The Merchant · n°155 · July 17, 2025

Shippers face summer suspense as tariff deadlines loom

🚢 Blood in the Red Sea
🇪🇺 The EU in the crosshairs
✈️ Who is the big winner of the tariff war?

Figure of the week

6.2% This is the tonnage decrease planned by carriers on the trans-Pacific routes in August, as freight rates continue the decline that began in June.

Quote of the week

“The current negotiating tactic has not worked and we must be firmer.” In a post on LinkedIn, Finnish MEP Aura Salla, though a strong supporter of Ursula von der Leyen, was very critical of the European Union’s strategy since the start of the tariff war triggered by Donald Trump last April.

The Houthis’ endless war

On July 7, the Houthis attacked ships for the first time since December 2024. Both operated by companies, the Magic Seas and the Eternity C, suffered extremely violent attacks. The first was targeted by fast boats and small-arms fire, leading to its abandonment and then its sinking. The second suffered an attack of unprecedented violence involving six missiles and remote-controlled suicide boats (drone boats). Of the forty-nine people aboard the two ships, several dozen were rescued, at least six are presumed hostages, and nine are dead or missing. On July 14, the search for the missing was officially suspended.

These attacks are still presented as actions in support of the Gazans. But as Ami Daniels, CEO of Windward, suggests, the Houthis are no longer content to target ships that have recently docked in Israel; they now go after any vessel operated by companies one of whose ships has called at an Israeli port. In other words, nearly one-sixth of the world fleet would now be a target. A few weeks after the twelve-day war, the Yemeni group is seeking to demonstrate its persistent capacity for harm in a context where other pro-Iranian militias are weakened.

The most immediate and lasting consequence of these attacks is the confirmation that maritime traffic via the Red Sea will not resume in 2025. Although the carriers have remained very cautious, the absence of incidents since December 2024 could have hinted at a possible normalization of transit via the Suez Canal. These two sinkings definitively buried that hypothesis. As Lars Jensen, founder of Vespucci Maritime, analyzes, “the return to the Suez route is no longer conceivable in the short or medium term.” As it stands, the military status quo, the ineffectiveness of the Israeli-American strikes in neutralizing the Houthis’ capabilities, and the continuation of hostilities in Gaza seem to guarantee that this crisis will continue into 2026 - or even beyond.

Who wants Brussels dead?

On Saturday, July 12, 2025, Donald Trump abruptly announced, in several letters published on his Truth Social network, the imposition of 30% tariffs on all imports from the European Union and Mexico, starting August 1. Invoking “national security” grounds to justify this drastic tariff hike, he railed against the persistent and “non-reciprocal” trade deficits between the United States and the Union. Trump accuses Europe of erecting tariff and non-tariff barriers that would “deeply” unbalance the trans-Atlantic trade relationship.

European leaders were caught off guard. All the more so as discussions seemed to be progressing behind the scenes and an agreement close to the British model - with duties limited to 10% - was still being mentioned a few days earlier: many commentators had welcomed it. In the immediate term, the European Commission reacted with caution: the goal is to keep the dialogue open, while warning that the Union would take “all necessary measures to defend its interests.” The Trumpian strategy is clear: tariff blackmail must make it possible to obtain enhanced access to certain markets or to obtain victories in other matters.

In its commentary on Trump’s letter, the journal Le Grand Continent compared the duties decided by Trump to an “imperial tribute - brutal, unilateral, asymmetric.” Faced with this brutal empire, the European Union appears in fact very hesitant. For now, the Commission is playing for time and pushing back to August 6 the possible tariff riposte. The retaliatory tools already exist: a list of US products to be taxed, representing 72 billion euros of imports, is ready, including products as varied as aircraft, bourbon or digital services. While affirming that he wanted to do everything to find a solution before August 1, Trade Commissioner Maroš Šefčovič acknowledges that the determination to act has “significantly increased” among the member states, but several capitals, beginning with Berlin, are still pleading for a compromise… All this reveals a deep flaw in the European Union: although endowed with a single market equivalent in power to that of the United States, it has still not established a credible balance of power.

Far from diplomatic cautions, internal polls nonetheless reveal that 80% of European citizens favor immediate retaliatory measures. The war is far from over.

Vietnam, a (tariff) war profiteer?

Donald Trump and his entourage are convinced that the enormous tariff increases announced since June will benefit the United States. Nothing is less certain. On the other hand, other countries could benefit colossally. Among them, Vietnam. US importers are reorienting their supply chains toward Southeast Asia: since the start of 2025, Vietnamese exports bound for the United States have jumped by 29%, whereas those of China declined slightly. The increase of tariffs to 20% on Vietnamese products, planned for August after the agreement between Vietnam and the United States, should not slow this momentum: the tariffs applied to Vietnam remain lower than those imposed on China (+55% starting August 12). Vietnamese competitiveness is thus reinforced. The explosion of air freight out of Ho Chi Minh City - +62% between January and April - confirms this logistics redeployment, notably for electronic products and semiconductors. Vietnam is now considered a strategic industrial hub.

This trade reorientation nonetheless raises a thorny question: that of transshipment, that is, the re-export of Chinese goods via Vietnam to circumvent US taxes. To counter this practice, Donald Trump announced a punitive tariff of 40% on products suspected of being merely repackagings of Chinese goods. But the application criteria remain vague: at a time when internationally networked production has become the norm, what is a product truly “of Vietnamese origin”? What percentage of Chinese components will be tolerated?

Despite these uncertainties, one thing is clear: the rise of Hanoi as an export platform toward the United States is structural. In 2024, Vietnam accounted for nearly 10% of US maritime imports, compared with less than 4% ten years earlier. Whatever the United States does, the industrial and commercial map of Asia is being transformed. This raises one final question: how will China react to the emergence of this new competitor?

👋 See you next week, The Merchant team

Sources

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