Shipping Stocks Begin to Regain Losses After Hints of a Tariff Reprieve

Clear signals that the Trump administration wants to pare back its new tariffs have prompted a market recovery, and key stocks in cruise and commercial maritime have begun to regain the losses they suffered after the April 2 levy announcements - but the course ahead is still far from certain.

Trade with China has been hit hardest with a 145 percent blanket tariff rate. Container booking data for mid-May shows that shipments for inbound cargo from China to LA-Long Beach will be down by more than 40 percent, according to CNBC, an unprecedented and sudden drop.

On Tuesday, Trump told the press that he would not "play hardball" with China and would be "nice" in negotiations going forward. He added that the current rate would be coming down "substantially," though not all the way to zero.

On Wednesday, the Wall Street Journal reported that Trump's team is aiming at average tariffs of 50-65 percent on Chinese goods, possibly lower for noncritical items and higher for strategic industries. A final decision has not been made, the WSJ said.

Later in the day, Treasury Secretary Scott Bessent denied that the White House is considering cutting tariff rates on China without getting something in return. But he said that both sides are motivated to walk back from current levels. "Neither side believes that these are sustainable [tariff] levels," he said. "This is the equivalent of an embargo, and a break between the two countries in trade does not suit anyone's interests."

Stocks have rallied on the news of a likely tariff rollback, including some key shipping stocks. AP Moller-Maersk, the largest publicly-listed ocean carrier (and second-largest overall) saw its shares jump up eight percent in a day. It has now regained most of its losses since April 2, buoyed by expectations of lower trade barriers.

Jones Act carrier Matson, which operates an express service between China and the United States, has been hit hard by the tariff disruption: its stock has lost nearly a quarter of its value since April 2. It began to recover from those losses on Tuesday, reflecting rising expectations of an eventual return to higher booking levels on transpacific routes.

As a discretionary expense, cruising is sensitive to swings in economic outlook, and it has tracked the recovery of the rest of the market. Carnival rebounded 3.5 percent over the past five days, Royal Caribbean is up by 7.5 percent, and Norwegian Cruise Line is up by 5 percent. However, all of the big three cruise stocks - like the markets overall - are still well below where they were last month.