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Air cargo volumes and capacity are set to rise in the coming days after the US and China agreed to a 90-day partial suspension of the trade war, which had seen tariffs between the two countries rise to more than 100% and duties added for e-commerce shipments.
After a weekend of talks, the two sides announced that tariffs imposed since 2 April, which amounted to 125% for imports into the two countries, would mostly be suspended, with a 10% rate remaining from each side. The duty paid for de minimis shipments - mostly e-commerce parcels - will also be reduced.
The US will also continue to apply the 20% tariff rate it introduced earlier in the year related to the fentanyl crisis.
This means US tariffs on Chinese imports will now stand at 30% while Beijing’s tariffs on goods from the US will stand at 10%.
Airfreight rate data provider TAC Index said that contacts suggested the temporary break could see companies rush to move goods from China to the US while the break remains in place.
The data provider added that airfreight rates had recovered slightly last week after a run of falls, perhaps a reflection of capacity being removed from the market.
”Sources said the recent stand-off on trade and very high tariff levels between the US and China had led to the cancellation of many block space agreements (BSAs) – though that had also been significantly offset by a sharp reduction in transpacific freighter capacity,” TAC said in its weekly market wrap-up.
“Following the subsequent announcement of a new US-China deal on trade, sources now expect both volume and capacity to ratchet up again in a race to restock empty shelves.”
A rush to move cargo wouldn’t be unprecedented. IATA suggested that a record March in terms of air cargo demand was fuelled by the front-loading of shipments.
However, reports suggest that inventories are well stocked as a result.
The two sides have vowed to continue talks during the 90-day suspension and US president Donald Trump has indicated that it is unlikely that tariffs would again rise to the levels seen in recent weeks.
Asked if tariffs would hit 145% again, the president responded “no” but added that they could still go “substantially higher”.
De minimis update
Also included in the tariff changes is a reduction in the de minimis duty to be paid for postal shipments from China and Hong Kong to 54% (or a flat fee of $100) from the previous level of 120%.
The removal of the de minimis exemption for packages from China worth less than $800 on 2 May had sparked a drop in capacity between the two countries last week as the packages now faced the 120% duty rate and extra customs scrutiny, although China’s Labour Day holiday would also have contributed to the capacity reduction.
The air cargo industry has been concerned that the tariff rates and extra customs scrutiny applied to e-commerce goods from China as a result of the removal of the exemption could cause a collapse in volumes and a capacity overshoot.
Non-postal de minimis shipments will pay the 30% rate applied to other imports.
Meanwhile, capacity on the transpacific trade has continued to recover after last week’s drop.
Figures from Rotate show that total cargo capacity between Asia Pacific and North America over the last 24 hours is up 26% compared with the same period a week ago.
Widebody freighter capacity is up 40% compared with last week.
