What is the 90 day tariff pause? 

So, you probably already know what a tariff is, but incase you’re new to the shipping world, here’s a brief description of a typical tariff. A tariff is essentially a duty tax that’s applied to goods imported from another county, these taxes vary by country and product type. Since Trump’s administration, we’ve seen all kinds of tariffs being imposed on our U.S. trade partners. On April 2nd, this year President Trump announced reciprocal tariffs and then on April 9th announced a 90 day tariff pause for certain countries, excluding China, who were seeing the highest tariffs at a rate of up to 145% on all Chinese exports to the United States.

It wasn’t until May 12th, that U.S. and Chinese officials came to an agreement to roll back the most recent tariffs and apply a 90 day truce on their trade war. These tariffs have been reduced from up to 145% to a still high 30% until the 90 day term is up in mid August.

So, what does this 90 day pause mean? 

In short, the 90 day pause, is a 3 month tariff holiday, to try and help ease trade tensions and it opens up the floor for negotiations and will hopefully prevent further economic damage from the escalating tariff battle. This pause is providing shippers with a temporary short window of relief and predictability in taxes and fees.

Fingers crossed, a better longer term deal can be negotiated in this time, if no deal is reached then the tariffs could snap back to the insanely high rates we’ve seen in recent months.

How is the 90 day tariff pause effecting shippers, including domestic? 🛳✈️🚚🚝

The high tariffs we’ve seen recently almost debilitated trade, particularly between the two biggest economies in the world, U.S.A and China. Businesses on both sides were effected, U.S. importers began scaling back to avoid the extortionate tariffs, which meant Chinese factories and manufacturers saw overseas orders decrease dramatically. Meaning, we also saw a dramatic decrease in trade volumes at US ports, falling around 60%. But now, the worry is the rebound effect in this window of paused tariffs, and the rapid increase in demand, which is expected to be around 150%. So, we’re preparing to see:

• Increased prices
• Logistics bottlenecks
• Congestion

There’s a lot of misunderstandings, from shippers assuming only international imports and exports are being effected by the tariff activity. However, logistics across the board is being impacted in one way or another. Let’s take a deeper dive into the knock-on effects we’re expecting…

1.Increased Prices 💵

The sudden increase in cargo, means transportation companies of all kinds will be effected by capacity constraints. This means, all countries will be more negatively affected by increased costs, of shipping to and around the U.S.A, not just China. This is because with climbing demand, freight rates respond accordingly. We’ve seen spot container rates from Asia to the U.S. surge between 16-19% since the tariff pause, and we’re anticipating a ripple effect across domestic trucking with the imported freight competing for truck capacity, spot truckload rates will likely rise too.

2.Logistics Bottleneck ✋

With people and companies ordering so much cargo from overseas in a short timeframe, domestic transportation companies will feel the squeeze. Warehouses and trucks will quickly become inundated with goods that will be fast tracked to beat the tariff deadline. The result? Logistics bottlenecks.

One huge drawback we predict will be equipment and infrastructure. Waves of containers arriving at port yards and distribution centers will cause a struggle for trucks to keep up pace. Warehouses in close proximity to ports will fill, which will force shippers to seek alternative shipping methods, i.e. transloading to avoid turning away inventory. But, we will most likely also see a shortage of chassis, in times where distribution centers are full, freight will often end up sitting on chassis for an extended period of time. However, with a shortage of chassis, containers cannot be moved off the docks quickly, compounding delays. We will see a domino effect happen: port congestion, chassis shortage, limited warehouse space = delays across entire operations.

3.Congestion 🚚🚚🚚

This tariff pause, is leading American companies to replenish stock at a rapid speed. For example, just days after Trump announced the temporary pause on tariffs, Alibaba.com reported that they saw a surge in order volume, product inquiries and inquiries from U.S. businesses were up 40% during the week of May 12th. With many companies treating the relief window as a crucial time to stock up on inventory. Now, imagine this, companies are rush buying a ton of products from overseas. All of those products need to be transported to and across the U.S. by some means.

What does this surge look like for ground transportation?

International containers flooding into our ports, as a result port operations and inland distribution networks are bracing for an early whirlwind summer. Higher port volumes, translate to more demand for trucking and rail to haul goods inland. Expect longer transit times, due to major congestion at ports, warehouses, and on our roads.

How Can PEI Help? 😊

We exceed in expedited, emergency, and out of the ordinary shipments. So in turbulent times like these, we thrive! If you’re for example an importer/exporter and need your freight moving domestically and quickly, we’re your people. Beating these tariffs and shipping freight in this short timeframe, requires speed. Our operations teams are focusing on agility, to scale up while still being able to offer flexible solutions. Although moving freight isn’t the easiest feat right now, the savings of transporting goods during this tariff pause could save you a lot of money. It’s a crucial time to take advantage of this break, replenish stock, move critical goods, and build inventory.

Need help with any of your specialized shipments during these turbulent times?

Today can be the day you stop struggling with your logistics problems.

At PEI we’re experts in dealing with specialized freight and can handle yours with any custom requirements.