This week:
- President Trump unveils reciprocal tariff policy with a minimum baseline 10% on all US imports
- Following the announcement of the tariff policy, shippers scramble to rework supply chain strategy
- US ending de minimis exemption for China and Hong Kong May 2, will phase out other countries
- Trans-Pac and trans-Atlantic air cargo rates surge as rush to beat new US tariffs spikes demand
- Flatbed truck spot demand increases as US businesses import industrial goods before tariffs hit
Trump Implements Minimum 10% Tariffs on All US Imports in Reciprocal Policy
US President Donald Trump unveiled his long-in-the-works reciprocal tariff policy last Wednesday, April 2. The US will now assess a minimum 10% tariff on all imports, with higher rates for countries the Trump administration believes have an unfair trade imbalance with America.
The baseline 10% tariff went into effect over the weekend, and the country-specific import duties will be effective by this Wednesday, April 9. Although it was well known that the President would announce his new trade policy on April 2, some of the details were unexpected.
Most analysts had predicted the reciprocal tariffs would match the duties imposed by US trading partners on specific product categories. Instead, the policy seeks to neutralize trade imbalances with broad and sometimes high tariffs. For example, the tariff on all imports from China was set at 34%, with 20% for the European Union.
Trump has said the tariffs are designed to spur a renaissance in American manufacturing. However, the President also said he’s open to using tariffs as a negotiating tool to reduce US trade deficits.
Vietnamese Communist Party chief To Lam was one of the first world leaders to contact Trump. The reciprocal policy imposes a 46% tariff on US imports from Vietnam, starting this Wednesday. Over the weekend, Lam offered to remove all of Vietnam’s tariffs on US products if Trump postponed the implementation of his new policy, but no deal had been reached as of Monday morning.
The new tariffs are in addition to the other import duties the Trump administration has announced so far, including 25% on automobile imports from all countries and 25% on most products from Canada and Mexico.
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Shippers Quickly Adjust Supply Chain Strategy in Response to Tariffs
Shortly after Trump announced his reciprocal tariff policy, the impact was felt across the global supply chain. Journal of Commerce (JoC) Senior Technology Editor Eric Johnson checked in with shippers to gauge their reaction and found them quickly adjusting their strategies.
“Some US-based shippers are, incredibly enough, racing to beat the April 9 imposition of new tariffs on most goods,” Johnson wrote in the JoC. “Others are holding back product in Asia on the chance the levies will be reduced by President Trump.”
A forwarder who spoke to the JoC on the condition of anonymity talked about some of the changes in strategy. “Customers are shifting volume from full container-load to LCL (less-than-container-load) to get goods here before April 9,” the source said. “Some are booking air to get ahead of the tariffs. Some are pulling back orders.”
While some stakeholders scramble, others are stepping on the brakes. Another forwarder who asked not to be identified told the JoC, “It looks to me like we are witnessing a sudden global (business) slowdown akin to Covid. It’s starting to look like the collective response will be to stop, kind of like what we saw (during the pandemic lockdowns).”
White House Ends De Minimis Import Exemption for China and Hong Kong
On the same day the Trump administration rolled out its reciprocal tariff policy, it also announced an end to the de minimis exemption for imports from China and Hong Kong starting May 2. The exemption, which will also be eliminated for other countries, currently allows most goods valued under $800 to be imported into the US duty-free. The White House has cited concerns about criminals exploiting de minimis to ship contraband into the US.
Starting next month, imports from China and Hong Kong that have historically qualified for the de minimis exemption will be subject to all duties prescribed in the reciprocal tariff policy, provided they don’t enter the US via the international postal system. For imports that arrive via the postal network, a duty of either 30% of the declared value or $25 per item will apply in place of other tariffs and fees. The $25 charge will increase to $50 on June 1.
According to an executive order signed by President Trump last week, the de minimis exemption will also be phased out for countries that fall under the reciprocal tariff policy once “adequate systems are in place to fully and expeditiously process and collect duty revenue.”
A February executive order previously eliminated the de minimis exemption, causing the United States Postal Service (USPS) to briefly halt deliveries from China and Hong Kong. The White House quickly reversed course and USPS restored deliveries, but the Trump administration indicated it would be working toward permanently eliminating the exemption.
Air Cargo Rates Spike in Race to Beat US Tariffs on China and Europe
Air cargo rates across the trans-Pacific and trans-Atlantic routes surged last week as shippers rushed to move goods before the new US tariffs on imports from China and the European Union go into effect. While it’s unclear whether demand will be strong enough to keep spot rates up after the tariffs are fully effective, airlines and forwarders have enjoyed a recent jump in volume and rates.
According to the Baltic Air Index (BAI), the average rate from Shanghai to North America reached $5.40 per kilogram last Monday, up slightly from the week before. Similar upward trends were observed on other key routes from Asia to the US, with notable weekly increases from Vietnam and India.
Trans-Atlantic routes also experienced a pre-tariff surge, with rates from North Europe to North America climbing 2.5% to $2.89 per kilogram. In addition, the BAI noted substantial weekly gains on outbound routes from Frankfurt (8.3%) and London (15.5%).
US Flatbed Spot Demand Up, Thanks to Rush of Pre-Tariff Industrial Imports
Looming tariff deadlines also caused a rush among US importers of industrial goods, leading to a spike in demand and prices for flatbed trucks on the spot market over recent weeks. According to a market analysis by JoC Senior Editor William B. Cassidy, shippers raced to find available trucks for loads of machinery, steel, and agricultural equipment before 25% tariffs on Canada and Mexico took effect on April 2.
Michael Regan, a shipper consultant with logistics management firm TranzAct Technologies, talked to the JoC about the urgency he witnessed. “If your business makes things with aluminum, steel, or lumber, you’re buying now,” Regan said.
DAT Freight & Analytics reported flatbed spot rates on major lanes at $2.36 per mile, an 8.3% increase from late February to March 25. FTR Transportation Intelligence found year-over-year spot rates, excluding fuel, up about 7.5%, with posted load volumes increasing 34%. For its part, DAT shows a 42% year-over-year spike in volumes.
While industrial goods are typically tied to construction and manufacturing, stakeholders like FTR’s vice president of trucking, Avery Vise, caution that this surge is likely a pre-tariff market distortion driven by an unseasonal import surge. “It really feels like it’s not domestic production-driven but is import activity,” Vise told Cassidy.
