A 28 May decision by the U.S. Court of International Trade (CIT), which challenged the legal basis of President Donald Trump’s tariffs, as well as the Trump administration’s appeal of that decision, has major implications for U.S. importers and shipping sector stakeholders, Clark Hill Senior Attorney Kelsey Christensen told SeafoodSource.
The immediate consideration for shippers, Christensen said, is whether they need to be rushing imports into the U.S. at the moment.
Christensen said that while the answer to the question depends on a specific company’s supply chain, she generally wouldn’t advise rushing.
“If companies have the next 10 days to two weeks that they can take to assess” the situation, Christensen said, that would be ideal, though she acknowledged that “that’s a long time in a lot of supply chains.”
“I think we’re going to get a whole lot more certainty pretty quickly,” she explained.
Though Christensen advises to wait and see how the situation plays out, there has nevertheless been a “cargo rush following the lowering of U.S.-China tariffs," according to Xeneta Senior Shipping Analyst Emily Stausbøll, explaining that the rush "combined with fear and uncertainty in the industry" is driving up prices and import levels.
Maritime research and consulting firm Drewry, via its World Container Index, confirmed that rates for freight between Shanghai and Los Angeles, California, U.S.A., had jumped 17 percent in the past week to USD 3,738 (EUR 3,284) per 40-foot equivalent unit (FEU) and 38 percent since 8 May.
Spot rates, or the current price quoted for shipping cargo, to New York City have also risen 14 percent in the last week and 42 percent since 8 May, the firm said.
Stausbøll said that carriers have been increasing their surcharges to capitalize on the tariff pause's window of opportunity for shippers.
Most tellingly, Stausbøll said that she had already seen general rate increases (GRIs) hitting USD 7,000 (EUR 6,158) per FEU into the East Coast of the U.S. for 1 June.
“These GRIs may not stick, but [they give] a clear indication of carrier intentions” to capitalize on moments of opportunity, Stausbøll said.
Even if Trump's tariffs are deemed to have no legal standing, Trump has “other levers to pull to achieve the same outcome as the sweeping tariffs,” according to Stausbøll.
One such avenue was the Trump administration’s proposal – on which it has since backtracked – to charge port fees on China-affiliated ships. These types of avenues Trump can pursue may confuse the shipping sector even more than tariffs, as businesses would have to navigate “a raft of surcharges and levies, whether that is port fees or a new tariff regime imposed on a product-by-product basis,” Stausbøll said.
Another avenue Trump could take would be to use the Forced Labor Act to similarly place duties on foreign countries' goods, Christensen told SeafoodSource.
“The U.S. government maintains a list of key industries that it assesses for unfair labor and forced labor practices, and I know that the seafood industry is often one that is in there,” she said. “If the administration loses this tariff tool from its toolbox, they can focus their efforts on other tools that they’ll [still] have.”
Overall, instead of the industry gaining clarity, the outcome of the CIT decision could could “signal the beginning of the next era of confusion in global supply chains,” Xeneta Director of Commercial Partners and External Communications Philip Hennessey said.
