News / Trump's tariff plan will cause another massive Asia-US freight rate spike

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US presidential hopeful Donald Trump’s promise to impose a 20% tariff on all imports entering the country, as well as 60%-100% imports levied on Chinese goods, could throw the transpacific trade into a renewed rate spike.

Ocean freight rate intelligence platform Xeneta said that the last time Mr Trump occupied the White House and first imposed tariffs on Chinese imports in 2018, the result was a 70%-plus increase in transpacific freight rates, as US importers and their Chinese suppliers desperately tried to front-load imports to beat the tariff deadline.

Xeneta chief analyst Peter Sand said: “Raising barriers to trade is almost always a negative move. We saw the cost of shipping goods by ocean spike dramatically when Trump introduced tariffs back in 2018 and his latest proposals will simply be a case of history repeating.”

According to Xeneta data, average spot freight rates from China to the US west coast increased from $1,503 per 40ft on 1 January 2018 to $2,604 on 1 November 2018.

Although Mr Trump claimed in the debate with Democrat nominee Kamala Harris that the proposed tariffs would not result in increased prices for consumers, industry observers largely disagreed.

In a summer analysis, the Peterson Institute for International Economics estimated the combined effect of the proposed tariffs would cost a middle-income household at least $1,700 in increased expenses each year, although this is number does not take into account the effect of potentially higher freight rates.

Freightos lead analyst Judah Levine said: “If Trump is re-elected and announces new tariffs, we could see a similar spike in rates. In 2018, then-president Trump’s tariff announcements led to a doubling of freight rates as shippers rushed to move goods ahead of increased costs.

“As in 2024, tariff announcements have historically altered the timing of shipments,” he added.

Mr Sand further explained that the cost of higher freight rates would likely be borne by US consumers: “When ocean container shipping markets increase, that cost gets passed down the line and ultimately it is the end-consumer who pays the price.

“It could be through increased cost of goods on the shelves or a limited choice in the products available.”

He pointed to the Red Sea crisis as evidence of the effect supply chain disruptions can have on the cost of goods.

Since the onset of the Houthi attacks on shipping, spot rates on the Far East-US east coast trade increased 303% between 1 December 2023 and 1 July 2024, and increased by 389% in the same period on Far East-US west coast shipments.

“Shippers react to supply chain threats by rushing to import as many goods as possible as quickly as they can. Front-loading of imports contributed to the massive increases in freight rates following the outbreak of conflict in the Red Sea and we will see the same behaviour from shippers ahead of any new tariffs coming into force,” added Mr Sand.

“Shippers and freight forwarders dislike uncertainty because it reduces their ability to manage supply chain risk.

“This is why people who work or operate within the maritime industry embrace global trade and do not want to see tariffs or other barriers introduced,” he added.