What are the New Tariff Levels?
Beginning May 14th, the U.S. and Chinese governments will enact a
90-day tariff truce
in an effort to ease trade tensions and reopen negotiations. The temporary de-escalation comes after both sides sharply increased tariffs in April, triggering supply chain disruptions and a sharp drop in cross-Pacific shipping volumes.
Is the 30% Tariff Permanent?
No. This is a temporary measure—a three-month pause designed to create space for negotiations. If no long-term agreement is reached, both nations may reimpose higher tariffs after the 90-day window expires in mid-August.
U.S. Treasury Secretary Scott Bessent called the new 30% baseline a "floor", signaling that tariffs could easily rise again if talks fail or are willfully delayed.
Impact on Ocean Freight and Shipping Volumes
The steep 145% tariffs implemented in April led to a 35%+ decline in China-U.S. ocean freight volumes. But with the new 30% baseline and a clear deadline for potential tariff increases in August, a rebound in demand is likely imminent.
According toNational Retail Federation import data, even a 20% minimum tariff earlier this year didn’t deter importers. Instead, it encouraged them to frontload inventory, resulting in an 11% year-over-year volume increase in March and April—despite higher costs.
Now that tariffs are temporarily reduced, many U.S. companies are expected to:
- Replenish inventories that have thinned over the past month.
- Frontload shipments again to avoid possible August tariff hikes.
This could spark an early start to the 2025 peak season, particularly for transpacific ocean freight, though this early activity may also lead to an earlier end to peak season as demand evens out.
Despite lower volumes in April and May, container rates as reported (FBX) have remained surprisingly stable:
- Around $2,395 (+3%) per FEU to the U.S. West Coast.
- Around $3,406 (+1%) per FEU to the East Coast.
The Freightos Baltic Index (FBX) represents
average spot market rates for shipping a 40’ container (FEU) and reflects the buy rate a freight forwarder would typically pay to steamship lines without a long-term contract. These
rates are based on actual bookings, quotes, and transactions and serve as a benchmark for current market pricing. The FBX includes standard surcharges (like BAF and THC), but excludes premiums for guaranteed space or equipment. It is important to note that these are not contract rates negotiated by large shippers or direct BCO agreements, but rather a normalized snapshot of rates based on actual bookings during this past weekly time frame.
This is largely due to carrier interventions, such as:
- Blank sailings
- Suspended services
- Deployment of smaller vessels
These actions reduced transpacific capacity by about 22%, keeping prices from falling further. However, if demand snaps back quickly, carriers may face a mismatch between available capacity and market needs.
In the near term, this could lead to:
- Container equipment shortages, as fewer empty containers have returned to China recently.
- Congestion at U.S. ports, as a surge of vessels arrives in a compressed time window.
- Delays in both origin ports (China) and destination ports (U.S.), particularly if scheduling becomes misaligned.
While this will likely be temporary, tight capacity during a surge could create short-term pricing pressure and rate volatility.
Will Peak Season Rates Soar?
Peak season ocean freight rates typically start climbing in late June or early July and often reach their highest levels between August and October. This timing aligns with key retail cycles, including back-to-school inventory shipments, holiday season stockpiling, and end-of-quarter restocking for many businesses. Shippers rush to secure space and avoid delays, which drives up demand and, in turn, increases rates.
In normal years, these elevated rates begin to ease by late October or early November as the rush subsides. The demand then picks up again in January prior to the
China New Year closures. However, when global supply chains are disrupted—whether by tariff changes, capacity issues, red sea conflicts, or port congestion—peak season can start earlier, last longer, or come in unpredictable waves. As a result, shippers must monitor market signals closely to avoid being caught off guard by shifting rate dynamics. The most effective strategy is to plan ahead effectively.
Ocean freight demand
is expected to rebound sharply as shippers rush to restock inventories and frontload goods ahead of the August deadline. This could trigger an early start to the peak shipping season, although some experts caution that peak season volumes may be muted due to earlier frontloading. Even with these constraints, current spot rates are still much more than 30% lower than last year. Container rates may come under upward pressure as capacity tightens, though overall rate spikes are unlikely to reach the highs seen in 2024.
In the short term, shippers should prepare for temporary congestion, equipment shortages, and limited space availability as vessels and containers reposition to meet rising demand. It is critical to plan ahead effectively. While spot rates are expected to climb due to the de-escalation-driven rebound and early peak season activity, several factors may limit rate spikes:
- Fleet growth over the past year has added more capacity globally.
- Increased competition between emerging carrier alliances has made pricing more competitive.
- Diversions around the Red Sea are still in place, but global container availability has improved.
The current pause in tariff escalation has already begun to ease economic anxieties, with early signs pointing to a rebound in consumer sentiment. Lower tariffs mean potentially lower costs for imported goods, giving American consumers more purchasing power and helping to temper inflation. This environment of relative stability has led economists to revise recession forecasts downward, citing improved prospects for job growth, stronger market confidence, and a more optimistic global trade outlook. However, the long-term impact of this truce remains uncertain. Without a comprehensive agreement by the August deadline, the return of steep tariffs could reignite volatility, disrupt supply chains, and dampen both consumer and business confidence—undermining the very gains this China tariff truce has begun to realize.
