E-Commerce Likely the Front-Runner in Resurge of Transpacific Trade After Deal

By Alex Lennane (The Loadstar) –

Trade flows – including ecommerce – are expected to restart on the transpacific after the initial new tariff agreement between the US and China. 

Talks over the weekend resulted in a huge reduction in tariffs – for 90 days. 

From Wednesday, US tariffs on China will be just 10% – plus the 20% fentanyl tariff, while Chinese tariffs on US goods will also be 10%. 

China has also pledged to remove tariff-related countermeasures, which included: placing 15 US companies on its Export Control list and designer brand company PVH on to its “unreliable entity list”; import taxes on US coal, LNG, and crude oil; an investigation into Google; and export controls on 25 rare metals. 

While the new tariff environment only holds for 90 days, few observers think it will ratchet up again. 

“After the 90-day pause, I think there will be some sort of resolution,” said Ti CEO John Manners-Bell. 

“As Scott Bessent, US treasury secretary said, they have a plan, they have a process, and they now have a mechanism allowing them to talk and to better negotiate. 

“I don’t know what the end game is, only Trump knows that. But I don’t think it’ll be a kicking of the can down the road. I think the mechanisms in place are a little more formal, and I think there are good relations.” 

The question now is whether companies feel secure enough to book freight capacity again – with ecommerce expected to be the likeliest to see growth soon.  

But according to Mr Manners-Bell, there could still be a delay for many goods. 

“There was a huge volume of goods moved to the US to beat the tariffs. Forwarders and carriers had a pretty good Q1 as a result of this, but all these inventories will now need to be drawn down. I think Q2 may see a pause or hiatus, as these inventories are drawn down, before shipments ramp up ahead of the peak.  

“No one really knows how this will play out, because we have the US economy to consider, and if that goes into recession, there may not be the peak and inventories will stay high longer than a peak would have allowed.” 

Inventories are indeed high. The US National Retail Federation said last week: “Imports have been elevated since last summer, first as retailers brought in cargo ahead of an October strike at east and Gulf coast ports, and then in anticipation of an escalation of tariffs after the November elections. Imports during 2024 totalled 25.5m teu, up 14.7% from 2023, and the highest volume since 2021’s record 25.8m teu during the pandemic.” 

However, analyst Lars Jensen said he expected a “surge”, adding: “There is already a large amount of cargo ready to go, as US importers have been adopting a ‘wait-and-see’ strategy over the past month and abstained from shipping cargo which is already ready.”

He added: “The 90-day pause expires in the middle of the usual peak season for holiday-related goods going to the US. We should therefore expect a possible pull-forward of cargo, creating a shorter, sharper, peak season from, basically, right now.”

Mr Jensen said carriers would likely reinstate blanked sailings, but could be restricted by vessel location.

“How quickly this can happen will also determine to which degree there might be a short-term capacity shortage on the Pacific, resulting in escalating spot rates.”

Airlines will be looking at the impact on ecommerce. Since the removal of the de minimis exemption on 2 May, capacity for ecommerce into the US has plummeted. 

Posted shipments will not be affected by the changes; goods sent via international mail will still face a 120% tariff or a flat fee of $100 per postal item increasing to $200 on 1 June.  But for the huge volumes of ecommerce sent via chartered freighters, the business will likely come back. 

Even with the 145% tariff, according to one Chinese ecommerce logistics player, “a lot of those products are still the cheapest around”. 

“For now, customers are still buying low-cost products from China. However, for higher-end, more expensive goods, the drop in volume is high,” the source said last week. 

The market does appear to be bouyed: in the past 24 hours versus the same period a week ago, according to Rotate, freighter capacity from China to the US has gone up 60% – although it may be worth remembering that a week earlier was likely affected by Labour Day holidays. Capacity from the US to China and Hong Kong has gone up 35% in the past 24 hours. 

Mr Manners-Bell believes the next hurdle for US retail will be the economy. 

“I see the second part of the US policy after getting tariffs sorted is to get taxation sorted, and that means a lot of tax cuts, which could have a big positive impact on the economy. More money in pockets could prompt a huge consumer boom. But there’s a huge amount of conjecture, as we don’t know what is going to happen and what the next step will be. 

“The level of uncertainty and confusion in the market is immense, and I think shippers will have a policy of ‘wait and see’. But there is no doubt there is going to be a huge demand for Chinese goods in the US.” 

He added that it appeared likely that the US could end its fentanyl tariff as well, bringing tariffs on all Chinese goods to 10%. 

The Loadstar is known at the highest levels of logistics and supply chain management as one of the best sources of influential analysis and commentary.

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