administration would promote offshore renewable energy. Particularly advancing the U.S. offshore wind sector. However, the geopolitical impact on shipping, particularly from the war in Ukraine, was largely unforeseen. This legacy will continue to significantly affect the shipping sector should Kamala Harris be elected.
Some argue that the election will not have a huge outcome for our sector. In a sense, I agree: our industry has existed for 3,000 years and knows how to adjust to change. An election in one country will not be earth-shattering. Just as every comma in a charter party has significance, an election in a country with an outsized impact on shipping regulation and global trade will have an effect on the maritime industry.
Background and Big Picture Issues
This election is historic for the U.S., marking the first time since Nixon, Ford, and Carter (1973-1981) that there will be three presidents in eight years, with back-to-back single-term presidents for the first time since 1897.[1] If elected, Donald Trump would be the first non-consecutive two-term president since Grover Cleveland.[2] It is historic that the Democratic Party has nominated a Black and South Asian woman as a candidate, which is unprecedented in U.S. History.
U.S. political stability has been declining since 2015-2016, reflecting past instabilities like the inflationary periods of the 1970s and 80s.[3] In addition to the above history, it is unheard of that a major party’s nominee has withdrawn so late in an election cycle. Shipping has thrived in the “pax Americana” of the post World War II period. Whether this will continue beyond this election or whether a more multipolar world will take its place.
Analysis
The election may significantly impact shipping in variety of areas critical to shipping, including LNG, sanctions, environmental regulations, offshore wind, and other areas of concern to industry. Certain areas important to the U.S., such as debates over the role of administrative agencies, may impact various sectors as well.
LNG
The LNG transport sector has rapidly grown and become highly profitable. This has been influenced by the Ukraine war, which has reduced Russian gas exports. U.S. exporters and LNG transport companies have benefited significantly. However, the Biden-Harris administration’s pause on new LNG facility permits may hinder investment and growth. If these policies continue under a Harris presidency, U.S. LNG exports and the global maritime LNG transport sector could decelerate.
A Trump presidency would likely promote U.S. LNG exports, driven by a mercantilist trade view. However, such policies could backfire, as past tariffs on Chinese exports caused China to cease imports of U.S. LNG.
International Relations and Sanctions
Sanctions are fundamentally tools of U.S. foreign policy implemented through legal means. As such, they are intrinsically linked to the U.S.’s approach to international relations. Despite taking a mild stance on sanctions in the run-up to the 2016 election, the Trump administration made targeting shipping companies as a central strategy. It would likely take a tougher approach on Venezuela while using sanctions relief to negotiate broader deals with Russia and North Korea.
The Biden-Harris administration has embraced a multilateral sanctions approach, coordinating with allies to target specific economic sectors. Sanctions have been used to implement Russia policy, improve relations with Venezuela, and expand measures against Iran amid Middle East conflicts. This trend is likely to continue under a potential Harris administration.
Russia/Ukraine
Trump plans to take a different approach to the Ukraine war than the Biden-Harris administration, likely easing sanctions and offering relief for peace. In contrast, Harris remains committed to Ukraine and would likely escalate sanctions as the conflict continues.
Middle East
The Biden-Harris administration has increased sanctions on Iran to support Israel amid rising conflicts with Iranian proxies in Lebanon. Candidates are unlikely to differ significantly on this issue, as they generally align on Iran-Israel relations. Both administrations have seized Iranian oil and expanded sanctions against Iran.
North Korea
Trump has pledged to improve U.S. relations with North Korea, surprising allies amid the latter’s support for Russia and missile tests. In contrast, the Biden-Harris administration has maintained the embargo, indicating that a Trump presidency could shift regional dynamics.
Venezuela
Harris and Trump would likely have different approaches to Venezuela. The Trump administration intensified sanctions from 2017 to 2020, targeting shipping companies and expanding sanctions. In contrast, the Biden-Harris administration has aimed to offer sanctions relief for democratic reforms and has issued individual licenses to some energy companies.
This foreign policy issue has turned into a domestic policy issue for the U.S. There are large Venezuelan and Cuban expatriate communities in Florida, a state with a large electoral vote which largely supports Trump but previously voted for Obama. In its analysis of this sea-change, Vox media credited this in part to Trump’s tougher stance on Venezuela and Cuba.
Environment
The Biden administration has made good on its promise to “encourage and incentivize compliance by private sector entities” using criminal and civil enforcement means. The difference in enforcement of environmental laws has been stark. The Biden administration took significant steps to increase enforcement of both the Environmental Protection Agency’s Vessel General Permit and other maritime environmental laws. Should Trump prevail, it is likely that we would see a decrease in enforcement.
A Trump administration would also likely work to change policy on environmental issues. One key area for the maritime industry is the Vessel Incidental Discharge Act (“VIDA”). VIDA has had a long history, becoming law in 2018, going through litigation, and recently having had an EPA final rule issued. However, to become enforceable, the Coast Guard would have to promulgate a corresponding rule. The previous Trump administration was unsupportive of rulemaking—requiring abolition of two rules for every one promulgated—so a Trump presidency could see a further pause on VIDA.
Administrative State
U.S. maritime industry regulation relies on administrative agencies to address issues like the environment, sanctions, safety, and cabotage. Conservative backlash against the administrative state has influenced current law. The Trump administration complicated rulemaking and supported limiting the administrative state, while Harris has advocated for using these agencies to establish rules on various topics. A loss of agency authority could lead to regulatory uncertainty for companies trading and doing business in the U.S.
Port workers Strike
The U.S. narrowly avoided a strike by East Coast port workers this October by delaying the issue until January. Vice President Harris supported the longshoremen, stating that “foreign-owned shipping companies have made record profits” and that longshoremen “deserve a fair share” of that money. Trump similarly supported longshoremen, many of whom, including ILA President Harold Dagget, are also reported to support Trump.
Both candidates would likely support the longshore workers’ positions, but their approaches may differ. It is hard to imagine President Trump negotiating from the sidelines.
Offshore Wind
Vice President Harris is a strong advocate for offshore wind energy. She has supported the expansion of offshore wind in the U.S., leading to opportunities for offshore construction vessels and prompting non-U.S. companies to establish offices in the U.S. to market their services. Joint ventures and partnerships across the Atlantic have also developed.
Tariffs & Trade
Since 2016, both parties have embraced protectionism. The U.S. has not signed a free trade agreement since the Obama administration (although the Trump administration renegotiated NAFTA). This was largely driven by the 2016 Trump campaign’s move to promote American industry and tighten borders. As president, he imposed significant tariffs and trade barriers—some legally questionable—and has promised to do so again if elected.
President Harris has taken a moderate stance that may benefit global trade. She has urged trade partners, especially China, to follow established guidelines but has avoided threatening tariffs or aggressive posturing.
Opposing approaches could significantly affect the maritime industry, particularly in the container sector—shipping goods from Asia to the U.S.—and the bulk sector, which supplies materials. A Trump presidency may focus on reducing U.S. imports, potentially lowering global shipping volumes.
Jones Act
I have noted that the Jones Act is amended “approximately as often as the U.S. Constitution.” Both parties support it, and previous administrations made no significant efforts to expand or restrict the status quo.
However, certain aspects of the Supreme Court’s rollback of the administrative state may limit U.S. Customs and Border Protection’s ability to rule on the Jones Act, potentially affecting the emerging offshore wind sector.
Conclusions
The maritime industry has adapted to the vicissitudes of history, from tyrants, kings, emperors, most serene republics, and the recent rise (and potential decline) of liberal democracy. It is certain that the industry will adjust to the U.S. election results. A Trump presidency may reduce opportunities for shipping due to decreased trade and increase uncertainty as the regulatory process stalls. In contrast, a Harris presidency would favor environmentally focused companies and provide few significant global changes from the current administration.
[1] Ford completed Nixon’s term after his resignation, and McKinley succeeded Cleveland in 1897.
[2] 1885-1889, 1893-1897. Teddy Roosevelt, McKinley’s successor, also ran for a non-consecutive term as President in 1912 but did not succeed.
[3] https://prosperitydata360.worldbank.org/en/indicator/WB+WWGI+PV+PER+RNK