- Global Trade Faces New Shocks from US Tariffs, EU Retaliation, and Freight Decline.
- Tariffs, Port Fees, and Geopolitical Tensions Shake Global Shipping.
- Freight Market Wobbles Under Weight of Tariffs and Political Uncertainty.
The United States and European Union are embroiled in an escalating trade war, fueling inflation and consumer concerns. The US has threatened to impose a 200% tariff on European spirits, which has sparked retaliation threats from the EU. Experts caution that such belligerent trade actions will increase costs for consumers as well as stoke inflation on either side of the Atlantic, reports Baltic Exchange.
New US Tariffs and Port Charges Add to Global Trade Pressures
In another step further increasing tensions, the US has imposed a 25% tariff on all foreign-produced car imports, which will take effect on April 2. The policy is one of a wider trade agenda that has witnessed escalating tariffs and policy changes designed to shield domestic industries.
Meanwhile, suggested US port charges—aimed at vessels with connections to China—have sounded the alarm throughout the Caribbean. Much of the region’s supply chains rely significantly on Chinese-constructed vessels and regular US port stops. The additional charges would substantially drive up shipping prices per container and upset patterns of trade, potentially prompting Caribbean countries to redirect more imports through China.
Houthi Threat Adds Geopolitical Risk to Shipping
Adding to trade tensions is the potential for renewed conflict in the Red Sea area. Yemen’s Houthi militia has signalled intentions to resume attacks on Israeli-owned ships, though it has not threatened non-Israeli vessels. The uncertainty provides another layer of geopolitical risk to global shipping lanes.
Freight Market Declines Amid Increased Capacity
The international freight market has fallen into a slump, with the Freightos Baltic Index (FBX) declining over 50% since January. Experts attribute the decline to increasing vessel capacity and changes in alliance configurations as key drivers. With additional fleet growth anticipated until 2026, freight prices are expected to continue under pressure.
Asia-US Routes Face Downward Price Pressure
Spot rates on the Asia-US West Coast (FBX01) route fell 14.1% from March 6 through to March 27. Rates for the Asia-US East Coast (FBX03) decreased by 6.7% during the same interval. The difference between the two routes has reduced, and this indicates a general downtrend in trans-Pacific shipping rates.
Futures prices for 2026 indicate FBX01 at $2,625 per FEU and FBX03 at $3,850 per FEU—well above pre-pandemic levels. Still, softening US consumer confidence may exert additional downward pressure, especially on the Asia-North America trade lane.
Asia-Europe Market Confronts Seasonal and Structural Headwinds
The Asia-Europe shipping market also experienced significant rate erosion. FBX11 spot rates fell 15.7% from March 6 to March 27, perhaps resulting from seasonal correction or slackened demand. Nevertheless, future rates are significantly above historical norms. The 2026 futures estimate for FBX11 is $2,625 per FEU, roughly 80% more than the 2019 annual average.
A fairly modest number of ultra-large container vessels due for delivery in 2025 and 2026 could temporarily relieve supply-side pressure in the region, potentially stabilizing rates.
Looking Ahead: A Volatile Outlook for Global Shipping
The international shipping sector is subjected to increasing uncertainty as geopolitical risks, trade wars, and regulation changes accumulate. The then-proposed US port charges are especially causing sector-wide concern, with some anticipations that policy changes will avert drastic rises in costs.
As 2025 draws closer, market dynamics are set to continue being choppy, guided by a blend of political developments, macro pressures, and shifting global trade routes.
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Source: Baltic Exchange
