- US shippers face a double hit: a 10% tariff increase on Chinese imports and soaring ocean freight rates due to the Red Sea conflict.
- Shipping costs from China to the US have surged by up to 196%, leaving businesses with little choice but to pass costs onto consumers.
- With China potentially retaliating, fears of a renewed US-China trade war are growing, adding further uncertainty to global trade.
The 10% tariff increase on Chinese imports, combined with skyrocketing ocean freight rates due to the Red Sea conflict, has created a crisis for US shippers, reports Xeneta.
Tariffs and Freight Hikes: US Shippers Brace for the Perfect Storm
Latest data from Xeneta reveals that shipping costs from China to the US West Coast have surged by 196% since December 2023, while costs to the East Coast have risen by 157%.
With no time to adjust supply chains, many businesses are left with no choice but to pass these costs onto consumers.
Freight Costs Surge Amid Red Sea Conflict
According to Xeneta, the average cost of shipping a 40ft container from China to the US West Coast has hit $4,816. The cost to the East Coast stands at $6,264.
These price hikes stem from the escalating conflict in the Red Sea. It has forced shipping companies to reroute, driving up costs.
“US shippers are being hit by wave after wave of disruption and spiraling costs to import goods.”
— Peter Sand, Xeneta Chief Analyst
Trump’s Tariff Move Leaves Shippers With No Options
Unlike the 2018 tariff hikes, when businesses had time to stockpile inventory, Trump’s sudden 10% tariff increase on Chinese imports leaves no room for adjustment. Companies looking to shift supply chains to India or Southeast Asia face significant financial and logistical hurdles.
“This time Trump has imposed tariffs almost immediately so if shippers haven’t taken action by now, it’s already too late.”
Fears of a Renewed US-China Trade War
The tariff delay on Mexican imports offers little relief, as analysts warn of a potentially escalating US-China trade war. Should China retaliate, US importers could face even more severe disruptions, making an already dire situation worse.
“If China retaliates and we enter another escalating trade war, an already very bad situation will get even worse for US importers.”
Hopes of Relief Fade Despite Ceasefire in Middle East
With prospects of lower shipping costs rising due to a potential ceasefire between Israel and Hamas, analysts initially expected relief for shippers in 2025.
However, the new tariffs have wiped out those hopes. Any savings in freight costs will be offset by the tariff hike.
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Source: Xeneta
