Weekly highlights
Ocean rates – Freightos Baltic Index
Asia-US West Coast prices (FBX01 Weekly) increased 3% to $2,246/FEU.
Asia-US East Coast prices (FBX03 Weekly) increased 5% to $3,541/FEU.
Asia-N. Europe prices (FBX11 Weekly) fell 5% to $2,385/FEU.
Asia-Mediterranean prices (FBX13 Weekly) fell 10% to $2,910/FEU.
Air rates – Freightos Air index
China – N. America weekly prices fell 3% to $5.48/kg.
China – N. Europe weekly prices stayed level at $3.79/kg.
N. Europe – N. America weekly prices fell 7% to $2.24/kg.
Analysis
The initial shock of President Trump’s long-awaited tariff announcements last week are giving way to economic fallout as well as confusion on the competing messages, competing viewpoints within the White House, and sometimes competing aims of the new tariffs – protectionist or aimed at removing foreign trade barriers? Long-term or temporary?
Whatever the aims, the global 10% tariff that went into effect last week and the reciprocal tariffs of varying levels on exports from a list of nearly 60 countries that start tonight – together with the other existing duties and those rolling out shortly – dwarf Trump’s first administration tariff initiatives both in their scope and degree.
For our full rundown on tariff details and implications click here.
The new 34% reciprocal tariff on all Chinese goods stacks on top of the 20% Trump imposed earlier this year and the 19% Trump/Biden tariffs already on the books for many goods – meaning a minimum duty of 54% for all Chinese goods and more than 70% for many items. And while the tariffs on China pushed many importers to other Asian sourcing partners since the previous trade war, this time many of these alternatives are subject to steep duties as well.
*Canada and Mexico tariffs apply only to goods not included in the USMCA
Exemptions to these new rules include an extension of the carve out for imports from Canada and Mexico that are covered by the USCMA , though the new global automotive tariffs will still apply to the non-US share of value for each import. Likewise, any import with a minimum of 20% US-manufactured value will only pay global, reciprocal or automotive tariffs on the foreign share of value, which may lead to shippers scrambling to calculate and demonstrate US contributions to their imports.
The executive order also excluded a long list of other goods including steel and aluminum already subject to separate tariffs, and goods like semiconductors, pharmaceuticals, and lumber, which may have been spared because they will be targeted for separate sectoral tariffs soon.
China has already retaliated with new tariffs on US exports – though Trump has threatened to increase US tariffs on China by another 50% if China does not cancel its retaliation – as has Canada, with the EU considering additional measures, all of which will negatively impact US exports. Many other countries, including Vietnam, are actively trying to negotiate a resolution instead.
In the meantime, the trade war intensification is increasing the likelihood of recession in the US and beyond.
For our full rundown on tariff details and implications click here.
For ocean freight, the time allotted between the tariff announcements last week and the reciprocal tariff roll outs tomorrow meant a short window for shippers to get some final goods loaded before the 9th to avoid the new tariffs. This final rush included a scramble not only to load containers, but some quick shift to LCL and air cargo too. There are concerns that the sudden policy changes will also mean customs delays for arriving shipments.
With so much confusion and uncertainty – and with many shippers already holding a significant amount of inventory frontloaded over the last few months to get ahead of new tariffs – we’re likely to see a significant drop in container demand to the US in the near term, and possibly in the intra-Asia manufacturing ecosystem too, as shippers wait for the dust to settle and for the outcome of the reciprocal tariff negotiations.
Whether due to frontloading or to a possible tariff-driven drop in consumer demand the Port of LA thinks H2 volumes will be down 10%, but not collapse, even if peak season is more subdued than usual. Other observers are less optimistic, and fear a recession – combined with growing overcapacity in the container market – could lead to a demand decrease and rate collapse like those that followed the 2008 financial crisis.
Indeed, as capacity continues to grow from newbuild introductions on the major trade lanes, even with Red Sea diversions continuing to absorb capacity, ex-Asia rates have fallen sharply since Lunar New Year, with container prices now beneath their 2024 floor.
Rates rebounded by a few hundred dollars per FEU on the transpacific on start of month GRIs last week, though no bump came through for Asia – Europe lanes, as carriers increase capacity management efforts. The expected tariff-driven drop in demand will only put more downward pressure on rates.
For air cargo, the tariff announcements likely meant a short burst of demand before April 9th and could mean some increased volumes in the lead up to May 3rd when tariffs on auto parts will take effect and, more significantly, the US will cancel de minimis eligibility for all Chinese goods.
The de minimis exemption has been a big driver of the surge of B2C e-commerce goods going by air from China to the US, and its cancellation is expected to lead to a sharp drop in China – US air cargo demand and rates. Freightos Air Index data shows that China-US rates – still elevated at about $5.50/kg last week – have yet to spike ahead of the May deadline.
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