Escalation of U.S.-China Trade Tensions: Implications for Dry Bulk Freight
On April 4th, China announced a 34% tariff on all U.S. imports, a retaliatory response to recent U.S. protectionist trade measures, effective April 10th. This escalation in the trade dispute is set to have a direct impact on key U.S. dry bulk exports—particularly soybeans and corn—based on recent cargo flow and vessel deployment data from the Signal Ocean Platform and supporting trade intelligence.
Grain Trade at Risk: China as the Top Buyer
According to Q1 2025 data, China accounts for 52.8% of U.S. grain exports to Far East destinations, with Japan and South Korea following at 23.3% and 9.0%, respectively. These flows are heavily reliant on Panamax vessels (59.2%), followed by Supramax (34.2%). The primary cargo types—soybeans (43.5%), corn (29.5%), and wheat (20.5%)—are all sensitive to Chinese demand.
Comparing quarterly performance, U.S. grain shipments to Far East destinations declined:
-29.69% quarter-on-quarter (Q1 2025 vs Q4 2024)
-18.62% year-on-year (Q1 2025 vs Q1 2024)
This downward trend is likely to accelerate as the newly imposed tariffs deter Chinese buyers, potentially redirecting volumes to alternative markets such as Southeast Asia. However, these substitute markets may offer lower margins and may not be able to fully absorb the volume previously destined for China.
U.S. Coal May Also See Dampened Demand
While China is not the top importer of U.S. coal, it does source 10.3% of U.S. coal exports, making it the second-largest Asian destination after India (25.2%). The coal trade—split between metallurgical (54.4%) and thermal coal (45.6%)—has so far shown relative stability, with only modest contractions:
-1.46% QoQ
-2.52% YoY
Coal exports primarily rely on Panamax (46.1%), Supramax (22.8%), and Capesize (15.2%) vessels, making the trade more diverse in both cargo type and ship class. However, the imposition of tariffs could make U.S. coal less competitive in Asia, especially as China already has strong import ties with Australia, Russia, and Indonesia.
Following China's announcement of retaliatory tariffs—34% on U.S. imports including key agricultural goods—grain markets reacted sharply. U.S. soybean futures dropped by 4% as traders anticipated a significant reduction in Chinese demand. The tariffs, combined with China's move to curb foreign grain purchases like barley and sorghum, added downward pressure on prices. Meanwhile, exporters such as Brazil have seen increased demand, boosting their market share and insulating Chinese buyers from U.S. supply disruptions.
In the coal market, the immediate price reaction was more muted. Despite a 15% tariff on U.S. coal, prices for seaborne coal and coking coal remained relatively stable. This resilience is partly due to the small share of U.S. coal in China’s overall imports and the quick redirection of U.S. cargoes toward alternative markets like India. However, the broader market remains cautious, with uncertainty around long-term demand and trade flows likely to maintain price volatility.
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Albert Greenway
Environmental Scientist, Sustainability Expert
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Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
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