Supply chains are bracing for further disruption as the United States temporarily suspended planned tariffs on several countries while escalating its trade conflict with China. Tariffs on Chinese imports have now risen to 145%, representing a significant escalation in the ongoing trade war between the world's two largest trading partners.
The White House increased tariffs on Chinese imports after Beijing retaliated with an 84% tariff, later raised to 125%.
Meanwhile, the U.S. announced a 90-day pause on reciprocal tariffs for countries facing rates higher than the baseline 10% set earlier this month, including Vietnam (45%), Thailand (36%), Taiwan (32%), South Korea (25%), Japan (24%), and the European Union member states (20%).
The U.S. has already earlier implemented a 25% tariff on automobiles, which took effect last week, with a similar tariff on automobile parts set to begin in May. Canada and Mexico are also subject to tariffs on goods that fall outside the scope of the Trump-led US- Mexico- Canada Agreement (USMCA), which replaced the North America Free Trade Agreement in 2020.
It is also set to terminate its "de minimis" exemption for imports from China and Hong Kong on May 2, 2025, ending duty-free entry for packages valued under US$800, which has fueled much of the air cargo market's growth over the past years.
The "de minimis" rule triggered the explosion of affordable goods being shipped out of China to the U.S., creating a competitive advantage for these low-value shipments. The U.S. Customs and Border Protection (CBP) reported processing over 1.3 billion de minimis shipments in 2024, with the Chinese commerce companies Temu and Shein accounting for more than 30% of these shipments.
It stated that "nearly half" of all de minimis shipments also likely originated from China.
The air cargo market is closely observing the constantly evolving tariff landscape, as frequent changes create challenges for companies trying to determine their response strategies.
The TAC Index stated that the ongoing fluctuations in tariffs are complicating companies' ability to plan for the future.
"All of this has also made it more difficult for market participants – including airlines, forwarders, and shippers – to plan ahead with confidence. That is also before taking into account the potential responses of other trading partners – and all the uncertainties about that," it said.
Freightos cautioned that the tariffs are causing instability: "In addition to roiling markets and increasing the likelihood of recession, the plan is also leading to significant uncertainty and confusion for supply chains in terms of understanding the moves as protectionist or aimed at removing foreign trade barriers, as long-term or temporary."
Meanwhile, in retaliation to the United States' latest tariff increase, China imposed a new tariff, raising taxes on American goods to 125%. Chinese President Xi Jinping, addressing President Donald Trump for the first time, stated that China does not fear economic suppression but emphasized that "there are no winners in a tariff war."
