Tariffs Pause & Capacity: Trouble on the Pacific
1. Trade Policy Shift Sets Off a Sudden Cargo Surge
On May 14, the U.S. formally reduced tariffs on Chinese imports, lowering duties across the board to a 10% ad valorem rate, a sharp drop from previous levels that reached as high as 34% or, in some cases, 125%. The rollback applies to all Chinese goods, including those from Hong Kong and Macau, and will be in effect for an initial 90-day window.
Key adjustments include:
- General tariff rate reset to 10%, with higher rates suspended.
- Low-value imports: dropped from 120% to 54%, though the $100 postal item fee remains (avoiding the planned increase to $200).
- HTSUS updates: Chapter 99 provisions were revised, and EO 14266’s 34% benchmark is now paused under the new Heading 9903.01.63 amendment.
The move acknowledges what U.S. officials describe as “significant steps” taken by China to address non-reciprocal trade practices. While markets responded cautiously, trade lanes are already reacting... and quickly!
Container bookings spiked within hours of the announcement, and forwarders report a rapid tightening of vessel space as cargo held back by steep tariffs is suddenly being released into the system.
2. Bookings Surge Before Ships Are Ready
After weeks of reduced movement (with volumes down 30% or more), shippers began locking in space as soon as a deal looked likely. Container bookings from China jumped 29% week-over-week, even before final details were public. Vessels are now sailing close to full. The gap between supply and demand is about to close... hard.
“It’s a mad rush,” said Jason Cook at Arden Global Logistics. “Every day will count this week.” In other words: book now or risk waiting weeks.
3. You Can’t Just Bring Ships Back
Carriers removed over one-third of trans-Pacific capacity earlier this month. Those ships were sent elsewhere: to intra-Asia or Latin America.
Reinstating them isn’t instant.
Flexport estimates it will take more than four weeks to add capacity back meaningfully into this trade lane. “There is maybe a ship or two that can be deployed back right away,” he said, “but for the market as a whole, it will take time.”
In the meantime, expect tight space, missed allocations, and rising premiums.
4. Ports Aren’t Ready Either
Even if vessels catch up, terminals won’t. U.S. ports are operating with the same infrastructure that struggled in 2020. They can’t absorb sudden spikes.
A new wave of imports, arriving without delay buffers or planning, puts ports under pressure, especially on the West Coast.
As Maersk North America’s president, Charles van der Steene said, “The surge will test the system and disruption cannot be avoided.”
5. Rates Will Rise. So Will Mistakes.
Freight rates are rising already, especially on space-guaranteed bookings. The tighter it gets, the more premiums apply. For many importers, that means revisiting budgets (again).
But here’s the deeper issue: mistakes creep in during rushes like this. Charges get missed, incorrect fees get paid, and D&D becomes a recurring cost rather than a rare one.
Freight Audits Aren’t a Back-Office Task. Think of a Defense Strategy
Anyone not auditing their ocean freight might want to start.
D&D, often viewed as a rare or one-off penalty, becomes a steady expense and a "normal fee" when disruption is the baseline. In today’s market, full of exceptions, sudden changes, and deal reversals... accessorial charges have become the new norm.
The best move is visibility. Auditing your invoices, especially during peak stress, is one of the only ways to protect your margins.
🗂 Sources
- Journal of Commerce: “Capacity crunch beckons on eastbound trans-Pacific after US-China deal”
- FreightWaves: “Transportation rates likely to surge during tariff pause” – link
- ICIS News: “Shipping Asia-US container rates will rise but not explode on tariff pause” – link
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