President Trump’s ‘Liberation Day’ Tariffs Increased Average U.S. Tariff Rate to 24%

What’s more, carrier exits reached a 12-month high, while new carrier authorities jumped by 48% month-over-month and 30% year-over-year.

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The ongoing down freight market combined with tariff volatility continues to drive high market turnover, according to ITS Logistics’ May ITS Supply Chain Report. What’s more, carrier exits reached a 12-month high, while new carrier authorities jumped by 48% month-over-month and 30% year-over-year.

“Spring is typically when the spot market sees more carriers join, and last month was no exception – despite larger freight market trends,” says Josh Allen, chief commercial officer at ITS Logistics. “Rates saw marginal movement for both reefer and dry vans, reflecting soft demand in key seasonal industries like food service and home construction. However, a forthcoming import surge from China could put upward pressure on capacity — at least in the short term.”

Key takeaways:

·        Due to the United States agreeing to lower the base level of tariffs on most Chinese goods to 30% from 145%, while China confirmed it would cut its levies on U.S. products to 10% from 125%, importers are urgently shipping cargo across the Pacific during the three-month trade war lull. As a result, ocean carriers are expected to raise that rate by as much as 50% by next week, leading to major carriers quoting rates for sailings through the end of May at about $900 per TEU higher than last week.

·        Despite surging container rates, an anticipated rebound of Chinese import volume is expected to hit U.S. ports in the next 4-6 weeks, quickly tightening drayage capacity and eventually making its way downstream into OTR. Tariff uncertainty is also driving a surge in demand for bonded warehousing, leading to significant disruption in inland truck routes and changes in current freight flows.

·        In April, the U.S. economy faced significant turbulence due to new trade policies, market volatility, and shifting inflation dynamics, all influenced by the current geopolitical factors affecting the overall supply chain; however, domestic demand continues to show resilience for now. U.S. consumer behavior reflected a complex interplay of economic pressures, policy shifts, and evolving preferences, leaving the Federal Reserve with the challenge of balancing the need to control inflation against the risks of slowing economic growth.

  • President Trump’s “Liberation Day” tariffs increased the average U.S. tariff rate to 24%, sparking market sell-offs and concerns about long-term economic impacts.
  • Economists caution that recent tariff implementation may exert upward pressure on prices in the coming months.
  • The Federal Reserve faces a challenging environment, balancing the need to control inflation with the risks of slowing economic growth.
  • The temporary 90-day tariff reduction agreement with China provided short-term market relief, boosting stocks of companies. However, the long-term effectiveness remains uncertain.

“Even though the total number of trucks active in the U.S. increased slightly in March, fleets with 300-1,000 trucks and those with over 5,000 saw month-over-month declines of 1% and 3.3%, respectively,” adds Allen. “Carrier exits came in at 7,474, the highest in 12 months and 26% higher than the prior month. Extreme turnover like we’re seeing in today’s capacity market creates an environment ripe for fraud, which is already a huge issue for shippers today who don’t have an established network of trusted logistics providers.”

 

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