Trump Tariffs Hurt Shares of Global Carriers Maersk and Hapag-Lloyd

US President Donald Trump imposed 25% tariffs on Canada and Mexico and 10% tariffs on China on Feb. 1, though he paused the tariff on Mexico on Feb. 3, following that country’s agreement to cooperate on border security. The news and the expectation of a reduction in worldwide trade sent global shippers and freight forwarders lower in early trading, with Maersk AMKBF and Hapag-Lloyd HLAGF down 2% and DSV DSVDF and Kuehne+Nagel down 2.5% on average.

At first glance, the news appears positive, relative to some expectations. The Canadian and Mexican tariffs concern countries that share land borders with the United States, limiting the impact on freight forwarders, whose core value comes from servicing and organizing complex global cargo, and global shippers. Furthermore, tariffs on China, which would significantly affect these four companies, are below the 60%-200% levels thrown out during Trump’s most recent presidential campaign and less than the 25% tariffs seen on some products during his first term.

However, Trump has proved that tariffs are not just a negotiating tactic, and the market is pricing in the possibility of an escalation to a trade war. This situation would adversely affect global trade demand and, in turn, these four names. It is also unclear how China, Canada, Mexico, or future targets might retaliate, which would escalate tensions and likely reduce trade levels further. So far, Canada has announced tariffs on select US goods, while Mexico has made enough of an effort to secure the southern border in Trump’s eyes to earn a monthlong pause.

We will hear from DSV and Maersk as they report their full-year results this week, which should shed some light on the tariffs’ impact and the firms’ expectations. We are making no changes to our fair value estimates as we await further news.