No extra time for the match on tariffs. The August 1st deadline is strict and binding. As communicated by U.S. Secretary of Commerce Howard Lutnick, starting from that date, the punitive tariffs established last April 2nd will come back into effect. And there is little hope that the U.S. and China will manage to reach an agreement before the next August 12th, when the window of the tariff pause announced just under three months ago will close.
Unless last-minute agreements are reached (the EU and the U.S. are working on a flat 15% tariff), shipping will soon have to rewind the clock and return to the moments of turbulence experienced in the days immediately following Liberation Day. We know what happened then: the stone thrown by Trump into the already choppy waters of the market caused container shipping demand from China to the U.S. to plummet, pushing carriers to shift capacity from these routes to the more lucrative ones with Northern Europe and the eastern coast of South America.
The announcement of the tariff pauses then reshuffled the deck again, forcing U.S. importers to exploit the 90-day window of opportunity to import as much goods as possible from China. This cargo rush saw a spike in spot rates, which between May 31st and June 1st increased by 75% on the U.S. West Coast and 58% on the East Coast.
However, the final rush of front-loading by shippers did not leave carriers indifferent, who decided to shift capacity back to U.S. routes, disrupting the already fragile balance between supply and demand and indirectly favoring a new drop in freight rates, which since June 30th have fallen by 58% on the West Coast and 35% on the East Coast.
This is a brief summary of what has happened so far, and it is very likely that starting August 1st, the stability of economic relations will crack again, with effects that will ripple through the global maritime economy.
What is certain is that carriers have now become increasingly skilled at responding effectively and promptly to market shocks.
Highlighting this is Xeneta, which notes the growing trend of carriers shifting stowage capacity from one trade to another, with the same frequency as the rising and falling of the sea level.
“Transferring capacity between commercial activities, however, takes time and is not like flipping a switch,” says Xeneta analyst Emily Stausbøll, who emphasizes how the redistribution of tonnage across trades has effectively made the market extremely volatile.
As anticipated at the beginning of this article, Trump’s continuous tariff twists have had a domino effect on all trades, starting with the services connecting the Far East and the east coast of South America, where rates have increased by 260% since May 1 (from $1,890 to $6,945 per FEU), due to carriers’ decision to redirect available capacity toward traffic flows to the U.S., which suddenly became attractive again following the announcement of tariff pauses.
The oversupply of stowage that, during the 90-day window, fueled transport demand from China and met the needs of U.S. importers was the main cause of the decline in freight rates along fronthaul traffic flows to the U.S.
Likely, starting from August 12, carriers will reposition their ships in trades to South America to benefit from higher rates. Even if only for a short time. It is now a well-established fact that capacity shifts to the most profitable routes always end up exerting downward pressure on rates. And that is what could happen in this case as well.
The American tycoon’s stop-and-go measures have also had heavy repercussions on the routes linking the Far East to Northern Europe, which remained economically profitable despite the massive injection of additional capacity promoted by carriers following Trump’s announcement of the new tariff policy.
In this trade, average spot rates have effectively increased by 18% since late June and by 78% since late May, settling at an average of $3,410 per FEU.
“It can be noted how much of the capacity withdrawn from direct traffic to the U.S. following the enactment of the tariffs announced on Liberation Day has been redistributed to Northern Europe services,” says Emily Stausbøll again, noting how the increased capacity on this route has, however, contributed to worsening congestion issues in Northern Range ports, already strained by labor disputes and navigation problems on the Rhine River, whose low water levels limit barge capacity, forcing traffic to rely more on road and rail.
The tug-of-war between the U.S. and China and the effects of tariffs on economic operators’ behavior have exacerbated the situation, disrupting supply chains amid growing volumes and saturating yards and docks in ports like Antwerp-Bruges, Rotterdam, and Bremerhaven.
Stausbøll predicts a rebalancing by autumn. Analysts expect a decline in rates for the remainder of 2025 along services connecting the Far East to the east coasts of the U.S. and South America. For Northern Europe, however, the situation is different.
“Port congestion will persist for the rest of 2025 and exert upward pressure on the long-term contract market,” notes the Xeneta analyst.
The moral of the story is that the stones thrown by Trump into the sea of maritime transport continue to produce concentric waves that are spreading across the entire body of water, eventually losing their force toward horizons that industry operators today cannot even glimpse.
A curse for shippers and end customers, to whom Xeneta recommends caution, advising them to sign indexed contracts with shipping companies, ensuring alignment between transport rates and market trends.
According to the consultancy firm, this measure should prevent “long-term agreements from being terminated or renegotiated regularly following shocks like U.S. tariffs.”
