New Tariff Tactics?

In this week’s Roar: Elevated freight markets, exploiting trade deal rules, the new tariffs Trump is trying to implement, slow growth in services and manufacturing, and diesel prices are down (for now).

There is little new to report on the Iranian conflict, and the economic pain continues. As expected, the Strait of Hormuz closure is keeping freight markets elevated, with fuel costs and ocean freight rates both staying above seasonal lows despite soft demand. Asia-Europe container rates are about 8% above pre-crisis levels and around 15% higher than last year’s low, while trans-Pacific rates have surged 45% since the conflict began. Air freight pricing is about 30% above what it was when the war began, but capacity is returning.

Over $300 billion in goods bypass U.S. tariffs annually by getting rerouted through Southeast Asia and Mexico. This highlights weaknesses in enforcement, as firms do the best they can to exploit trade deal rules. And even though China’s direct exports to the U.S. have dropped, suspicious USMCA-bound shipments surged 75% last year, and this has led to calls for stricter rules of origin and potential changes to North American trade agreements.

With President Trump’s temporary tariffs expiring in July, his administration is racing to slap new import taxes through fast-tracked Section 301 trade investigations, targeting forced labor and industrial overcapacity in economies covering nearly all U.S. imports. Even though these tariffs are expected to be less volatile and have a stronger legal backbone than the ones the Supreme Court just struck down, importers are afraid of rising costs and renewed legal battles.

The U.S. war with Iran has driven up inflation and triggered the slowest three-month growth in services and manufacturing since early 2024, according to an S&P Global report. Rising energy prices and supply bottlenecks are weighing on business sentiment and output, especially in services. But AI-driven manufacturing investments and optimism around tariff-driven reshoring offer some hope.

Benchmark diesel prices have fallen for a third straight week, down nearly 30 cents per gallon. But this is while futures and wholesale prices are trending higher, which suggests the pullback may be short-lived. The oil markets are tight, and a fragile Middle East ceasefire, along with ongoing constraints at the Strait of Hormuz, could keep oil and diesel prices elevated through the year.

For the rest of the week’s top shipping news, check out the article highlights below.