This week:
- US negotiates deal with China to lower tariff rates for 90 days, remove other trade barriers
- Trump announces US-Houthi ceasefire, but ocean carriers not likely to resume Red Sea transits
- DOT asks for trucking deregulation ideas, receives nearly 900 comments from industry stakeholders
- Intermodal services provide US shippers price breaks in Q1 before rise in trade tensions with China
US Reaches Deal With China to Lower Tariffs For 90 Days
On Monday, the White House announced that it had reached a deal with China to lower tariff rates for 90 days. Following President Donald Trump’s rollout of his reciprocal tariff policy on April 2 and subsequent retaliatory actions, duties for US imports from China had reached a high of 145%. According to US Treasury Secretary Scott Bessent, the new agreement will reduce the level of US tariffs on Chinese goods to about 30%, while China will lower its levies on American-made goods to 10%.
“We have reached an agreement on a 90-day pause,” Bessent told reporters in Geneva, Switzerland, where he spent the weekend negotiating with his Chinese counterparts.
President Trump’s reciprocal tariff policy aims to neutralize America’s trade deficits with other countries. The new agreement will see China remove trade barriers for numerous US exports, which the President calls “opening up China.”
“The biggest thing that we’re discussing is opening up China, and they’ve agreed to do that,” Trump said at a White House press conference Monday morning.
The lowered tariffs will likely come as a relief to US retailers who depend on imports from China. In the last few weeks, there have been multiple signs of the effect the 145% tariff has had on the American supply chain, including lowered volumes at key US ports. The National Retail Federation (NRF) announced on Friday that US imports will decline in May for the first time in 19 months.
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Despite Ceasefire, Ocean Carriers Not Likely to Resume Red Sea Transits
Even though President Trump announced a negotiated ceasefire between the US and Houthi militants, the long-running Red Sea crisis will likely continue, according to one major ocean carrier.
Maersk has ruled out a return to Red Sea transits in 2025, despite Trump’s assertion last week that the Houthi militants “have capitulated” and agreed to stop their attacks on commercial shipping vessels. Those attacks began in October 2023, leading carriers to take longer, costlier diversions around the Cape of Good Hope ever since.
A temporary ceasefire in January gave carriers some hope that the crisis would end early this year. However, they all later said the region wasn’t safe enough to resume Red Sea transits. On a Q1 earnings call last Thursday, Maersk CEO Vincent Clerc said it still wouldn’t be responsible to return to the region, despite positive steps taken by the Trump administration.
“If the US will stop bombing (the Houthi), that’s good. Whether this means there is not only safety today, but safety for the foreseeable future for us sending our colleagues, our assets, and our customers’ cargo through the Red Sea again, we’re pretty far from that threshold.”
Other industry observers agree with Clerc’s position, including Jack Kennedy, head of Middle East and North Africa country risk at S&P Global Market Intelligence. In a customer brief issued last week, Kennedy said the US-Houthi ceasefire is “a pragmatic, limited de-escalation rather than a pathway toward comprehensive peace.”
US Shippers Enjoy Q1 Intermodal Savings Before Rise of Trade Tensions
US shippers achieved substantial savings in Q1 by choosing domestic intermodal over long-distance trucking, according to the Intermodal Savings Index (ISI), which is tracked by the Journal of Commerce (JoC). However, the ISI also shows those savings narrowed in March as trade tensions with China rose.
According to the ISI, shippers saved 19% on average for spot freight and nearly 26% for contract loads in Q1. The early part of the quarter saw trucking companies secure contract rate increases, but this momentum faltered as freight volumes decreased amid growing trade disputes with Beijing. By March, contract rates remained flat, except for some increases in California.
The spot ISI averaged 119.1 in Q1, down from 120.4 in Q4 but up from 117.1 year-over-year. The contract ISI was 125.6, down from 126.2 in Q4 and 125.8 year-over-year.
ISI values above 100 indicate intermodal cost savings. A value of 119.1 means 19.1% savings, and 125.6 means 25.6% savings compared to truckload.
Strike Threat Looms at Canada Post, Customers Advised to Seek Alternatives
Canada Post, the government-owned postal service, is facing a potential work stoppage by the Canadian Union of Postal Workers unless both sides can agree to a new long-term contract by May 22. In a move acknowledging the likelihood of labor disruption, Canada Post released a statement earlier this month advising its customers to consider alternative delivery options.
“This is not the message we hoped to be sharing at this time,” Canada Post said in the statement released April 3. “But we recognize how important it is to give you the information you need to make business decisions.” The statement encourages shippers to talk to other delivery services to minimize the impact of a potential strike.
Contract negotiations have stalled, with both sides acknowledging a breakdown in talks in March. A significant point of contention is the handling of weekend deliveries. Canada Post wants to create a new part-time workforce for weekend work. The proposed new hires would be part of a broader initiative to align staffing with fluctuating volumes. The union opposes these measures and says the postal service should use its current full-time employees whenever possible.
Last year, the union went on strike during the peak holiday season, halting operations for over a month until the Canada Industrial Relations Board intervened on December 17.
