Tariff fears – as well the already significant uncertainty and confusion surrounding the White House’s trade policy – grew this week with the 2nd April deadline set for many tariff announcements approaching.
The Trump administration indicated that it will narrow the scope of reciprocal tariffs initially proposed for all US trade partners that have tariffs or other trade barriers on US exports or businesses.
Only 15% of the long list of countries with a US trade imbalance and tariffs on US goods will be assigned reciprocal tariffs, but these countries account for most of both total imports to the US and the trade deficit. Reciprocal tariffs are expected to be announced if not applied on April 2nd.
The levels of these tariffs will depend on the foreign tariff rates for US exports and so will vary, but the list of the top 15% – aside from China, Mexico, Canada and the EU – includes ostensible alternative sourcing partners like India and Vietnam as well.
And though some reports indicated that certain planned sectoral tariffs would be postponed, yesterday, President Trump stated that global duties on automotive and pharmaceutical imports would be announced soon, possibly even before 2nd April.
The president also signed an executive order on Monday that, also effective 2nd April, will apply 25% tariffs – on top of any other applicable tariffs – on all goods from any country that purchases oil from Venezuela. In addition to China, this list could include Singapore, Vietnam and India.
Finally, the USTR’s public hearing on its proposed significant port call fees targeting Chinese-made vessels is underway, with American BCOs, exporters, port labor and ocean carriers all objecting to the rule and the significant threats it would pose to their respective businesses.
Recently heightened fears of steep US tariffs on imported alcohol from the EU on 2nd April, were enough for the US Wine Trade Alliance to advise members to stop all shipments. But despite the April deadline for many other possible tariff announcements, demand indications suggest that, overall, US shippers continue to frontload due to the uncertainty of what and when tariffs will be implemented. This pull forward is reflected in the recent build-up of empty containers in LA/Long Beach.
Transpacific ocean container rates have eased as demand has decreased relative to the pre-Lunar New Year rush. But despite volumes estimated to be significantly stronger than a year ago due to continued frontloading, rates have continued to slide.
At about US$2,200/FEU to the West Coast and US$3,300/FEU to the East Coast, prices are more than 20% lower than 2024 lows on these lanes. The likely culprits of this trend are the increased competition and less effective capacity management resulting from the new carrier alliance formation, as well as continued fleet growth.
Asia – Mediterranean rates of US$3,500/FEU are about 20% lower than post-LNY last year (though about even with its 2024 low), and Asia – Europe’s US$2,565/FEU is 20% beneath its 2024 floor despite continued port congestion at many European hubs. With tariff frontloading not a factor on these lanes, easing demand and the impacts of the new carrier alliances are likely combining to push rates down.
In air cargo, a Heathrow electrical fire on Thursday night kept the airport closed for eighteen hours, canceling more than a thousand flights and stranding more than 200,000 passengers. Though there were moderate air cargo rate increases to alternative destinations in the days following, so far, there are few reports of significant resulting disruptions.
Freightos Air Index rate data also shows that ex-China prices to the US have rebounded by about 15% since earlier this month to more than US$5.25/kg, and to Europe rates have increased by more than 20% to nearly US$3.90/kg.
The China – US rate recovery comes despite anticipated changes to de minimis rules that are expected to cause a significant drop in e-commerce volumes, with some reports that carriers are already gradually shifting capacity to other routes.
This article was written by Judah Levine, Head of Research at Freightos
