Yesterday President Trump’s ‘Liberation Day’ was based on the simple theory that in the eyes of the US administration if a country places 100% tariffs on US exports, the US would return the terms.
Therefore the new reciprocal tariffs range from 10% to nearly 50% depending on the country.
This is not so simple for global manufacturers, importers and exporters. It creates an unstable trading platform.
The 10% baseline is imposed on all countries (no country has been exempted even the Heard and McDonald Islands close to the Antartic, which are home to penguins and seals but no humans 🤨)
President Trump intends that by increasing the cost of imported products, Americans will shift toward domestically produced goods – supporting local businesses and stimulating US domestic economic activity.
However, the overall impact of tariffs depends on how much of this cost increase is passed along to domestic consumers and producers.
The expectation is that businesses will raise prices, reduce shipments and cut investments, meaning that the burden of tariffs will fall on domestic consumers and firms rather than foreign exporters.
Tariffs are paid by US importers not foreign countries or suppliers.
In an additional blow to exporters President Trump signed an executive order on Wednesday eliminating a shipping workaround for low-cost products from China and Hong Kong. This is effective from 2 May.
The provision, known as the de minimis exception, has been used by many e-commerce companies to send goods valued at or under $800 to the United States from China and Hong Kong without having to pay taxes on them.
This affects billions of goods sold by retailers like Shein and Temu, increasing the cost of these products to US consumers. It will affect $23-$46 billion worth of Chinese small parcel exports.
How US tariffs affect ecommerce
For ecommerce businesses, this policy translates directly into increased operational costs. Brands must decide between absorbing tariffs to maintain pricing stability or passing these costs onto consumers, risking reduced sales. Industries heavily reliant on imports, particularly fashion and apparel sourced from China and Vietnam, are facing severe impacts.
When do they start
The 10% tariffs begin on 5 April and higher duties for certain nations start on 9 April.
A 25 percent duty applies to all cars assembled outside the United States, this took effect at 12:01 a.m. 3 April. The tariff will also apply to imported auto parts. Germany, Europe’s biggest economy, is particularly vulnerable as automobiles are its biggest export.
Chinese tariffs and what they mean for manufacturers
President Trump has imposed tariffs on Chinese goods of 54 percent — this is a heavy burden and may make companies to look elsewhere for suppliers.
Looking at the wide range of tariff rates Asia, Malaysia, the Philippines and Singapore have a significant advantage over Vietnam, Cambodia and India. South American countries, such as Brazil and Argentina, also look more attractive now.
The 46 percent tariffs on Vietnam mean that Nike and Adidas shoes will get more expensive. About a third of U.S. footwear imports were sourced from Vietnam last year, making the country the largest footwear exporter to the United States. Nike produces about half its footwear from Vietnam.
In the UK, manufacturers sourcing components from the US or exporting products to the US will be affected. Supply chains could be disrupted with re-routing, putting pressure on shipping capacity and transit times.
What do the US tariffs this mean for freight
The tariffs increase the overall landed cost of importing goods, but we are not expecting a short-term spike in air or sea freight rates. Demand remains slow and once the tariff implications become clearer – shippers will begin to diversify supply chains across regions.
Sea Freight – Average spot rates from the Far East increased 8% into the US East Coast and 15% into the US West Coast on 1 April, however they are down 43% and 49% since 1 January respectively.
Air Freight – A slight increase on rates from China and Europe to the US at the end of March may have been pre-emptive, and it is more likely air freight rates will decrease with higher priced goods and lower consumer demand. Air freight capacity is due increase in the coming weeks as the airlines start their summer schedules – this will also reduce rates.
Air cargo spot rates currently stand at USD 4.16 per kg from Shanghai to US, down from the peak season high of USD 5.75 in the week ending 10 November. Spot rates from Western Europe to the US stand at USD 2.16 per kg, down from the peak season high of USD 3.51 in the week ending 15 December.
Amongst forwarders there is a feeling we could also see lower demand for US exports if there is growing anti-US sentiment across consumers in regions hit by the tariffs. It is possible that consumer sentiment has the potential to be even more powerful than tariffs.
What next and how to mitigate
- Adapt your supply chain – sourcing from other countries gives you options, be less reliant on one geography, supplier or port of entry.
As global freight forwarders we can provide information to help you investigate other countries, in Matt Smiths role at Export Champion he is engaged with the Department for Business and Trade on global trade opportunities and can advise to help you make informed decisions.
- Understand Tariffs, Rules of Origin, Customs formalities and Shipping terms – higher tariffs can also mean more complex customs procedures (no more easy de minimis exemptions for affected goods) and potential shipping delays.
We know that running your business is your main focus, you may have time to follow all the policy changes and announcements and apply this to your forecasting. But if you don’t, using a logistics partner will help to navigate this landscape.
As freight forwarders we are up to date with regulations and compliance to ensure our customers goods are shipped without hold ups and we can advise our clients on the routes and rates to suit their supply chain.
- Stock management – effective stock management relies on smart routing, flexible warehousing arrangements and intelligent technology.
Our Canary 7 warehouse management system contains a customer portal where you can view dashboards, query orders and inventory, track batches, raise orders, purchase orders, advance shipping notices and generate custom reports. Integrating with all major trading platforms and marketplaces our fulfilment solutions support every size of business — from dynamic startups to multinational enterprises.
We’re more than happy to show you around the portal so please contact us for a demo.
What next
At TPS we are having more conversations with clients about reliability and transparency than we are about price.
It’s not necessarily about the cheapest quote, more about ensuring goods arrive on time and on budget without holdups.
This is where experienced freight forwarders can mitigate risks, they have the right contacts to utilise viable routes, both now and looking ahead to 6 months or a years’ time.
At TPS we have over 20 years of experience working in the volatile world of freight, and are able to help our clients to successfully navigate their logistics.
Speak to us about routes, rates and options for your supply chain.
The US tariffs will be in effect until President Trump determines in his view, the threat posed by the trade deficit and underlying nonreciprocal treatment is either satisfied, resolved or mitigated.
Tariff Terms – Under the IEEPA Order* invoked by Trump , he can increase or decrease tariffs at any time.
Still on the table is a proposal by President Trump to charge substantial fees for Chinese built and Chinese operated vessels to enter US ports. Under this proposal, vessels owned by Chinese maritime transport operators would pay a port entrance fee of up to $1 million each time, and other operators using Chinese-built ships could be charged as much as $1.5 million. This has the potential to increase freight costs and disrupt global supply chains. We are watching developments.
* President Trump is invoking his authority under the International Emergency Economic Powers Act of 1977 (IEEPA) to address the national emergency posed by the large and persistent trade deficit that is driven by the absence of reciprocity in US trade relationships and other harmful policies like currency manipulation and exorbitant value-added taxes (VAT) perpetuated by other countries.
In summary – these moves set a precedent where major shifts in trade policy can be made rapidly, with little consultation, and large global impact.
New tariffs for select countries
| Country | New tariff |
Share of U.S. imports |
Trade balance |
| E.U. | +20% | 18.5% | –$241 bil. |
| China | +34% | 13.4% | –$292 bil. |
| Japan | +24% | 4.5% | –$69 bil. |
| Vietnam | +46% | 4.2% | –$123 bil. |
| South Korea | +26% | 4.0% | –$66 bil. |
| Taiwan | +32% | 3.6% | –$74 bil. |
| India | +27% | 2.7% | –$46 bil. |
| Switzerland | +32% | 1.9% | –$39 bil. |
| Thailand | +37% | 1.9% | –$46 bil. |
| Malaysia | +24% | 1.6% | –$25 bil. |
| Indonesia | +32% | <1% | –$18 bil. |
| Israel | +17% | <1% | –$8 bil. |
| South Africa | +31% | <1% | –$9 bil. |
| Philippines | +18% | <1% | –$5 bil. |
| Cambodia | +49% | <1% | –$12 bil. |
| Bangladesh | +37% | <1% | –$6 bil. |
| Iraq | +39% | <1% | –$6 bil. |
| Norway | +16% | <1% | –$2 bil. |
| Venezuela | +15% | <1% | –$2 bil. |
| Nigeria | +14% | <1% | –$2 bil. |
| Guyana | +38% | <1% | –$4 bil. |
| Pakistan | +30% | <1% | –$3 bil. |
| Nicaragua | +19% | <1% | –$2 bil. |
| Jordan | +20% | <1% | –$1 bil. |
| Sri Lanka | +44% | <1% | –$3 bil. |
| Algeria | +30% | <1% | –$1 bil. |
| Kazakhstan | +27% | <1% | –$1 bil. |
| Angola | +32% | <1% | –$1 bil. |
| Libya | +31% | <1% | –$907 mil. |
| Tunisia | +28% | <1% | –$610 mil. |
| Cote d’Ivoire | +21% | <1% | –$427 mil. |
| Serbia | +38% | <1% | –$615 mil. |
| Laos | +48% | <1% | –$759 mil. |
| Madagascar | +47% | <1% | –$678 mil. |
| Myanmar | +45% | <1% | –$581 mil. |
| Botswana | +38% | <1% | –$320 mil. |
| Democratic Republic of the Congo | +11% | <1% | +$112 mil. |
| Namibia | +21% | <1% | –$142 mil. |
| Fiji | +32% | <1% | –$179 mil. |
| Cameroon | +12% | <1% | –$57 mil. |
| Liechtenstein | +37% | <1% | –$175 mil. |
| Brunei | +24% | <1% | –$121 mil. |
| Lesotho | +50% | <1% | –$234 mil. |
| Mauritius | +40% | <1% | –$187 mil. |
| Mozambique | +16% | <1% | –$67 mil. |
| Bosnia and Herzegovina | +36% | <1% | –$122 mil. |
| North Macedonia | +33% | <1% | –$112 mil. |
| Zambia | +17% | <1% | –$61 mil. |
| Moldova | +31% | <1% | –$81 mil. |
| Equatorial Guinea | +13% | <1% | –$33 mil. |
| Chad | +13% | <1% | –$22 mil. |
| Zimbabwe | +18% | <1% | –$24 mil. |
| Reunion | +37% | <1% | –$32 mil. |
| Malawi | +18% | <1% | –$18 mil. |
| Vanuatu | +23% | <1% | –$9 mil. |
| Syria | +41% | <1% | –$8 mil. |
| Saint Pierre and Miquelon | +50% | <1% | –$3 mil. |
| Nauru | +30% | <1% | –$1 mil. |
| Norfolk Island | +29% | <1% | –$111243 |
| Falkland Islands | +42% | <1% | — |
Sources: White House, Observatory of Economic Complexity