Trump’s New Tariff Plan Could Spell Another Surge in Container Prices
Much has been made about additional imports tariffs floated by former President Donald Trump ahead of the 2024 presidential election.
If implemented, such a plan would impose duties of up to 20 percent on all imports and another round of 60-percent to 100-percent tariffs on China-made goods, creating some concern among analysts that container prices could be thrown for a loop.
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Ahead of the first batch of tariffs imposed on China-made goods in July 2018, the Xeneta Shipping Index indicated that average spot freight rates out of China to the U.S. West Coast as of June 29 were $1,340 per 40-foot container. That number climbed all the way to $2,692 per container on Nov. 1, a 100-percent increase in the period. Numbers did tail off by the end of the year, but were $1,679 per container by Jan. 2, 2019—still a 25-percent jump in container prices.
Trump stated during Tuesday night’s debate with Vice President Kamala Harris that his newest round of proposed import tariffs would not result in increased prices for consumers. But companies paying higher freight costs could still consider price increases to recoup potential margin hits.
“When ocean container shipping markets increase, that cost gets passed down the line and ultimately it is the end-consumer who pays the price,” said Xeneta’s chief analyst Peter Sand in a Tuesday blog post. “It could be through increased cost of goods on the shelves or a limited choice in the products available.”
Sand warned that the latest proposals from the Republican presidential candidate “will simply be a case of history repeating.”
Trade groups like the National Retail Federation and the American Apparel and Footwear Association have been staunchly against the tariffs, including Trump’s original duties, those that were maintained during Joe Biden’s presidency, or Trump’s proposals if he were to win the election in November.
Concerns about higher prices ahead of the election could result in another pulling forward of goods if shippers wanted to avoid the potential implementation of tariffs.
“If we see a Trump victory in November—or a high likelihood of a Trump victory in the period prior to the election—we could well be seeing a new import boom in container volumes into the U.S., as importers (who certainly do know how tariffs affect their business) will be scrambling to import as much as possible before any new Trump tariffs,” said Lars Jensen, CEO of Vespucci Maritime in an August LinkedIn post. “This could well set the stage for a new demand-driven spike in freight rates on U.S. imports from November.”