Chinese import activity resumes amid tariff rate drop
Since President Donald Trump’s tariffs on China were slashed from 145% to 30% on May 12, retail companies have grappled with just how quickly they should rush in shipments — or not — during the 90-day window.
Some are still uncertain about what the tariff rates on China imports will be after the 90-day pause is up, making it difficult to plan upcoming inventory orders. Some brands and retailers are taking advantage of the temporary relief by resuming shipments from their Chinese manufacturers. But still others are playing the 90-day pause more cautiously, opting not to rush in higher-than-usual levels of inventory because they are unsure of what consumer demand will look like in the second half of the year.
Still, given that many companies stopped importing goods from China altogether when the 145% tariffs were in effect, the week-over-week growth in container shipments has been eye-popping.
By mid-May, container-tracking provider Vizion said the average weekly bookings jumped by 277%, indicating that retail companies are racing to get their products stateside.
According to Ryan Peterson, CEO of supply chain logistics platform Flexport, “Flexport had the two biggest ocean freight booking weeks in company history in the two weeks since the tariffs on China were paused,” Peterson wrote on X. “80% growth over the pre-tariff trend line. Not just China surging, Vietnam [is] also setting records.”
Logistics providers say, indeed, importers are aiming to use the 90-day truce to secure upcoming orders before having to face long-term tariff implications.
Joseph Firrincieli, sales manager at logistics service OEC Group, told Modern Retail, “People are going to try to ship out as much as possible before the 145% tariffs potentially comes back.”
However, there are still some snags that contradict a so-called mad dash to import products from China.
“I wouldn’t say it’s business as usual because consumer demand as a whole is still relatively down,” Firrincieli said. He explained that Chinese-produced shipments have been lower-than-usual this year, since tariff announcements followed the Chinese New Year. The slow rebound could also be due to a lag, as many brands need more than a few weeks to get finished products manufactured and on cargo ships.
Still, while it’s only been a couple of weeks since the U.S.-China truce went into effect, Firrincieli said he anticipates shipment volume to ramp up in the coming months. “I’m seeing it from my own portfolio as well as the general market statistics,” Firrincieli said. He added that the historical peak season for ocean freight starts around June and July as brands prepare inventory for back-to-school and the busy fourth quarter.
“With that, we are already seeing ocean freight prices going up consistently,” Firrincieli said.
For the June rate cycle, Firrincieli said a 40-foot container from Asia is shipping “at roughly $7,000 to the West Coast and close to $8,000 to the East Coast.” While that’s nowhere near the peak demand rates during the pandemic, it’s still a major spike from the respective average rates of $1,500-$2,500. While rates vary between providers, this was the rate that, more or less, many importers had been paying for roughly the past year, Firrincieli said.
Still, not everyone in the logistics industry has been seeing a rush.
“I’m not working with any brands that are rushing production to try jamming out more inventory ahead of the ‘termination’ of the 90-day pause,” said Matthew Hertz, the founder and CEO of Third Person, an AI-powered platform that connects brands with fulfillment partners. “It’s just not possible for many brands to ramp up production that quickly, given the lead times.”
For the most part, Hertz said the brands he’s working with are still dealing with the long-term implications of tariffs on their cost of production. “In other words, for most brands, it has been ‘business as usual’ these last few weeks, albeit with a large headache,” he said.
As for how each company is approaching cargo freight during the temporary Chinese tariff rate drop, Firrincieli said it all depends on whether they’re willing to gamble and absorb the 30% tariffs. “There isn’t necessarily one clear cut answer for it.”
One thing remains clear, Hertz said: Many e-commerce brands are still holding out hope that things will get better soon. Hertz said these brands have largely kept their manufacturing going in China, even through the volatile tariff policy announcements in recent months. “It seems as though that bet was won,” he said, given that tariff rates have dropped.