Last week, the Trump Administration announced a temporary reduction in tariffs on Chinese goods, reducing them from 145% to 30%. At the same time, China agreed to lower its tariffs from 125% to 10%. These changes are set to remain in effect for 90 days, as both countries (and global markets) aim to finalize a long-term agreement during this window.
How will these tariff adjustments affect freight rates for imports from Asia, particularly China?
According to the Freightos Baltic Index (FBX), rates from China to the U.S. East Coast (USEC) were around $2,500 per 40-foot container in September 2024. With excess vessel capacity in the market, the expectation was for rates to gradually decline. That trend was upended on April 2nd, when the U.S. implemented a 145% tariff on Chinese goods, triggering a sharp drop in trade volumes. Carriers reported a 40–50% drop in bookings from China during April. The Port of Los Angeles forecasted a 35% year-over-year decline in May import volumes.
Carriers responded quickly. Drewry reports that blank sailings reduced capacity on the Asia – U.S. West Coast (USWC) trade route by 20% in April and 12% in May. For the U.S. East Coast, the reductions were even more significant with 22% in April and 18% in May.
Since last week’s tariff rollback announcement, bookings from China have spiked. While many large U.S. importers had already frontloaded inventory in Q1, smaller and mid-sized companies are now rushing to catch up. And, with no guarantee that the tariffs won’t jump back to 145%, importers are eager to ship as soon as possible.
What should importers expect as we head into the second week of this 90-day tariff pause window?
It’s not easy for carriers to immediately reinstate previously blanked sailings, especially when some vessels were reassigned to other trades or idled. A full recovery in capacity could take 3 to 4 weeks. In the meantime, we may see early signs of congestion. Some carriers have even compared the recent surge in demand to post-Covid levels, putting pressure on both Asian and U.S. ports.
In just the past week, spot rates have already surged to $4,500 per 40-foot container to the U.S. West Coast and $6,000 to the U.S. East Coast for June shipments. Many shippers are aiming to move their cargo before the end of June. Additionally, vessels that were serving Southeast Asia are now being redirected to accommodate Chinese demand, potentially tightening capacity in Southeast Asia in the coming weeks.
Where will freight rates go from here?
That largely depends on the outcome of the tariff negotiations and how carriers decide to manage capacity. If a deal is reached and the market appears stable going into Q4, carriers may carefully deploy more capacity to keep rates elevated at $4,000 – $5,000 per 40-foot container to the U.S. East Coast. That’s nearly double what the market would be without the tariff-induced disruption.
On the other hand, if this is viewed as a short-term spike, carriers may delay restoring full capacity, allowing bookings to build and driving spot rates even higher, and potentially reaching $8,000 – $10,000 per 40-foot container by late June.
Once again, the unexpected is driving the market. Just like the Middle East crisis last year, which still lingers, this year’s tariff uncertainty is reshaping trade flows and sending rates higher than anyone anticipated.
