This week:
- Trump extends U.S.-China tariff truce by 90 days, avoiding steep hikes ahead of holiday import surge
- US reciprocal tariff policy returns after months-long pause, businesses adapt to “new normal”
- After months of frontloading during the tariff pause, US imports set to plummet through rest of ’25
- Appeals court hears case questioning whether President Trump has sole authority to issue tariffs
- Small ocean carriers make tentative return to Red Sea transits, major lines still divert around Africa
U.S. Extends China Tariff Truce to Mid-November, Averting Steep Hikes
President Trump has extended the U.S.-China tariff truce by 90 days, delaying steep tariff hikes that were set to take effect this week. The move keeps U.S. duties on Chinese goods at 30% and Chinese tariffs on U.S. products at 10%, avoiding increases to 145% and 125% respectively that analysts said would have amounted to a near trade embargo. The extension, lasting until mid-November, gives both sides more time to negotiate ahead of a potential Trump–Xi meeting later this year, while helping U.S. retailers import goods at lower rates during the peak holiday shipping season. Trade experts see the decision as a positive step toward easing tensions, though demands for expanded Chinese purchases of U.S. soybeans and other goods remain unresolved.
US Reciprocal Tariff Policy Returns, Businesses Adapting to “New Normal”
The US reciprocal tariff policy, which was announced by President Donald Trump in April but was quickly paused while the White House negotiated with its global trading partners, officially took effect last Thursday, August 7. American retailers and manufacturers are adapting to the “new normal” of higher tariffs, according to multiple industry figures.
Trump signed an executive order on July 31, permanently implementing the country-specific tariffs. He has said the reciprocal tariff policy aims to equalize trade imbalances and to promote American manufacturing. While many US companies initially protested the policy, observers now see them grudgingly accepting it. But small businesses may have fewer options, industry leaders say.
“We have heard directly from small retailers who are concerned about their ability to stay in business in the face of these unsustainable tariff rates,” David French, EVP of government relations for the National Retail Federation (NRF), said in a statement released earlier this month.
Pressure may intensify as the US continues trade negotiations and conducts Section 232 investigations into pharmaceuticals and semiconductors. In the past week, Trump has proposed tariffs of 25% for pharmaceutical imports and 100% for semiconductors.
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In Response to Tariffs, US Imports Set to Plummet Through End of the Year
US import volumes are projected to plummet by roughly 20% year-over-year for the remainder of 2025, according to a report released last Friday by the NRF. The downturn is attributed to frontloading, while the reciprocal tariffs were paused, and how that activity created an early peak season.
The latest Global Port Tracker (GPT), published by the NRF in collaboration with Hackett Associates, indicates that the rush to avoid higher tariffs accelerated import demand. This follows a similar cargo surge in late 2024, when businesses rushed to move goods ahead of longshore labor strikes at US East and Gulf Coast ports. These events occurring in two consecutive years have created an unusually high baseline for comparison, the GPT says.
The traditional fall peak season is now expected to be unusually quiet. The GPT imports forecast calls for 1.83 million TEUs in September, down 19.4% from September 2024.
The October forecast is for 1.82 million TEUs, representing an 18.7% year-over-year decline. Then, the forecast for November is 1.71 million TEUs, a 20.8% decrease from November 2024 and is also the lowest monthly volume since April 2023.
Finally, the GPT forecasts 1.72 million TEUs for December, a 19.2% decrease from the same period last year.
According to the report, the impact of this year’s tariff-driven frontloading is already visible. While the first half of 2025 saw imports rise 3.6% compared to 2024, the NRF now forecasts that total imports for 2025 will fall to 24.1 million TEUs, a 5.6% drop from last year’s 25.5 million TEUs.
Court Case Questions Trump’s Authority to Issue Tariffs Without Congress
While American businesses adjust to the reality of new tariffs, the future of President Trump’s sweeping import duties rests with a federal appeals court.
On July 31, the same day Trump signed the executive order reinstating the reciprocal tariffs, the court’s 11-judge panel began mulling the question of whether the president overstepped his authority by imposing wide-ranging duties without explicit approval from Congress.
The hearing is part of an appeal by the Trump administration after a lower court, the US Court of International Trade, temporarily blocked the tariffs in the case V.O.S. Selections, Inc. v. Trump. The appeals court stayed the lower court’s order, allowing Trump’s tariffs to remain in place while litigation continues.
The legal battle concerns the 1977 International Emergency Economic Powers Act (IEEPA). The administration argues that the act, which allows the president to “regulate importation” during a national emergency, includes the power to set tariffs.
Assistant Attorney General Brett Shumate, representing the government, argued this authority was established in a 1975 case, US v. Yoshida International, Inc., that validated President Richard Nixon’s temporary tariffs in 1971. He claimed Congress didn’t need to specify “tariffs” in the IEEPA two years later because the power was already understood to reside with the president.
However, challengers — including 12 states and several businesses — contend the administration is claiming “unbounded authority” where none was granted.
“If the government is going to have that power, then Congress has to give it to them clearly,” attorney Neal Katya argued, representing five business plaintiffs.
The appeals court has not indicated when it will issue its decision.
Regional Shipping Lines Lead “Quiet Revival” in Red Sea Despite Dangers
While the world’s largest shipping lines continue to divert their fleets around Africa, a “quiet revival” is taking place in the Red Sea, according to reporting by Greg Knowler, a senior editor for the Journal of Commerce.
A growing number of smaller and regional carriers are steadily adding capacity through the dangerous Bab-el-Mandeb Strait, a new analysis from ocean visibility provider eeSea shows. This comes even after Houthi militants renewed deadly attacks in July, sinking two bulk carriers and killing three crew members. That incident put an end to any speculation that major carriers would return to the vital waterway this year.
Despite the risks, the number of unique services transiting the Red Sea has doubled from eight per month in late 2024 to 16 today. According to eeSea, planned capacity in the region has surged 54% year-to-date and is expected to peak at 104,000 TEUs in August.
Knowler says this tentative return to Red Sea transits is led by small carriers from China, the Middle East, and India. These companies are primarily serving the Asia-Middle East trade lane with small- to medium-sized vessels. Analysts believe their confidence may be boosted by the fact that their services typically do not make calls at Israeli ports.
Major carriers have rerouted the majority of their fleets around Africa’s Cape of Good Hope since late 2023, a situation known as the Red Sea Crisis. This diversion adds two weeks to transit times and has tied up an estimated 10% of global vessel capacity.
“We have a constant position here, which is that vessels will pass the Bab-al-Mandab Strait (only) when security conditions are met,” Ramon Fernandez, CFO of CMA CGM Group, said last week. “That means security for the crew, security for the vessel, and for the cargo.”
