Tariff war simmers as Trump mulls next move

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883,053 TEUs

Roller Coaster supply chains have seen the Port of Los Angeles notch up record volumes for the past quarter. The Port handled 883,053 TEUs in September down 7.5% on a year ago, but still enough to help it to its best ever quarter. Director Gene Seroka attributed the high volumes to the “supply chain roller coaster effect” of tariffs.

Quote of the week

“That delay is about waiting to see which tariffs are going to stick, because tariff policies are up and down and on and off. I don’t want to anger my customers if there’s a chance this is going to go away.” Renee Haltom, vice president of the Federal Reserve Bank of Richmond, explains why tariff costs so far appear not to have been passed on to consumers.

Tariff war simmers as Trump mulls next move

The Trump administration has been strangely quiet on the subject of its potential 157% tariffs on Chinese goods over the last week. But for shippers, no news may well be good news . The tariff war erupted after China responded to new Commerce Department restrictions by expanding export controls on rare earths and rare earth supply chains. In response, Trump threatened to impose a further 100% tariff on Chinese goods, over and above existing tariffs. However, this week, the administration has been largely silent on its threats. Trump’s initial remarks that he would refuse to meet Chinese President Xi Jinping appeared to have been rolled back. The U.S. president is now planning to meet the Chinese leader at the Asia-Pacific Economic Cooperation summit in South Korea in November. Trump was also asked whether a 157% cumulative tariff rate on Chinese goods was sustainable. “It’s not sustainable,” Trump said, “but that’s what the number is. They forced me to do that.” The U.S. administration has called China’s restrictions a threat to global supply chains. In response, Trump has also threatened to levy new export controls on critical U.S. software and has also spoken of an embargo on plane parts for Boeing aircraft. The new developments give shippers little clarity over what, if any, tariff developments will result, but most will probably settle for relative silence rather than further inflammatory comments between the two sides .

Airspace row risks opening new trade war chapter

With Sino-American relations already on a knife edge, Washington is considering opening a new front. The latest target of U.S. ire is Chinese airlines, or more specifically, their continued ability to operate routes to the U.S. that fly over Russian airspace . The Department of Transportation is considering banning Chinese airlines from Russian overflights on routes to the U.S. U.S. carriers are protesting at the competitive advantage enjoyed by Chinese carriers. The use of Russian airspace means they can enjoy shorter journey times, lower fuel consumption, and higher payloads. The potential for diplomatic blowback against such a move is enhanced by the fact that this competitive disadvantage is essentially self-imposed. “Russia’s ban on airlines accessing its airspace came as a simple tit-for-tat move following similar sanctions that placed restrictions on its airlines. The current situation has indeed caused a significant impact on service offering, costs, complexity, and on the environment, and of course, it creates an uneven playing field,” said Glyn Hughes, director general of TIACA. However, Hughes noted that U.S. attempts to prevent Chinese airlines from enjoying this competitive advantage could easily backfire. What the U.S. is proposing will create an ancillary, antagonistic situation between the U.S. and third countries, added Hughes. The fear is that China could react angrily to any such ban, feeling itself pressured into assuming an involuntary role in enforcing Western sanctions against Russia. In recent weeks, China has shown itself willing to respond to U.S. trade restrictions with potentially hard-hitting moves of its own. Many analysts and industry insiders do not share Washington’s apparent confidence that China will eventually back down in the face of U.S. might. A further potential problem for U.S. shippers is that it isn’t only Chinese carriers that overfly Russian airspace—an estimated 24 carriers from 13 countries do so. Any of these 13 states could consider potential retaliatory measures against U.S.-registered airlines. EU airlines are also urging the union to impose a similar ban on carriers overflying Russia en route between Asia and Europe. U.S. Air cargo shippers will be watching the move nervously, lest their jobs become even more difficult .

Shippers brace for volatile month as spot rates climb

A slight jump in trans-Pacific container spot rates is likely to represent the beginning of a month of uncertainty for shippers . Analysts have warned that the latest WCI data recorded a 1% gain on the Shanghai to Los Angeles leg week on week. Similar gains were seen between Shanghai and New York. The rise was largely attributed to the success of a 15 October GRI. A further GRI is scheduled for 1 November. According to Xeneta chief analyst Peter Sand, the rate increases could see some success. “There is a lot on shippers’ minds in Q4,” he said, “trying to look ahead and procure freight for 2026 whilst also dealing with the here and now. We have USTR port fees coming into force this month, and China responding with port fees of its own. So there is plenty of uncertainty for shippers and plenty for carriers to latch onto to try and justify the mid-month GRIs.” A recent article on joc.com by Lars Jensen noted that it isn’t just the potential impact of tariffs in themselves that is wrong-footing shippers. It is the rapid deadlines for implementation of new tariffs, sometimes coming when cargo is already long loaded onto vessels, leaving the importer with no option but to accept a sudden increase in cost for goods already purchased. “This creates an environment for shippers where planning a stable long-term supply chain is no longer a risk-mitigating activity, but a source of risk,” said Jensen. Shippers have been warned that coming weeks may well see some volatility in spot rates owing to tariff developments .

🤔 Did you know ?

The combined efforts of the US and Saudi Arabia have scuppered a deal to cut global shipping emissions. The motion tabled by Saudi Arabia to adjourn talks on the IMO proposal by a year passed by a handful of votes. The delay effectively makes the proposal unworkable within the allotted timescales.

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