On 12 May, the United States and China announced that they had agreed to pause their trade war for 90 days. In reply to the prohibitive 145% duties imposed by the United States, China riposted with 125% duties on US products. Since 14 May, however, tariff levels fell to 30% and 10% respectively. Measures against the European Union have also been paused until 9 July 2025, with increases in duties limited to 10% in the interim. Some products have been exempted from this increase, however, notably those which are already paying additional sectoral duties.
Before the 12 May agreement, the concerned parties on both sides were waiting. The extra customs duties were at such levels that trade was virtually paralysed. After the agreement, however, there was a rush of orders, which will need to be processed as quickly as possible, given the uncertainty about the period after the 90-day pause. The shipping companies, meanwhile, have brought in additional capacity and increased rates on transpacific routes.
In Europe, port congestion is not the result of excessive activity but of a drop in cargo-handling speeds arising from strike action and go-slows. The launch of the new shipping alliances in February has also necessitated a period of adaptation. It is not always easy to reconfigure quayside operations and there have been a number of disputes with port authorities and terminal operators regarding vessel operating windows.
In the United States, China represents about 35% of import volumes in the ports of Los Angeles and Long Beach. Following the 90-day pause on additional customs duties, a deluge of containers is expected from mid-June on. Some temporary offloading to east coast ports via the Panama Canal, as was the case during the post-Covid boom, cannot be excluded.
In April, the Office of the US Trade Representative (USTR) presented the broad lines of the tax it plans to impose on Chinese-built ships and ships operated by Chinese companies from 14 October. The original text has been considerably toned down after, as expected, it attracted a highly unfavourable response from the shipping companies as well as from all other parties involved in international trade, particularly US shippers. Opposition was expressed discreetly but, apparently, fairly efficiently. The surcharge per container should now be around $200, instead of the $1,000 suggested in the initial draft.
On the Asia-Europe corridor, we can see that great efforts have been made by all the alliances to maintain some sort of discipline, with widespread use of sailing cancellations, which had the effect of keeping freight rates slightly above operating costs (...)