The Merchant - $30 billion tariff cut agreed, but Chinese ports face a long recovery

The essentials at a glance 🌀 Chinese ports face extended recovery period 🤝 China tariff deal tantalizes shippers

Figure of the week

$30 billion

A new tariff agreement between China and the United States is based around a “30 for 30” framework - a mechanism aimed at reducing tariffs on roughly $30 billion of goods from each country , creating a total reciprocal tariff reduction framework worth $60 billion .

Quote of the week

“This is less the demolition of a tariff wall than the opening of a safety valve: enough to let off steam, not enough to change the structure of the conflict.” Henry Gao, professor of law at Singapore Management University, cautions that the latest Sino-US tariff reductions may just be a pause in a larger trade war.

Chinese ports face extended recovery period

Port congestion in China caused by a string of typhoons could last into 2027 , industry insiders say. Sea-Intelligence CEO Alan Murphy warned in his latest newsletter that “there is now a distinct likelihood that port congestion in Asia will only be partially alleviated for the seasonal uptick in cargo prior to the Chinese New Year.” Shippers had pinned their hopes on Golden Week , which is due to start on October 1 , providing a respite that would allow Chinese ports to clear backlogs. But now analysts such as Murphy believe this will not be enough. At the same time, there is fear that another typhoon could complicate any recovery. Congestion in South China already stands at record levels , and another typhoon could add a week or two to the recovery timeline. Asia is currently in mid-typhoon season, though the risk starts to tail off later in October. Congestion affecting Chinese ports has added to plummeting schedule reliability figures over recent weeks. Then again, Maersk CEO Vincent Clerc last month warned that port congestion had become deeply entrenched worldwide. On the other side of the world, however, the weather is coming to shippers’ aid. Wetter-than-expected conditions in Panama are allowing the Panama Canal Authority to increase the number of transits. The authority has also been able to loosen draft limits. For now, shippers should expect carriers to try to push rates higher. CMA CGM has announced a GRI for October 18 . Many industry insiders doubt that the market will support this increase. That said, shippers should keep a close eye on demand after Golden Week, when the market should start to return to normal after the unexpected peak season of recent weeks.

Shippers face Trans-Pacific air freight holiday squeeze

Strongly growing exports from North America were the main driver of rising world air cargo tonnages, according to the latest WorldACD weekly figures. North America saw 14% growth in export volumes via air cargo. This more than offset slight declines from the Middle East and Africa. However, the wide availability of capacity meant that rates, especially Trans-Pacific spot rates , remained broadly stable despite being around 40% higher than the equivalent week last year. Among the biggest drivers of the increase were year-on-year rises of 62% from Singapore and 50% from Japan . Shippers are now looking at a tightly compressed window between China’s Mid-Autumn Festival from September 25 to 27 and Golden Week on October 1 . Some industry insiders are reporting rising demand from northern China as shippers attempt to beat the start of the holiday period. Once Golden Week is upon us, shippers should expect wide capacity but slower operations. They may well also be able to find competitive rates from airlines offering standby services during the holiday period.

China tariff deal tantalizes shippers

Chinese Premier Xi Jinping ‘s visit to the US has brought cheer to importers after the two sides agreed a tariff deal but shippers are still waiting for the details to be fleshed out. The main beneficiaries of an agreement to reduce tariffs on $30 billion worth of goods from each country will be importers of toys, sports equipment, and Christmas decorations . US agricultural producers will be among those who will see lower tariffs on exports to China. However, at the time of writing, it was unclear what tariffs on the affected categories would actually amount to following the agreement. Nor had either side revealed when the lower tariffs would take effect . “If we see the tariff cuts actually implemented before the holiday season, it could provide a welcome boost to US consumption and to retailers,” said WPIC CEO Jacob Cook . US Treasury Secretary Scott Bessent has also revealed that the one-year tariff truce reached last fall will be extended to January . A total of 77 Chinese goods will receive lower tariffs following Xi’s visit. These include plates, cups, bowls and serving dishes, tableware, kitchenware, blankets, bed linen, curtains, artificial flowers, flashlights, microwave ovens, toys, sports equipment, and some household goods. Shippers should watch this space for further updates on when the lower tariffs will come into force and by how much they will go down . ❓ Got a question about your flows? We answer it in an upcoming edition.

Ask your question Did you know?

Global container shipping reliability is currently at its worst for four years, according to Sea-Intelligence. The consultancy said schedule reliability had fallen by 5.9 percentage points month on month in August to 49.9% - principally due to severe port congestion in Asia as a result of a series of typhoons.

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Sources

• The Journal of Commerce - Asia port congestion could bleed into 2027, analysts
• Asian Aviation - WorldACD air cargo tonnages rebound ahead of Chinese holiday period
• The Journal of Commerce - Suez return, order book will shape 2027 container market, BIMCO
• CNBC - US and China agree to lower tariffs after Trump-Xi meeting
• TIME - US and China cut reciprocal tariffs on $60 billion of trade goods
• The Loadstar - Box shipping reliability the worst since 2022, a new normal says DP World