Chinese Imports Expected to Surge Amid 90-Day Tariff Pause
[Stay on top of transportation news: .]
President Donald Trump’s deal to lower tariffs against China for 90 days is expected to spur a surge of pent-up cargo and further market volatility, according to experts.
Trump has focused on tariffs as a way to pressure other countries into renegotiating more favorable trade agreements. That includes a 10% baseline tariff for trading partners. China was of particular focus, with the administration threatening tariffs as high as 145%. But the two countries struck a deal May 12 to lower the tariffs to 30% over 90 days.
“When the tariffs on goods from China abruptly accelerated in April, demand abruptly dropped,” said Mike Short, president of global freight forwarding at . “Now that tariffs have been lowered, we’re expecting a burst of pent-up cargo starting in two or three weeks.
“Customers that had cargo stored at origin are ready to ship. Others are cutting purchase orders this week and asking suppliers to produce as quickly as possible to get their goods out in the 90-day window.”
C.H. Robinson's Short anticipates a burst of cargo activity now that the tariffs have been lowered. (C.H. Robinson Worldwide)
Short added that what customers are doing partially depends on whether they front-loaded ahead of an earlier round of tariffs in April. He also pointed out retailers and retail suppliers tend to have a greater reliance on low-priced consumer goods from China.
“Still, many of our small to medium retail customers took a wait-and-see approach,” Short said. “For other companies, front-loading didn’t make sense. Our industrial manufacturing customers were less likely to pull forward because of the way their forecasting and demand patterns work.
ǰ
“If lead time on the machinery you make is eight or nine months, and you’re facing a possible recession, you don’t stock up on materials you might not need.”
Short noted, too, that a lot of capacity was recently removed in response to tariffs from the lanes that connect the East and West coasts to Asia. Because of that, he stressed that ocean carriers will first have to reposition their vessels.
C.H. Robinson ranks No. 2on the Transport Topics Top 100 list of the largest logistics companies in North America. The Eden Prairie, Minn.-based company is No. 20 on the TT Top 50 list of the largest global freight companies.
“We remain focused on supporting our customers in adapting to the latest regulatory requirements,” FedEx Corp. said in a statement provided to Transport Topics. “It is important for customers to have paperwork completed correctly ahead of pickup so shipments can continue to move seamlessly through our network to their final destinations.
“FedEx has an experienced team of clearance and compliance experts who are continuing to enable the movement of shipments across borders of the more than 220 countries and territories we serve.”
FedEx says its team of clearance and compliance experts can enable the movement of shipments across the borders of more than 220 countries and territories. (John Sommers II for Transport Topics)
FedEx ranks No. 2 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
TD Cowen noted in a report May 14 that the 90-day pause opens a window of clarity for shippers. It expects a pull forward of available capacity to hit ports in about three weeks at the earliest. The banking firm followed that up the next week by reporting that bookings three weeks out at the Port of Los Angeles are only 80% of what they were the year prior despite a surge in ocean bookings after the 90-day pause, suggesting shippers are still holding back on purchases.
Robert Brown of Bot Auto breaks down the state of autonomous trucking today, and where it's headed.Tune in above or by going to .
“Through the first week of May, traffic in the Port of LA was down 30%,” Jason Seidl wrote in the report May 19. “10 cancellations are currently on the books for June. Current capacity at the PoLA is only 30% of what peak was during COVID, suggesting ample capacity for any pull forward in the coming weeks given the 90-day pause. Latent capacity remains at the truck gates, and chassis remain readily available.”
Susquehanna International Group noted in a report May 19 that container imports the month prior were relatively seasonal. Its preliminary West Coast volume data was even up 8% year over year and the East Coast was up 5% year over year. The investment firm, however, expects volumes to slow in the months ahead before recovering.
“Looking forward, real-time ocean shipment data […] rolled over during April and the first half of May post ‘Liberation Day,’ though is starting to stabilize sequentially a week post the China-U.S. 90-day pause announcement, suggesting U.S. volumes should weaken in May and June before recovering into July and August,” SIG analyst Bascome Majors wrote in the report.
Want more news? Listen to today's daily briefing above or go here for more info
The ITS Logistics U.S. Port/Rail Ramp Freight Index showed heavy import volumes and pent-up demand from China is set to pull forward in peak retail season and cause transportation challenges. It warned the sudden surge in demand and uncertainty from the 90-day deal has the potential to spur another front-loading event that drives an early start to peak season.
“I have clients with thousands of containers pre-loaded in China that is ready to come in,” said Paul Brashier, vice president of global supply chain at ITS Logistics. “Shippers should be prepared to increase trucking and equipment capacity immediately to ensure they can withstand volatility and get their goods to market on time.”
