Trump win and 10 pointers for container shipping in 2025

Donald Trump has won a second term in the White House with an economic policy pledging to revitalise American manufacturing and counter what the U.S. regards as China’s unfair trade practices.

"Ocean container shipping is a global industry feeding on international trade; so Trump’s strategy of higher import tariffs raises a number of key questions," says the latest update from Xeneta.

Here are the 10 questions that need close watch:

1. What is Trump proposing and why?
Trump has vowed tariffs of up to 20 percent on all imports into the U.S. and additional tariffs of 60 percent on goods from China. The U.S. already imposes tariffs in those ranges and higher on certain categories of goods, notably a 100 percent tariff rate on EVs aimed at protecting American manufacturers from what it deems to be China’s unfair trade practices.

"High tariffs were at the centre of Trump’s trade policy during his first term in office, but it should be noted this approach was continued by the Biden Administration."

2. What can we learn from Trump’s first term in office?
Back in 2018, Trump escalated the U.S.-China trade war through new import tariffs. Xeneta data shows this resulted in ocean container shipping freight rates spiking more than 70 percent.

"U.S. importers and exporters will be fearing more of the same this time around and higher tariffs will place upward pressure on ocean container shipping rates. But it would be unwise to assume an exact repeat of 2018, because there are key differences between then and now."

3. How will U.S. importers and exporters react?
The knee-jerk reaction from U.S. shippers will be to frontload imports before Trump is able to impose his new tariffs. If you have warehouse space and the goods to ship, frontloading imports is the simplest way to manage this risk in the short term, the update added.

4. Will frontloading be at the same level as 2018?
"There is likely to be even more frontloading of imports this time around compared to Trump’s first tariffs in 2018.

"In 2018, tariffs came in several rounds, each with specified goods to be included, so shippers had to wait for those lists to be published. There was then two months or more before the tariffs were implemented."

This time, shippers may be working to the worst-case scenario that all tariffs will be introduced immediately following Trump’s inauguration on January 20, meaning the window of opportunity is much shorter, the update added.

5. What are the risks of frontloading for shippers?
A sudden increase in demand on major trade lanes into the U.S. will place upward pressure on freight rates and available capacity on some trade lanes.

"Average spot rates from the Far East to the U.S. West Coast and U.S. East Coast have remained relatively flat in the weeks leading up to the U.S. election, down -3.5 percent and -2.5 percent, respectively since October 15. It may be a case of shippers crossing their fingers until the outcome of the election is known – but many will now take action and that could lead to less available capacity and increased cost."

6. What can shippers do to reduce risk?
Shippers must use data to monitor freight rate developments and benchmark their market position. "It is also important to monitor rates on different trade lanes, especially if a shipper is considering importing goods into the U.S. via different ports than they ordinarily would do."

7. The supply chain risks of a Trump presidency has been known for a long time – are shippers fully prepared?
2024 has been a brutal year for shippers and huge credit must go to stakeholders across ocean container shipping networks who have once again shown how resilient global supply chains can be, the update added.

"Shippers have been working pro-actively throughout 2024 to manage the impact of conflict in the Red Sea while also having one eye on threats such as port strikes on the U.S. East Coast and potential for another Trump Presidency. This has seen frontloading taking place throughout the year, with monthly container volumes entering the U.S. at an all-time high in August at 2.64 million TEU. This earlier frontloading may help to limit some of the impact of the Trump tariffs if shippers have already built some buffer in inventories."

8. What is the medium-term impact on rates?
Average spot rates are elevated, primarily due to the Red Sea conflict. The current average spot rates of $5,210 per FEU into the U.S. West Coast and $5,820 per FEU into the U.S. East Coast are 167 percent and 134 percent higher, respectively, than 12 months ago.

"If frontloading does lead to elevated spot rates into Q1 and Q2 next year, it could place upward pressure on the long-term market. This would have implications for many U.S. shippers because it would coincide with the tender season for new long-term contracts."

9. What is the longer-term impact on supply chains?
An escalating trade war could see some shippers shift supply chains and import goods into the U.S. on other trade lanes, the update added. "Firstly, they may open factories in other countries in the Far East, but this takes time and comes at a cost. Businesses will be reluctant to lose the competitive benefits gained through well-established manufacturing and trade infrastructure in China.

"It may be more likely that shippers import goods into the U.S. via Mexico. This trade route has already grown in prominence in 2024 with record volumes shipped from China to Mexico, suggesting it is increasingly being used as a backdoor into the U.S. Imports are up by 22.2 percent in Jan-Aug 2024 year-on-year, and the average spot rate is currently double up from half a year ago at $4,150 per FEU, following massive volatility that saw spot rates climb to $7,600 per FEU by mid-year."

10. What about the rest of the world?
Once the full details of Trump's tariff framework is known, it may well be the case that other nations and trading blocs, such as the EU, respond in a similar way to China during the first trade war by imposing tariffs of their own.

For that reason, it is important to monitor ocean container shipping data on backhaul trades because these could also be impacted if a trade war with the U.S. escalates at a more widespread global level, the update added.