Logistics is experiencing major whiplash around the globe as we enter a new chapter of the U.S. trade war. First, volume increased with the surge of front-loaded goods late last year. Then, it fell off immediately following the retaliatory tariff announcement in April. Now, activity is sputtering back to life with the news that tariffs on goods from China have plummeted from 145 percent to 30 percent.
What happens next is an unknown. With the potential for tariffs to spike again or disappear altogether, the anticipated rush to deliver goods before that deadline is a gamble, according to Bruna Angel, principal analyst for fibers at market insights firm Wood MacKenzie. “You’re risking paying through the nose when you might not have had to or not having product on the shelves to sell,” she said. “You’re forced to make a choice [without knowing] what the situation is going to be.”
Below, Angel shares how the Trump tariffs are shifting the peak logistics season, shipping routes and production strategies—and not just for retailers doing business in the U.S. market.
Q: How did the industry deal with not one but two temporary tariff situations with the 90-day stay on retaliatory tariffs running through early July and the reduction in tariffs on goods from China initially set to expire in early August?
BA: With the warehousing that has been going on in the U.S. over the last quarter of ’24 and in the first quarter of ’25, the cost of warehousing really increased because everybody wanted to front load as much as possible.
Unless there is a sign from the U.S. administration that there’s a potential for extending the tariff reductions, I think you’re going to see the supply chain into the U.S. really paying excessive freight—and even air freight—to get product in. We have quite a bit of back to school product still to get into the U.S. And by the time we get to July, you’re going to be wanting to bring in as much of the Thanksgiving and Christmas stuff as you can. And it doesn’t mean ordering, it means trying to get it in. So, I think we are going to see prices in Asia really jump, and once they come into the U.S., they’re going to be very high prices because of the freight costs that are jumping as well.
Q: What’s the impact of the rollercoaster of tariff rates on goods from China over just a matter of weeks?
BA: You have risk of delivery because everybody is now trying to get containers into the U.S., yet because of the big tariffs on China previously, the big shipping lines had rescheduled and had blanked out some sailings. So, they were not calling in China so much. They were calling more into the Southeast Asia ports. Now they have to reschedule back, because that big swing in demand is back to China. All of that costs. They had already started to reduce a little bit of the availability of labor and truck logistics at ports. That all has to come back. So that’s one cost.
The other cost is, do you stay in Vietnam now that you’ve switched a little bit of your supply chain to Vietnam, or do you go back to China? Whichever one of those two you do, you are going to have the additional cost of having switched to Vietnam [and] everybody’s going to try and get other stuff shipped before the end of the 90 days. So rather than you having a peak season that would go from May to September, the peak season finishes in July.
Q: How is a massive change in demand like this going to affect the rest of the world?
BA: The EU is going to be affected a little bit just because the shipping lines are going to move some of their scheduling away from the EU into the U.S. It doesn’t mean that the EU is not going to receive it. It’s just that they’re going to have to pay more to ensure that they have the volume of shipping that they require.
The shipping lines have space because they blanked a lot of sailings. We think about it as if we could switch a light on and off. If you have docked a ship, you have to get all your mariners on. You have to ensure that your ship is ready. You then have to make sure that you have berths at the ports. A week after the April 9 huge China tariffs, some of the shipping lines said, ‘Okay, we are going to reduce by 20 percent even by 30 percent the shipping out of China.’ That means that over the next three to four months, that’s how far out you schedule.
And for the East Coast of the U.S., we have the issue with the Red Sea, where supposedly we have a cease fire with the Houthis. But as of [mid-May], I still haven’t seen a commitment by the big shipping lines to start moving through the Red Sea. And remember, moving through the Cape of Good Hope in South Africa makes your shipping to Europe very long, longer than shipping to the U.S. East Coast. So, Europe is at a disadvantage from Asia at this moment, and I see their prices for shipping going up more than to the U.S. probably.
Q: Is it possible for retailers to rethink supply chains to mitigate any of this impact?
BA: Remember, we were going to have some strikes in the eastern port so there was a bit of forward purchasing for that, and then for the tariffs, forward purchasing for that. If [sourcing managers] find that they don’t have to be just-in-time because we’ve lived with warehousing probably since the end of Q3, you might find that some of the just-in-time risk is thought to be not worth it in the U.S., they’ll warehouse [instead].
Just-in-time is not something that only the U.S. supply chains are going to pull back from a little bit. Until you have certainty of U.S. trade policy, I think the risk of just-in-time is too big for anybody. For example, what Europe is going to see now is probably they are not going to be receiving the shipping scheduling that they thought they were over the next quarter, because it’s all going to be moving into the U.S. and the U.S. supply chain is going to be willing to pay the prices. just-in-time only works if you have certainty [and] you reduce your risk. [Just-in-time] is not going to disappear, but you are going to move a little bit away from it, just like we moved or supply chains moved away from China.
Q: Do you anticipate more certainty as we reach these tariff milestones this summer?
BA: My big issue is when the pause ends, what happens? Are we going to continue with the 10 percent tariffs, or are we going back to the reciprocal tariffs or are we going back to pre-April 2? It’s three different worlds—except that you don’t return to pre-April 2, because of the break in trust and the big risk factors now that supply chains are dealing with.
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