Airfreight Market Volatility Amid U.S.-China Trade Policy Changes

Airfreight Market Volatility Amid U.S.-China Trade Policy Changes

In anticipation of the U.S. implementing a 34% tariff on Chinese imports starting April 9, 2025, the airfreight shipping sector is experiencing notable shifts:

Surge in Air Cargo Rates and Volumes:

• To avoid the impending tariffs, there has been a rush to ship goods before the April 9 deadline. This urgency has led to increased air cargo volumes and a subsequent rise in spot rates. For instance, spot rates from China to the U.S. jumped 12% week-on-week to $4.53 per kg in late March.
• This surge is expected to be temporary, with volumes likely to ease after the April 9 cutoff.

Impact of De Minimis Provision Removal:

• The U.S. government’s decision to eliminate the de minimis exemption for low-value Chinese imports, effective May 2, is expected to significantly affect e-commerce shipments. This exemption previously allowed packages valued under $800 to enter the U.S. duty-free.
• Its removal is anticipated to have a longer-term dampening effect on air cargo demand, particularly impacting e-commerce platforms that relied on this provision.

Market Reactions and Industry Adjustments:

• Major airfreight carriers have experienced sharp declines in share prices due to concerns over reduced shipment volumes following these policy changes.
• Shippers are exploring adjustments to their operations, such as altering supply chains and considering alternative shipping methods, to mitigate the impact of increased tariffs and the removal of the de minimis exemption.
• These changes come amid broader U.S.-China trade tensions, with China announcing retaliatory tariffs on U.S. goods, further heightening market uncertainty.

Overall, the airfreight industry is bracing for a period of volatility as stakeholders navigate the short-term urgency of new tariffs and the longer-term implications of regulatory changes.

 Sources:

• https://apnews.com/article/43df1673ac9508ae58fc76150101d686
• https://www.wsj.com/livecoverage/stock-market-tariffs-trade-war-04-04-2025/card/tariff-move-to-come-as-seismic-shock-to-airfreight-market-eVpH1lkw8PiNqjaVpZAq
• https://www.investopedia.com/china-retaliates-with-34-percent-tariff-on-us-imports-11709024

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