The global trade landscape is experiencing significant upheaval following President Donald Trump’s recent tariff announcements, with widespread impacts reverberating through international markets and supply chains.
While these developments have created challenges for many sectors, they have temporarily boosted container shipping rates, which had been trending downward for an extended period, according to Freightos’ latest weekly update.
China is bearing the brunt of this intensified trade war, now facing a baseline minimum duty of 54% on all exports to the United States. Certain goods are subject to tariffs exceeding 70%, and in some cases, rates as high as 129%, following the White House’s announcement of an additional 50% duty earlier this week.
These measures build upon duties imposed during the Trump and Biden administrations, creating an almost insurmountable obstacle for Chinese exporters and their U.S. counterparts.
The consequences of these tariff increases are rippling beyond U.S.-China trade relations. Judah Levine, research chief at Freightos, noted that many other Asian nations that previously benefited from trade diversions are now encountering steep tariffs, forcing businesses to reconsider sourcing strategies and adjust supply chain configurations.
In retaliation, China has announced counter-tariffs on U.S. exports. Similarly, other major trading partners, including Canada and the European Union, are either implementing or considering their own retaliatory measures. This escalating cycle of tit-for-tat tariffs is raising fears of global trade destabilization and the potential for a broader economic downturn.
The tariff announcements have had a swift and pronounced effect on ocean freight. In a bid to move goods before the tariffs took effect, shippers rushed to secure container space, causing a temporary surge in demand. Some businesses even opted for less-than-container load (LCL) and air freight options as alternatives.
However, this spike in activity is expected to be short-lived, with container demand for U.S.-bound goods likely to decline significantly in the coming months.
For the week ending Friday, the Freightos Baltic Index reported:
Asia-U.S. West Coast container rates rose 3% to $2,246 per forty-foot equivalent unit (FEU).
Asia-U.S. East Coast prices increased 5% to $3,541 per FEU.
Looking ahead, the Port of Los Angeles projects a 10% decrease in volume during the second half of the year. This decline could be exacerbated by a growing surplus of container capacity in the market, potentially driving rates downward further.
The situation has drawn comparisons to the 2008 financial crisis, when a global recession led to a collapse in freight rates. Despite carriers’ efforts to manage capacity—such as deploying diversions through the Red Sea—overcapacity from newbuild vessel introductions continues to weigh heavily on the market.
Since the Lunar New Year, container rates out of Asia have fallen sharply, now sitting below their 2024 floor. Temporary rebounds, such as a general rate increase (GRI) on trans-Pacific routes earlier this month, have provided only limited relief. Meanwhile, Asia-Europe lanes have not seen similar price recoveries, as carriers intensify capacity control measures.
As the tariff-induced slowdown in demand takes effect, the pressure on container rates is expected to increase, potentially marking the beginning of a prolonged downward trend in the shipping sector.
Source: https://www.freightwaves.com/news/container-rates-see-uptick-as-tariffs-shock-supply-chain
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