Japan’s largest shipping company, Nippon Yusen (NYK), is raising concerns over the potential fallout from new U.S. tariffs, warning that increased costs on automobiles and consumer goods could weaken demand and slow global cargo movements.

Read also: Navigating Tariff Uncertainty: How Supply Chain Managers Can Adapt and Thrive

Tariffs and Consumer Impact

NYK President Takaya Soga highlighted the indirect but significant impact of tariffs on consumers, stating that while the duties aren’t directly imposed on buyers, they ultimately lead to higher prices, reducing trade volumes. “That’s our biggest concern,” Soga told Reuters in an interview.

The warning comes as U.S. President Donald Trump announces a 25% tariff on automobile imports and plans for broader reciprocal trade measures against key partners, a move expected to hit Japan’s export-driven economy hard.

Potential Industry Shifts

Despite the challenges, NYK sees potential opportunities amid the trade war. Similar to the COVID-19 pandemic disruptions, tariff-related procedural delays could tighten vessel availability, leading to higher freight rates. Additionally, if China diversifies its sourcing of raw materials away from the U.S., NYK could capitalize on new logistics demands.

Soga noted a temporary surge in cargo movement in December before the Chinese New Year, as businesses rushed to move goods ahead of the tariffs. However, he has yet to see a significant shift in material flows since the measures took effect.

New U.S. Shipping Restrictions

Further complicating global trade, the U.S. government is planning to impose docking fees on ships affiliated with Chinese-built or Chinese-flagged fleets. Washington is also urging allies to adopt similar policies or risk retaliatory trade actions.

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

Ongoing Global Shipping Challenges

Beyond tariffs, NYK is grappling with geopolitical risks in the Middle East, particularly the continued disruptions in the Red Sea caused by attacks from Yemen’s Houthi militants. These threats have forced many vessels to reroute around Southern Africa, absorbing additional capacity and increasing transit times.

Meanwhile, congestion issues at the Panama Canal have largely been resolved, but NYK is urging the Panama Canal Authority to reinstate Tier 1 priority for liquefied natural gas (LNG) tankers.

Future Investment in Offshore Wind Power

NYK’s investment plans in offshore wind power projects face delays in Japan due to slower-than-expected market growth. However, Soga confirmed that overseas investments in the sector will move forward sooner.

As NYK navigates these economic and geopolitical uncertainties, the shipping giant remains cautious yet optimistic about emerging business opportunities amid shifting trade dynamics.