AP Moller-Maersk has warned that the ongoing US-China trade war is impacting growth, and it could “in isolation remove up to 0.5% of global container demand” in 2019 and 2020.

While global container trade grew by around 2% in the second quarter of 2019 compared to the year-ago period, there has been a broad-based slowdown in all major economies with negative effects from escalating trade restrictions also weighing on trade growth.

In April, the US raised tariffs on Chinese imports from 10% to 25% on goods with value equivalent to 2-3% of globally traded goods.

Later in early August, US tariffs of 10% on additional $300bn was announced to take effect by 1 September 2019.

“So far, US importers have shifted imports away from China to other countries such as Vietnam, Korea, Thailand, India and Mexico,” Maersk stated in its latest second quarter results report.

“The impact of the newly imposed tariff hike is expected to be significant for the US-China bilateral trade and could in isolation remove up to 0.5% of global container demand in 2019 and 2020, and when US tariffs on additional $300bn is implemented later in the year, it could result in a reduction of up to 1% in 2020,” Maersk stated.

The shipping group’s ceo Soren Skou warned that the low growth scenario is not expected to end soon, and there is a possibility of a recession, though it is unlikely to happen in the US in 2019 or 2020.

For the full year 2019, global container trade is projected to increase by 1-3%.

Uncertainties relating to the strength of container demand in 2019 pose a downside risk to freight rates in general, Maersk added.

Time charter rates declined by 18% year-on-year in second quarter but rebounded from the first quarter by 7.6%. Rates might rebound further in the coming quarters as the 0.5% sulphur cap on marine fuel from 2020 will lead to retrofitting of a significant part of the global fleet and weighs on the availability of vessels of more than 8,000 teu capacity.