Significant Decline in China-U.S. Trade Volumes: Kuehne + Nagel CEO Stefan Paul reported a substantial drop in volumes and bookings on the China-U.S. tradelane, attributing this to the hefty import tariffs imposed by the Trump administration. Source: The Loadstar
Complete Halt in Certain Supply Chain Activities: The tariffs have led to a complete stop in some supply chain activities, indicating a severe disruption in trade flows between China and the U.S.
Variability Across Different Sectors: The impact of the tariffs varies across different industry verticals, with some sectors experiencing more pronounced effects than others.
Contrasting Effects on Sea and Air Freight: There is a contrasting picture between sea and air freight, suggesting that the mode of transportation influences how the tariffs affect logistics operations.
Strategic Reassessment by Logistics Providers: The current trade environment is prompting logistics companies like Kuehne + Nagel to reassess their strategies and operations to navigate the challenges posed by the new tariffs.
Blank sailings surge.
Transpacific container shipping is experiencing a significant surge in blank sailings, primarily due to the ongoing U.S. tariff war. According to Sea-Intelligence, the Asia–North America East Coast route saw blanked capacity rise from 35% to 42% for the week starting May 5, 2025. Similarly, the West Coast route's blanked capacity increased from 13% to 28% for the week beginning April 28. These levels are typically observed during seasonal slowdowns like Chinese New Year or Golden Week, but the current spike is attributed to sudden demand drops and limited advance notice to shippers. The escalation in blank sailings reflects carriers' responses to reduced demand, as shippers pause or cancel shipments amid tariff uncertainties. This abrupt capacity reduction poses challenges for supply chain planning, with many cancellations announced on short notice. The situation underscores the volatility in the market and the need for shippers to stay informed about schedule changes. Source: Sea Intelligence
China-US Relations.
As of April 29, 2025, President Donald Trump has expressed optimism about the trajectory of U.S.-China trade relations. Despite the recent escalation in tariffs, where the U.S. imposed up to 145% on Chinese goods and China responded with 125% tariffs on American imports, Trump believes these measures will ultimately lead to a more favorable trade balance for the United States. He maintains that the tariffs are a strategic tool to pressure China into addressing longstanding trade imbalances and issues related to intellectual property rights.
Trump's administration continues to advocate for a "reciprocal trade" approach, aiming to ensure that U.S. exports receive the same treatment abroad as foreign goods do in the American market. While acknowledging short-term economic challenges, the President remains confident that these policies will strengthen the U.S. economy in the long run.
This stance is part of a broader "America First" economic policy that emphasizes domestic manufacturing and seeks to reduce reliance on foreign imports. The administration's approach has garnered both support and criticism, reflecting the complex dynamics of international trade and economic policy. Source: The Hill
McKinsey: Geopolitics and Trade Policy biggest economic risks.
McKinsey's March 2025 Economic Conditions Snapshot highlights a global economic landscape marked by increased uncertainty and cautious business sentiment.
Key insights include:
Geopolitical Instability and Trade Policy Changes: Both are now viewed as equally disruptive forces to the global economy, surpassing previous concerns over inflation and interest rates.
Cautious Business Sentiment: Executives express greater caution compared to the previous quarter, with a notable shift from optimism to pessimism regarding future economic conditions.
Recession Risks: A majority of executives anticipate a recession scenario driven by rising uncertainty and declining consumer sentiment.
Central Bank Actions: In response to economic challenges, Mexico and the Eurozone have implemented interest rate cuts to stimulate economic activity.
Diverging Regional Outlooks: While developed economies exhibit caution, emerging markets show varied responses, with some maintaining growth expectations despite global headwinds.
These insights underscore the complex and evolving economic environment businesses must navigate in 2025. McKinsey & Company
Market Adaptation: Canadian Bonded Storage.
U.S. importers are increasingly utilising Canadian bonded storage to defer tariff payments. Inquiries for bonded storage north of the border have surged four-fold recently, according to 18 Wheels Warehousing and Trucking, a Canada-based third-party logistics provider.
Key Points:
Bonded Storage Utilization: Importers are storing goods in Canadian bonded warehouses, allowing them to defer U.S. tariffs until the goods are withdrawn for U.S. consumption.
Tariff Deferral Strategy: This approach enables importers to manage cash flow by postponing tariff payments, which is particularly beneficial during periods of high tariff rates.
Increased Demand: The heightened demand for bonded storage reflects the urgency among importers to mitigate the financial impact of current trade policies.
This strategy is part of a broader trend where businesses are seeking ways to navigate the complexities of international trade and manage the financial implications of tariffs.
Auto Parts Tariffs eased to support U.S. Production.
On April 29, 2025, President Trump signed an executive order easing tariffs on imported auto parts, offering temporary relief to U.S. automakers facing increased production costs. While the 25% tariff on imported vehicles remains, the new policy prevents these tariffs from compounding with existing duties on materials like steel and aluminum. Domestic manufacturers assembling vehicles in the U.S. are granted a two-year reprieve on duties for imported parts, with reimbursements up to 3.75% of a vehicle’s retail price in the first year. This move aims to stimulate domestic production and encourage foreign automakers to establish manufacturing within the U.S. Industry leaders, including executives from GM, Ford, and Tesla, welcomed the announcement, though some cautioned that the industry needs stability and that significant shifts require time and investment. Source: The Loadstar
UPDATE: April 16th, 2025
For Australian businesses, tariff exposure is now a moving target - confidence in demand planning, landed cost forecasting, and network flexibility will be key. Here's the latest.
🇺🇸 U.S. Tariff Update
10% Baseline Tariff on Most Imports Effective April 5, the U.S. imposed a 10% tariff on imports from most countries, including allies like Australia. This move is part of President Trump's "reciprocal tariffs" policy, which aims to address trade imbalances and encourage domestic manufacturing. Source: DFAT.
145% Tariffs on Chinese Imports Tariffs on Chinese goods have escalated to an effective rate of 145%. This increase targets sectors such as electronics, pharmaceuticals, and automotive parts, intensifying the ongoing trade tensions between the U.S. and China.
Section 232 Investigation into Semiconductor Imports The U.S. Commerce Department has initiated a Section 232 investigation into semiconductor imports, citing national security concerns. This could lead to new tariffs, potentially starting at 25%, on semiconductors from countries like Taiwan, South Korea, Malaysia, Japan, and China. Source: Politico
Temporary Exemptions on Electronics While some electronics, including smartphones and laptops, were temporarily exempted from new tariffs, these exemptions are not permanent. The administration has indicated that additional duties may be imposed soon, affecting a broad range of consumer electronics.
Global Market Impact The sudden implementation of these tariffs has led to volatility in global financial markets, with concerns about potential recessions in countries heavily reliant on exports to the US. Source: ABC
🇨🇳 China’s Response to U.S. Tariff Hikes
China Raises Tariffs to 125% On Friday, China escalated the trade war by increasing tariffs on U.S. goods from 84% to 125%. This is a direct response to the U.S. imposing tariffs of up to 145% on Chinese imports. These duties took effect Saturday, signaling that tensions between the world’s two largest economies are far from cooling.
Impact on Global Markets The intensified trade conflict has rattled investor confidence. U.S. stock markets have shown volatility, and uncertainty is expected to linger as the business community weighs the long-term impact of prolonged tariff escalations.
Temporary “Liberation Day” Tariff Pause President Trump enacted a 90-day pause on his planned "Liberation Day" tariffs. This gesture was echoed by the EU, which agreed to a similar pause on retaliatory duties. While this creates a short-term diplomatic window, the broader conflict remains unresolved.
🇦🇺 Impact on Australian Trade
10% Tariff on Australian Exports Despite the 2005 U.S.-Australia Free Trade Agreement, Australian exports to the U.S. are now subject to a 10% tariff. This has raised concerns among Australian exporters about the competitiveness of their products in the US market. Source: DFAT
Challenges in Negotiations Australia's caretaker government faces difficulties in negotiating exemptions or adjustments to these tariffs, especially given the unpredictable nature of the current U.S. administration's trade policies. Source: The Guardian
Economic Uncertainty The imposition of tariffs has led to a decline in consumer confidence within Australia, with fears that prolonged trade tensions could negatively impact the country's economic growth. Source: Reuters
Strategic Responses Australian officials and business leaders are exploring diplomatic channels and leveraging personal relationships to address tariff issues. Notably, Australian golfer Greg Norman has offered to use his personal rapport with President Trump to facilitate discussions aimed at resolving trade disputes. Source: The Guardian
Increased Global Trade Uncertainty As China and the U.S. continue their tariff tit-for-tat, global supply chains face increased pressure. Australia, which trades heavily with both nations, could see ripple effects—especially in sectors like agriculture, resources, and high-tech components.
Potential Opportunities in Re-Routing Trade
As the U.S. and China look to other markets to source goods, Australia may benefit from diverted demand. For instance, China could increase imports from Australia in areas where U.S. goods become too expensive.
Downside Risk for Exporters However, the broader market volatility and economic slowdown triggered by the U.S.-China conflict could dampen global demand overall. This poses risks for Australian exporters, particularly those exposed to raw material and intermediate goods markets.
Need for Strategic Positioning With rising protectionism in the U.S., Australian companies may need to rethink supply chains and diversify trading partners. Trade agreements with Asia-Pacific nations and the EU could offer more stable alternatives in the current climate.
How tariffs are calculated:
When goods enter the United States, Customs and Border Protection (CBP) determines the amount of import duty (tariff) that must be paid. Tariffs are calculated based on three main factors:
1. Country of Origin
The country where the product was manufactured (not where it was shipped from) is what matters most.
Even if the goods are shipped from Australia, if they were made in China, the tariffs applicable to Chinese-origin goods apply
Example: If sneakers were made in China but sold and exported by a company in Australia, the U.S. still treats them as Chinese-origin goods for tariff purposes.
2. Harmonized Tariff Schedule (HTS Code)
Every imported product is classified with a specific HTS code.
This code determines the base duty rate (e.g., 5%, 10%, etc.).
You can search HTS codes on the HTS Search Tool.
3. Customs Value
The duty is calculated as a percentage of the declared customs value—usually the FOB (Free on Board) value of the goods.
This is the price paid to the supplier, excluding international shipping and insurance.
Example: Let’s say you import furniture from Australia that was made in China:
Customs Value: $10,000
HTS Duty Rate: 25% (due to Section 301 tariffs on Chinese goods)
Products originating from China may be subject to extra duties under Section 301 of the Trade Act—currently up to 25% on many items.
These apply regardless of where the goods are shipped from.
✅ Summary: Key Takeaways
The country of origin (where the product is made) determines the applicable tariffs, not the shipping country.
Goods manufactured in China will still incur China-specific tariffs, even if shipped from Australia, the EU, or anywhere else.
Tariffs are based on the HTS code and the declared customs value (typically FOB).
🔺 Where the "up to 145%" Comes From:
This high rate typically happens when multiple types of duties are combined on certain Chinese imports:
Base Tariff (from HTS code) – e.g. 5–10%
Section 301 Tariffs (China-specific) – up to 25%
Anti-Dumping Duties (ADD) – can range from 10% to 100%+
Countervailing Duties (CVD) – can add another 5% to 40%+
These cumulative duties can push total landed tariffs up to 145% or more in some cases — especially on high-scrutiny goods like steel, aluminum, or electronics.
⚠️ Important: Not All Goods Are Affected Equally
If you're importing, for example, furniture or clothing made in China, you're likely facing standard + Section 301 tariffs only. But if you’re importing solar panels, electronics, metal products, or industrial materials, you might trigger ADD/CVD investigations, which can bring huge extra charges.
Need help calculating your tariffs?
Whether you need to model costs, rethink routing, or adapt your sourcing strategy, our team is here to help. Get in Touch today.
UPDATE: April 3rd, 2025
What the New U.S. tariffs mean for APAC supply chains.
Today, U.S. President Donald Trump announced sweeping new tariffs on global imports, marking a significant shift in trade policy and injecting fresh uncertainty into supply chains worldwide. For APAC businesses, the challenge now is not just understanding what’s changed but navigating what comes next
US Import Tariffs: A Quick Overview
From 5 April 2025, the US will impose tariffs of 10% to 49% on nearly all imported goods.
A 25% tariff will apply to all foreign-made automobiles and auto parts.
Australia will face a 10% blanket tariff, with US officials citing long-standing biosecurity restrictions (specifically the ban on fresh American beef) as justification.
Other APAC nations hit hardest include:
Vietnam: 46%
China: 34%
Thailand: 36%
India: 26%
Taiwan: 32%
Japan: 24%
Bangladesh: 37%
Canada and Mexico were notably excluded from the announcement.
Sectors flagged for further scrutiny include agriculture, pharmaceuticals, and tech components.
De Minimis Trade Exemption Terminated
On April 2, 2025, U.S. President Donald Trump signed an executive order terminating the "de minimis" trade exemption for low-value shipments from China and Hong Kong. This exemption previously allowed packages valued at $800 or less to enter the United States duty-free and with minimal customs oversight. The new policy will take effect on May 2, 2025, at 12:01 a.m. ET.
Background on the De Minimis Exemption
The de minimis provision permitted low-value shipments to bypass import duties and extensive customs inspections, facilitating a surge in e-commerce imports. In the fiscal year 2024, circa 1.36 billion shipments utilised this exemption, more than doubling the total from four years prior.
Implications of the Policy Change
The revocation of the de minimis exemption is expected to increase customs workload and raise costs for smaller shipments. It will also significantly impact Chinese e-commerce platforms such as Shein and Temu, which have relied heavily on this provision. Critics of the exemption argued that it disadvantaged U.S. businesses by allowing foreign competitors to avoid tariffs and undercut prices.
Australia’s Position
Despite longstanding ties, Australia has not been exempted from these new tariffs. The 10% tariff will apply to around $23.9 billion in Australian exports to the US including key categories like commodities, pharmaceuticals, and meat.
Prime Minister Anthony Albanese called the move “totally unwarranted” and “not the act of a friend,” but confirmed Australia will not implement retaliatory tariffs. Instead, the government is pursuing dispute resolution under the AUSFTA.
While the US accounts for less than 5% of Australia’s total exports, the shift signals a broader move toward protectionism - one that APAC supply chains can’t ignore.
Steps to Take Now
In the short term, the new tariffs are expected to create disruption at the border and slow down supply chains. Taking proactive steps now can help minimise delays and cost blowouts.
Brief customs brokers: Ensure they’re across the latest tariff classifications and documentation requirements
Double-check documentation: Accuracy matters more than ever, especially for origin declarations and tariff codes
Build in buffer time: Allow extra lead time for US-bound shipments
Review your exposure: Understand your direct and indirect links to the US
Re-model landed costs: Reflect new tariff structures in pricing and budgeting
Check supplier concentration risk: Especially in newly affected countries
Stay proactive: Monitor policy shifts, negotiations, and potential exemptions closely
Strategic implications for APAC supply chains:
If you’ve already diversified away from China, you may still be exposed. Many businesses moved operations to Vietnam, Thailand, and Bangladesh post-COVID - countries now facing some of the highest U.S. tariff rates.
This reinforces a key point: diversification must go beyond geography. What’s needed is a more strategic, adaptable model.
Rethinking Diversification Strategy
The current trade environment requires a more nuanced approach. Leading supply chains are:
Balancing risk: Across countries, trade blocs, and tariff exposure
Building flexibility: Alternate routing, warehousing, and sourcing models
Factoring in geopolitics: It’s not just about cost. It’s about access, reliability, and resilience
Diversification can’t be static in the current environment. It needs to be dynamic, data-driven, and continuously reviewed.
What to watch for:
Retaliation and disruption risks: Some APAC governments are already exploring formal responses.
Exemptions and negotiations: Timelines are unclear, and outcomes uncertain.
Possible escalation: Additional tariffs on beef, pork, pharma and other goods have been flagged.
Need help assessing the impact or adapting your strategy?
Whether you need to model costs, rethink routing, or pressure-test your sourcing strategy, our team is here to help you take control. Get in Touch today.
UPDATE: February 7th, 2025
Today, U.S. President Donald Trump announced sweeping new tariffs on global imports, marking a significant shift in trade policy and injecting fresh uncertainty into supply chains worldwide. For APAC businesses, the challenge now is not just understanding what’s changed but navigating what comes next.
Key Changes in Trade Policy.
US Tariff Increases: Canada and Mexico face a 25% tariff on imports into the US, while Chinese goods are subject to an additional 10% tariff.
China’s Response: China has imposed tariffs ranging from 10-15% on key US exports, including crude oil, LNG, coal, and agricultural machinery.
Canada’s Response: Canada has introduced a 25% tariff on $155 billion of U.S. goods, with $30 billion taking effect immediately and the remaining $125 billion set to be enforced 21 days later.
Mexico’s Response: While Mexico’s tariffs have been postponed for now, retaliatory measures are likely should negotiations with the US not result in a resolution.
Postponements & Retaliation: The US has delayed Mexico’s tariffs by one month following discussions with President Claudia Sheinbaum. Similarly, Canada and the US have agreed to postpone their reciprocal tariffs for a month.
E-Commerce Impact: The removal of the Section 321 de minimis customs exemption means shipments under US$800, often e-commerce orders, will now be subject to tariffs.
US Refinery Costs: Tariffs on Canadian and Mexican oil imports may increase costs for US refineries, potentially benefiting European and Asian refiners.
Panama Canal Tensions: The US has raised concerns over Chinese influence in the Panama Canal, adding another layer of geopolitical uncertainty.
Despite these changes, trade among these economies is expected to continue, with businesses adjusting their supply chains accordingly.
What Australian Businesses Need to Know.
Although Australia is not directly affected in these tariff measures, there are several key considerations for APAC shippers:
Impact on Trade Partners: China is Australia’s largest trading partner, accounting for 29% of exports, while the US ranks third at 6.8%. Changes in their trade relationships may indirectly affect Australian supply chains.
Commodity Demand Uncertainty: If Chinese exports to the US decline, demand for raw materials could weaken, potentially affecting commodity prices and the Australian dollar (AUD). However, stimulus measures from China could offset some of these effects.
Market Volatility: Trade tensions can lead to fluctuations in global markets, impacting investor confidence and shipping rates.
Potential Trade Discrimination: The US is prioritising new trade agreements, which could give preferential treatment to some countries over others, affecting Australian export competitiveness.
Risk of Additional Tariffs: US trade representatives have flagged certain Australian trade barriers, including those on beef, pork, turkey, apples, and pears, as potential targets for future negotiations.
What’s Next?
For APAC shippers, staying informed and adaptable will be essential in the coming months. To help mitigate risk, we suggest:
Keeping an eye on China’s response
Adjusting sourcing strategies where needed
Planning ahead for potential tariff adjustments
While trade remains strong, shifting policies highlight the need for flexibility and proactive supply chain management. Want to know how these changes could impact your supply chain? Speak to your Explorate operator today to get expert insights and tailored solutions.
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