How Do Tariffs Impact Freight Shipping and Logistics?

The global shipping industry has seen some major changes in the last few years. One of these changes is the U.S. and Chinese shipping tariffs. These tariffs can have an impact on freight shipping and delivery times. Since this country relies on a great deal of China’s exported goods—including raw materials—the tariffs have had a greater effect than you might expect.

The U.S./China trade war and tariffs

At the height of the U.S./China trade war, the Trump administration imposed a number of new tariffs on Chinese exports. These higher costs are being passed on to businesses and consumers. CNBC reports:

“U.S. importers absorbed more than 90% of additional costs resulting from the 20% U.S. tariff on Chinese goods. That means U.S. importers pay around 18.5% more in price for a Chinese product subject to that 20% tariff rate, while Chinese exporters receive 1.5% less for the same product, according to the report.”

How much are these tariffs?

CNBC says:

“U.S. tariffs on Chinese goods stood at an average of 19.3% on a trade-weighted basis in early 2021, while Chinese tariffs on American products were about 20.7%, according to data compiled by think tank Peterson Institute for International Economics.”

Some have risen as high as 25 percent. Prior to 2018, U.S. tariffs were about 3 percent and Chinese tariffs were around 8 percent. That’s a significant added cost for businesses and consumers alike. If you’ve had sticker shock at the store lately, it’s likely that the company is passing at least part of the costs onto the consumer.

Ocean freight slowing down

It’s hard to escape the fact that cargo ships are queuing in ports, sometimes waiting weeks or months to be unloaded. Part of the reason has to do with the tariffs and trade war. While experts expected Chinese exports to slow down, the reverse has happened. The backup at ports has shown the clear impact tariffs have had on delivery times.

Shipping slow down and new trade destinations

Despite the long waits at ports, the Chinese economy is actually slowing down. There is less demand for Chinese exports, partially due to the U.S. and Chinese tariffs. One solution is to find new routes and trade destinations, which don’t include 20 to 25 percent tariffs.

Vietnam, Cambodia, Thailand and other Southeast Asian countries have seen an uptick in imports and exports. In fact, logistics companies had already been making the move due to rising costs of labor and goods. The tariffs were just one more reason to look elsewhere.

Ultimately, this should lower costs for shipping companies, businesses and consumers alike. With faster, more efficient and inexpensive shipping routes, China’s dominance over the market is likely to fall.

Now that you understand how U.S. and Chinese tariffs impact shipping and delivery times, let Double Tap Transportation LLC help get your goods where they need to go. Reach out to us today to discuss your shipping options, place an order or learn more about our services. We look forward to working with you.