Tariffs Start To Take Toll Across The Board

11 Sep Tariffs Start To Take Toll Across The Board

Following months of frontloading, U.S. retailers are pulling back on ordering for the rest of the year due to a slowing U.S. economy and higher tariff costs. Whilst volumes from Asia to the U.S. hit a six-month high in July, ahead of August tariff deadlines, volumes from September through to December are anticipated to be down 20% year over year each month.

These findings reflect the toll of the U.S. tariffs on China as importers are finding it difficult to absorb the higher tariff costs, therefore orders are impacted as they try to push price increases onto consumers or back onto suppliers. In fact, a recent U.S. survey conducted in July found that 34% of all businesses would increase prices over the next six months.

In addition, shippers and consignees are facing increasing demurrage and storage expenses as demand uncertainty slows their pick-up of containers from terminals. Some businesses importing lower-value goods have even begun abandoning containers as the cost of the tariffs outweighs what the items can be sold for, whilst others are shifting toward origin-controlled cargo, in which the seller bears all shipping and customs costs until it delivers the goods to the buyer.

Rising demurrage levels at major US ports also reflect the increased deterioration in the trans-Pacific market. Demurrage levels have been rising all year, hitting a peak average of 8.1 days in July (up from 3.8 days in January), again predominantly driven by tariff uncertainty, particularly with regards to market concern that the 55% tariff rate between the U.S. and China might change yet again once the tariff truce expires on 10th November.

Elsewhere, postal traffic to the U.S. has dropped more than 80% after the Trump administration ended the de minimis tariff exemption for low-cost imports, which saw over 30 nations partially or fully suspend some postal services to the U.S.

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