Tariff truce means more cargo, and uncertainty

The trade talks in Geneva between the United States and China yielded greater-than-expected de-escalation in the ongoing trade war, but it won’t be so easy to undo the damage this skirmish has done to U.S. trade credibility and the role of the dollar on the global stage.

The two sides agreed to a point-for-point mutual reduction in their respective tariff rates for an initial period of 90 days, bringing rates down to near the same levels that prevailed before the tit-for-tat escalation. This reduction of 115 percentage points lowers the U.S. tariff rate on Chinese imports to 30 percent and 10 percent on U.S. goods flowing the other way.

The impact on Shipping 

The US-China tariff 90-day truce had a mixed but notable impact on the global shipping industry, especially on trans-Pacific trade routes. Here’s a breakdown of the shipping-specific impacts and disruptions associated with the truce:

Immediate Impacts on Shipping During the Truce

1. Spike in volumes:

Pre-truce frontloading effect: Leading up to the truce, many importers rushed to ship goods to avoid additional tariffs—this led to an artificial spike in cargo volumes, especially from China to the US in late 2018.

During the truce: Shipping volumes flattened or slightly declined as demand normalized post-frontloading. Shippers, uncertain about future tariffs, held off on aggressive restocking.

2. Rate Volatility

Freight rates, particularly on Trans-Pacific eastbound lanes, were highly volatile:

High freight rates due to capacity constraints and urgent demand.

Long-Term Disruptions and Strategic Shifts

1. Shifting Trade Lanes

Importers began to diversify sourcing, shifting cargo origin from China to Southeast Asian countries (Vietnam, Thailand, Indonesia). This altered traditional shipping patterns.

Carriers had to adjust their routes and port calls, sometimes increasing intra-Asia connectivity.

2. Uncertain Demand Planning

Carriers and freight forwarders struggled with schedule reliability and capacity planning. The “on-off” nature of tariffs and truces made it hard to predict cargo flows.

Led to increased reliance on blank sailings (cancelled services) to maintain rate stability.

3. Container Imbalances

The unpredictability of US-China trade flows contributed to container equipment imbalances, especially in Asia. This affected availability and repositioning costs.

4. Investment Hesitation

Ports and logistics firms delayed or reassessed expansion projects due to trade unpredictability, especially projects reliant on stable US-China flows.

While the 90-day truce offers a short-term breathing room, it's expected to do little to restore full confidence in US-China trade. For shipping, this means a temporary pause in disruption, but not a return to stability. The bigger disruption came from behavioral changes—shippers and carriers alike began adapting to a world where trade policy unpredictability is a permanent feature.