The clock is ticking on the China–US tariff de-escalation agreement, which is due to expire on 14 August. But time is even tighter for US importers sourcing from a long list of trading partners, as reciprocal tariff pauses—intended to allow space for trade negotiations—are set to end as early as 9 July.
To date, only the United Kingdom has reached a tentative agreement with the United States. Negotiations with the European Union, South Korea, and Japan remain stalled, reportedly due to the US’s insistence on retaining its 25 percent tariff on autos.
President Donald Trump has acknowledged he does not expect to finalise agreements with all parties in time, suggesting he may instead unilaterally apply tariffs. However, it remains unclear whether those tariffs will revert to the levels announced in April.
Adding to the uncertainty is the ambiguity over the July and August deadlines: it is not yet known whether goods must be loaded at origin by those dates—as was the case with the 9 April deadline—or arrive in the US by then. The latter would significantly shorten the lower-tariff window, with ocean freight from the Far East needing to move within the next week or two to arrive in time.
Ocean freight demand surges
The 12 May China–US tariff pause has triggered a sharp rebound in transpacific ocean freight demand, following a significant volume drop after the US imposed 145 percent tariffs on Chinese goods in early April.
In response, carriers have implemented mid-month general rate increases (GRIs) of between $1,000 and $3,000 per FEU, with similar hikes planned for 1 and 15 June. These measures aim to push rates as high as $8,000/FEU—levels last seen during the 2024 summer peak on the Asia–US West Coast route.
According to Freightos, daily transpacific rates as of Monday had already increased by approximately $1,000/FEU to the East Coast (now at $4,400/FEU) and $400/FEU to the West Coast (now $2,800/FEU).
Carriers are scrambling to restore blanked sailings and suspended services that were cancelled during the April downturn. However, many vessels and containers were redeployed to other trade lanes during the lull and are now out of position. This has led to equipment shortages in China just as bookings are picking up.
Congestion and weather-related delays at several Chinese container hubs are also contributing to rising container prices. As the tariff deadlines approach, demand may tilt further towards West Coast ports, as shippers prioritise shorter transit times to beat the clock.
Despite the rebound, some analysts believe that with a 30 percent minimum tariff on Chinese goods still in effect, rates and demand may increase—but are unlikely to surge—before August. The current activity may mark an early start to the peak season, which could wrap up earlier than usual.
Airfreight market shifts
The suspension of de minimis eligibility for Chinese goods has significantly reduced airfreight volumes between China and the US, especially in the chartered freighter segment. As a result, much of the freighter capacity has exited the transpacific market.
Nonetheless, spot rates remain elevated. The Freightos Air Index reported China–US rates at $5.50/kg last week—holding steady with early April levels.
Freightos also notes that this previously transpacific freighter capacity may now be shifting to other markets, which could soon influence rate dynamics beyond the US.
Meanwhile, Asia–Europe ocean freight has not yet seen a seasonal uplift, despite persistent Red Sea diversions. This contrasts with last year, when shippers began peak season bookings months early to accommodate longer voyage times.
Carriers have announced June GRIs aiming to lift rates to approximately $3,200/FEU to northern Europe and $4,500/FEU to the Mediterranean—around a $1,000/FEU increase. However, these figures remain well below the $6,000–$7,000/FEU levels recorded in June 2024.
