Supply chain planners are busy booking shipments from non-Chinese destinations into the US today following last night’s tariff surrender by Donald Trump, the American president.
Trump announced a 90-day pause for countries hit by higher US tariffs amid financial turmoil and a weakening dollar in the week since he had first made his tariff announcements.
However, the trade war between Beijing and Washington has worsened, as the US president increased tariffs on goods from China to 125%. China’s retaliatory tariffs of 84% on all US imports took effect yesterday, with the government reiterating it will not back down to Trump.
Shippers from non-China origins might want to start the peak season now
Trump’s universal 10% levy for all countries, except China, remains in place, but there are signs the US is exploring trade deals with alternative manufacturing bases to China.
For instance, the Vietnamese government said today it is in talks for a trade agreement with the US, hours after Trump lifted onerous 46% tariffs on the Southeast Asian nation.
The two countries will consider removing as many non-tariff barriers as possible, Hanoi said in a statement released after a meeting between Vietnam’s deputy prime minister Ho Duc Phoc and US trade representative Jamieson Greer in Washington.
Following Trump’s tariff backtracking, Lars Jensen, who heads up container advisory Vespucci Maritime, suggested via LinkedIn: “For the supply chains this means that the large amount of bookings which were suspended/put on pause for the past week are all prone to be shipped as soon as possible for non-China origins. Shippers will want to get this cargo moving whilst they have the opportunity to avoid the large tariffs.”
The week of tariff turmoil saw container bookings into the US slide by 67%, and the sudden July deadline for lower tariffs is likely to lead to some bottleneck issues as shippers rush to get their goods into the US.
“We should expect that shippers from non-China origins might want to start the peak season essentially already now – or as fast as possible – in order to get their peak season loads moved prior to July 9 when the suspension expires,” Jensen advised.
China is not holding back as the trade war between the two world’s largest economies escalated, something that is seeing a shift in grain and gas buying patterns.
VLGC rates continued to plummet yesterday following the announcement in Beijing of an 84% total tariff on US goods. Yesterday, the LPG1 route fell by $12,200 a day to $13,600 a day, while the LPG3 route dropped by $12,800 a day, settling at $14,300 a day.
“Trade wars produce no winners, and protectionism leads up a blind alley. The economic success of both China and the US presents shared opportunities rather than mutual threats,” the Chinese government stated in an 18,300-word white paper just published in response to the latest US tariffs.