OVRSEA
Subscribe
← The Merchant

The Merchant · n°177 · January 29, 2026

Tariff guessing game creates quandary for shippers

Figure of the week

$1.2 trillion In 2025, China notched a record high trade surplus of $1.2 trillion, confounding Washington’s trade hawks.

Quote of the week

“China will eat Canada alive, completely devour it… Canada lives because of the United States. Remember that, Mark, the next time you make your statements.” President Donald Trump threatens Canadian PM Mark Carney with 100% tariffs on imports into the US if Ottowa signs a trade deal with China.

Tariff guessing game creates quandary for shippers

The tariff roller coaster that shook much of 2025 shows no sign of slowing, as President Donald Trump threatened new restrictions against Canada . Trump threatened to impose 100% tariffs on Canada in response to moves to develop a trade partnership with China. “If Canada makes a deal with China, it will immediately be hit with a 100% tariff against all Canadian goods and products coming into the US,” said Trump. Canada and China agreed earlier this month to lower tariffs and expand market access to each other’s goods. Key exports from Canada, such as canola seed, and Chinese electric vehicles would be most affected by the lower duties. However, there was confusion as to whether Trump’s threats apply to this preliminary deal or to a wider-ranging China trade agreement. Canadian premier Mark Carney has ruled out the latter. For shippers, the possibility of new tariffs create yet more uncertainty. At the same time, many will note that recent threats against nations that continue to trade with Iran have failed to materialize. This was despite Trump saying on social media that new tariffs of 25% aimed principally at China would come into force immediately. It also appears that the threat of tariffs on European countries that Trump considered to be obstructing his plans to acquire Greenland have now been dropped. This followed reports of an agreement reached at the Davos Summit, which would see the US take control of specific localities within the territory. Regarding the latest threats against Canada, analysts are also convinced these will blow over. Jason Miller, Eli Broad Endowed Professor of supply chain management at Michigan State University, believes Trump would be wary of the significant inflationary spike that would result from new Canada tariffs. “Do I think there is any chance POTUS goes through with this threat, especially for energy products? Absolutely no chance,” Miller said on LinkedIn. The 35% levy on Canadian goods Trump imposed last summer was significantly diluted, as products that qualify under United States-Mexico-Canada Agreement rules were exempted. Nevertheless, the threat of tariffs continues to have a significant effect on importers. Many are holding off placing new orders until there is more certainty around the tariff situation. Based on the last 12 months, these importers could be in for a long wait.

CNY spike gives way to airline discomfort

This year’s earlier-than-usual Chinese New Year factory shutdowns are leading to the front-loading of air cargo demand well into January , while ocean carriers are struggling to enforce higher rates worldwide. Air cargo tonnages have been rising by more than 25% week on week in early January on China-to-US routes. This has left rates at elevated but restrained levels. Rises are typical at this time of year and, notably, have not yet reached the sky-high levels seen in previous peak seasons due to weakness in broader US demand. However there is a sting in the tail for smaller shippers. Some analysts have noted that manufacturers are prioritizing high-value, high-volume customers at the expense of smaller businesses. This is reflected in the distribution of capacity favoring large customers and major e-commerce platforms, who are also consuming a large proportion of available plane space. In the meantime, the volume flows seen in recent weeks are typical of other years but are affected by t he earlier-than-usual CNY holiday. However, now that the spike is receding, an “uncomfortably cool” market beckons for airlines. Shippers moving high-value, time-sensitive cargo will likely regain the upper hand next month .

Rates fall but logistics managers feel the pressure

Carriers’ latest attempts to use GRIs to prop up falling container spot rates have fallen flat . Rates on the Shanghai-to-Los Angeles leg were down 12% week on week, while the Shanghai-to-New York component fell by 11%, according to Drewry data. It appears that carriers’ strategy of using an aggressive series of rate increases has run out of legs. Last year, GRIs failed to fully stick but did enough to slow the falls in rates. Now, as the pre-CNY rush ebbs, volumes are falling and aggressive price strategies are showing little return. There is still anecdotal evidence that in some areas, carriers are having trouble even fetching official spot rates. President Donald Trump’s rapid-fire series of tariff announcements has not helped. Many industry insiders attribute this year’s slowdown to shippers adopting a wait-and-see approach in the face of more potential tariffs. The latest fall in rates presents a quandary for ocean carriers, because many shippers might feel emboldened to seek better contract rates when these are negotiated later in the spring. Emily Stausboll, senior analyst at Xeneta, said: “We certainly expect that as more US shippers start tendering, they should be saving money compared to last year. But how much depends on shippers’ individual negotiations and whatever happens in the market over the next few months before many of those contracts are finalized.” Logistics managers are reporting increasing pressure to cut costs due to higher tariffs. Many importers are resisting pressure to pass on additional costs to suppliers or consumers. A recent Goldman Sachs survey found that the latter was the more popular strategy between April and August of last year. Surveyed businesses passed on 37% of their tariff costs to consumers and only 9% to suppliers. The remaining 51% was absorbed as a hit to margins. However, on the positive side, shippers have been told that they can expect increased reliability in coming months, despite a relatively high number of blank sailings .

🤔 Did you know ?

Ocean Alliance carriers are set to expand their North American services by offering shippers more connections from Southeast Asia and the Indian subcontinent. Ocean Alliance carriers are also set to make their first calls to the Port of Jacksonville in seven years with a modified Gulf Coast service.

đź’Ś Receive your weekly freight update!

đź‘‹ See you next week, The Merchant team

Sources

← The Merchant Subscribe to The Merchant