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Yahoo
2 days ago
- Business
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China's Exports Surge as Global Trump Tariffs Take Effect
Four months after President Donald Trump declared the United States 'liberated' from pervasive global trade imbalances by a new tariff regime, a revamped set of duties on the country's most prominent trade partners has gone into effect. Thursday saw dozens of nations integral to the fashion supply chain hit with steep, double-digit duties. The European Union's 27 member countries now face 15-percent tariffs on U.S.-bound exports, while Cambodia, Indonesia, Malaysia, Thailand and Pakistan were all hit with 19-percent tariffs and Bangladesh and Vietnam saw their duty rates set at 20 percent. More from Sourcing Journal Tariffs Could Deliver 'Crippling Blow' to India's Fashion Producers US Ambassador Calls Panama Ports Owner 'A Bad Operator' as Cosco Rumors Ramp Up Maersk Lifts 2025 Outlook as Global Container Market Defies Tariff Turbulence Earlier this week, the president threatened to elevate tariffs on India, already set at 25 percent, to 50 percent due to the country's continued purchase of Russian oil. He slapped Brazil with an analogous sky-high rate for pursuing criminal charges against its former president, a Trump ally. But one key U.S. trading partner—and the historic object of Trump's most fervent ire—faces a separate deadline. The three-month bilateral tariff truce between the U.S. and China expires Tuesday, and state officials on both sides have been fervently negotiating with the aim of brokering a deal before the 55-percent tariffs on Chinese shipments kick in. Whether the pause is extended (as Commerce Secretary Howard Lutnick said Thursday is likely) or another resolution is reached, importers have been clamoring to ensure that their China-originating goods are loaded onto vessels bound for U.S. shores before the pause is due to expire. Chinese exports grew 7.2 percent year over year to $321.8 billion in July in a sign of strength for the market as shippers rush product out of the country ahead of the looming negotiating deadline. The country's outbound shipments heavily outperformed the 5.4-percent jump calculated by a Reuters poll of economists, and represented an acceleration over export totals in May (4.8 percent) and June (5.8 percent). The ongoing trade war between the trans-Pacific powerhouses has resulted in a collapse in goods sent directly from China to the U.S., with exports falling 21.7 percent in July, according to data from the General Administration of Customs. But July figures from the National Retail Federation's Global Port Tracker still indicate some semblance of a pull-forward, with major U.S. ports expecting to pull in 2.1 percent more 20-foot equivalent units (TEUs) than the year prior—the most containers entering the country since May 2022. American companies that are still importing cargo from China via ocean or air are likely looking to get out in front of a potential increase in price—again. Both the U.S. and China engaged in talks in Stockholm to prevent tariffs from returning to the elevated levels they reached in April and May. The U.S. had hit Chinese goods with tariffs as high as 145 percent, with China retaliating with an 85 percent duty before the countries agreed in May to mutually reduce their tariffs for 90 days. When including a 20 percent punitive duty for fentanyl trafficking, U.S. tariffs on Chinese exports currently stand at 55 percent. The deadline for the countries to negotiate a new trade deal is Aug. 12. If a deal is not made, the tariffs before the May truce would go back into effect, though administration officials have been hinting that an extension of the deal is imminent. Though the tenuous nature of the relationship has knocked down export numbers to the U.S., China has been able to more than make up for the gap elsewhere. The country's shipments to the 10 countries comprising the Association of Southeast Asian Nations (ASEAN) increased 16.7 percent year over year. This includes markets like Vietnam, Indonesia, Malaysia and Thailand. China has increasingly relied on third countries such as those in ASEAN to circumvent tariff barriers and for the manufacturing of final products or components. The White House has explicitly targeted Vietnam and Thailand as countries that are participating in this transshipment process, with the U.S. hitting the former with a 40 percent tariff for goods transshipped into the U.S. from China. Outbound shipments to the European Union increased by 9.2 percent in July, while exports to Latin America ticked up 7.7 percent. Africa had the largest increase in shipments on the receiving end at 42.4 percent. Maersk CEO Vincent Clerc said in a second-quarter earnings call that the strength of Chinese exports to the rest of the non-U.S. world will dictate the wider growth of the container market. 'On the back of the industrial successes that they're having and the overcapacity that there is in China, this could actually carry stronger market growth than anticipated for a few years,' said Clerc. China's imports, meanwhile, rose by 4.1 percent year over year last month to $22.3 billion, representing the sharpest gain since July 2024. The numbers defied expectations of a 1 percent decline in the month, and build on a 1.1 percent gain in June. The strong import month points to improved domestic demand as Beijing has placed a stronger focus on stimulating consumer spending. As the reality of the tariff landscape settled in on Thursday, experts weighed in about the potential impacts to shoppers and brands in the U.S. In an interview with CNBC, J.P. Morgan global market strategist Meera Pandit said, 'In aggregate, we're expecting that around 60 percent of the overall cost of tariffs gets passed on to the consumer.' Brands and retailers will face about 40 percent of the tariff burden, she estimated, 'but certainly it will be carrying the load on both sides, and have an economic impact when we think about the consumer and also profitability.' Earlier this week, J.P. Morgan released reporting saying that 'inflation questions are heating up.' Thus far, much of the cost of tariffs has been absorbed throughout the supply chain, with about 40 percent reaching consumers (much lower than the price hikes seen during Trump's first term when he levied Section 301 duties on China). However, that's expected to change. 'Part of that has been thanks to inventories built up by front-loading, but that cushion can only go so far,' analysts wrote. 'We are starting to see goods inflation climbing again, with the potential to push overall inflation above 3 percent by year-end,' the report said. Meanwhile, Ralph Lauren held its quarterly earnings call, with CEO Patrice Louvet saying that while consumer trends remained consistent with previous quarters, the company is taking a 'more cautious' view of the second half of the year. 'The big unknown sitting here today is the price sensitivity and how the consumer reacts to the broader pricing environment and how sensitive that consumer is,' he added. The heritage New York brand this spring said it planned to hike up pricese in the fall as a means of offsetting the duty impacts. The company's stock price took a 7-percent hit on Thursday. 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Yahoo
31-07-2025
- Business
- Yahoo
Trump Issues Executive Order Ending De Minimis Exemption
President Donald Trump on Wednesday signed an executive order 'closing the catastrophic loophole' known as the de minimis trade exemption to small commercial shipments from across the globe, building upon a ban issued on China-originating shipments in May. Effective Aug. 29, shipments worth $800 or less making their way into the United States through channels other than the international postal network will be subject to 'all applicable duties,' the White House wrote in a memo. More from Sourcing Journal Trump Slaps India, a 'Friend' to the US, With 25% Tariffs Tariffs Hurt Footwear, Apparel Growth, Says Moody's Trump Administration's DOJ Primed to Tackle Tariff Evasion With New Unit Small parcels shipped through the international postal system will instead see duties assessed through one of two methodologies. Most packages will pay ad valorem duties equal to the tariff rates imposed under Trump's International Emergency Economic Powers Act (IEEPA) tariffs. Meanwhile, some packages will be subject to specific duties ranging from $80-$200 per item, depending on the effective IEEPA rate of the country of origin. This methodology for determining tariffs will only be available for six months, after which shipments must comply with the ad valorem model. Trump said the action will put an end' to the 'big scam' perpetuated by Section 321, which has allowed large volumes of foreign-made goods (to the tune of 1.36 billion shipments in 2024) into the country duty free. Cauterizing the fatal wound to de minimis, the president's Big Beautiful Bill, signed into law last month, will permanently repeal the statutory basis for the trade provision globally beginning on July 1, 2027. This week's move represents a logical next step for the administration after it closed the de minimis exemption to shipments from China more than two months ago, imperiling the business models of fast fashion titan Shein and global e-commerce marketplace Temu and cutting off shoppers' access to impossibly cheap wares. The change has impacted global shippers like UPS, which this week released second-quarter insights revealing a sharp contraction in parcel shipping, especially for smaller packages. In an earnings call Tuesday, CEO Carol Tomé said trade policy shifts had prompted a 34.8-percent volume decline in packages traveling from China to the U.S. between May and June. Apparel imports from China fell to a 22-year low in May, with the country's share of American apparel sourcing to dropping below 10 percent for the first time in decades following the administration's de minimis announcement on May 2. Shoppers and businesses reliant on the duty-free exemption are lamenting its demise—and even taking the president to court over it. But the National Council of Textile Organizations (NCTO), which represents U.S. textile and apparel manufacturers, has been a longtime proponent of de minimis reform due to a perspective that the deluge of low-value imports is undercutting American makers. The group's president and CEO, Kim Glas, commended Trump for leveraging his presidential authority on the matter. 'For eight years, NCTO has led critical efforts to close the de minimis backdoor pipeline for cheap, subsidized, and often illegal, toxic and unethical imports—half of which are estimated to be textiles and apparel,' she said, placing the estimate at 4 million packages per day. 'The de minimis mechanism has functioned as a black box for low-cost, subsidized, and unethical Chinese imports and undermined the competitiveness of the U.S. textile industry—a key contributor to the workforce and the U.S. economy,' she added. According to Glas, Wednesday's executive order 'restores fairness for U.S. manufacturers, closes a major gateway for illegal and toxic goods, and lays the groundwork for reinvestment and job creation here at home.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Fibre2Fashion
17-07-2025
- Business
- Fibre2Fashion
High tariffs cut value of US RMG imports from China in May by 52% YoY
High tariffs reduced the value of US apparel imports from China in May this year by 52 per cent year on year (YoY), data from the US International Trade Commission (USITC) reveal. China's market share in US apparel imports in May also dropped to 9.9 per cent, a new low in decades; it was 19.9 per cent in May 2024. High tariffs cut US apparel imports value from China in May by 52 per cent YoY, USITC data show. China's market share in US apparel imports in May also dropped to 9.9 per cent, a new low in decades. Due to reciprocal tariffs, the average tariff rate for US apparel imports grew to 23.8 per cent in May, up several points from the already record-setting 20.8 per cent seen in April, a US academic said. The May trade insights, compiled by University of Delaware professor of fashion and apparel studies Sheng Lu using USITC data, revealed that tariff rates on fashion products (especially steep duties on China-originating goods) ballooned beyond levels seen in the modern era. As a result of the Trump administration's reciprocal tariff regime, the average tariff rate for US apparel imports grew to 23.8 per cent in May this year, up several points from the already record-setting 20.8 per cent seen in April, and substantially higher than the 13.9 per cent average rate in May 2024, and even the 14.7 per cent rate of January 2025, before the president's second term began, he wrote on his website. While the overall value of US apparel imports decreased by 7 per cent YoY, import duties grew by almost 60 per cent during the same duration. 'In May, I think most of the [average apparel tariff] increase was because of China. And for the rest of the world, they were charged a 10 per cent universal tariff rate. Some products, especially those from Asia, were able to enter [the country] in May before the new tariff rate hit,' Lu said. Across the board, all countries paid more duties on apparel in May than they did in previous months due to the universal baseline tariff. Vietnam's average apparel import duty rate reached 25.9 per cent, up from 20.5 per cent in April, while Bangladesh saw a similar percentage jump from 17.8 per cent to 21.1 per cent month on month (MoM). India's average clothing tariff rate climbed from 15.8 per cent to 20.1 per cent, while Cambodia's increased from 19.7 per cent to 24.6 per cent. Mexico, however, saw its average import duties paid on apparel products decrease from 2.2 per cent in April to 1.4 per cent in May — nearly the same rate it paid a year ago. But the country's apparel import values jumped considerably YoY, by 12.2 per cent. Mexico's apparel imports are covered by the US-Mexico-Canada Agreement (USMCA), giving them duty-free access. However, the country still only accounted for 4.6 per cent of US apparel sourcing in May this year. 'The signal is very clear—the Trump administration not only wants to decouple from China, but it wants Asian countries to decouple their supply chains from China,' Lu noted. But the US administration's target of encouraging Asian nations to abandon China as a partner 'does not appear to be realistic, at least in the near to medium term,' with so much dependence on the country for inputs, he added. Fibre2Fashion News Desk (DS)
Yahoo
23-04-2025
- Business
- Yahoo
Air cargo shippers opt for short-term contracts as tariffs escalate
This story was originally published on Supply Chain Dive. To receive daily news and insights, subscribe to our free daily Supply Chain Dive newsletter. Shippers and freight forwarders are stalling on making longer-term commitments on air cargo capacity as international trade tensions heat up, according to an April 3 Xeneta report. Seventy-nine percent of shipper contracts negotiated in Q1 were short-term agreements of three months or fewer, up nearly 20 percentage points year over year, Xeneta said. Forwarders are opting to keep about 45% of volumes on the spot market. 'With the growth of rates slowing overall, we'd normally expect to see shippers making longer capacity commitments to achieve more competitive rates, but, right now, this is clearly a gamble few shippers are ready to take – and this is before we're even seeing tariffs impacting volumes,' said Niall van de Wouw, Xeneta's chief airfreight officer. President Donald Trump's tariff-heavy trade strategy is sending shocks throughout supply chains, leading to volatility in the air cargo market, especially for shipments between China and the U.S. Earlier this month, the U.S. hiked reciprocal tariffs on imports from China to 125%, pushing the potential duty burden on imports from the country to as much as 245%, per the White House. China countered with a tariff hike to 125% on U.S. imports, further escalating tensions. In such a turbulent environment, even if capacity agreements have escape clauses, it is risky for shippers and freight forwarders to commit to a fixed rate for a year, according to van de Wouw 'If they agree a plan for the year now, it could turn out to be much costlier in the longer-term,' he said. March by the numbers 5% YoY percentage increase in global air cargo volume $4.17 The average spot rate per kilogram from Northeast Asia to North America, up 9% YoY 60% The global dynamic load factor, which measures the volume and weight of cargo flown, as well as available capacity The planned reinstatement of a ban on the de minimis exemption for imports from China and Hong Kong in May is also roiling the air cargo market. E-commerce shipments from China to the U.S., many of which rely on the provision, make up roughly half of the trade lane's available cargo capacity and 6% of global air freight demand, Xeneta reported. Any disruption to that demand will free up a sizeable share of cargo capacity, which would impact other parts of the market. Xeneta reported that the U.S.' temporary lifting of its de minimis ban on China-originating shipments spurred a recovery in Transpacific e-commerce demand in March, but that is likely to change once the ban returns next month. Still, March marked the third consecutive month of subdued single-digit global air cargo demand growth. 'Clearly, everyone will be waiting to see how the removal of the de minimis threshold and all the global tariffs already announced and those still to come will impact trade, as well as how quickly there will be less demand and, consequently, less airfreight,' van de Wouw said. 'It's all expectations right now, but we must expect the situation will get worse before it gets better.' Recommended Reading Trade tensions prompt air cargo market uncertainty Sign in to access your portfolio
Yahoo
10-04-2025
- Business
- Yahoo
Trump Drives Another Nail Into De Minimis
President Donald Trump's latest trade action may be the death knell for the de minimis trade exception. After banning China's use of the duty-free import tool (which applies to shipments worth $800 or less) last week, the president effectively tripled the tariffs that China-originating parcels will face as they enter the U.S. More from Sourcing Journal Tariffs Giving Shoppers the Yips, ReturnPro Found US Trade Czar Grilled By Congress as Trump Moves Forward With Triple-Digit China Tariffs De Minimis Ban Alters Fate of 1.4 Billion Packages Annually Small shipments that would have once qualified for de minimis that are sent through the international postal network were slated to be subject to a duty rate of either 30 percent of their value or $25 per parcel—a fee that would rise to $50 after June 1. Now, those same shipments will face levies worth 90 percent of their value or $75 (which will rise to $150 after June 1). That spells trouble for giants like Shein and Temu, whose low-value products will now become exponentially more costly to American consumers. With the move, he aimed to hit back at the steep retaliatory duties China levied against the U.S. The president also said the tariff increase would ensure that China would not be able to circumvent the executive order or undermine the de minimis ban, which takes effect on May 2. U.S. Trade Representative (USTR) Ambassador Jamieson Greer explained the decision to lawmakers at a Ways and Means Committee hearing on the 'Trump Administration's 2025 Trade Policy Agenda' on Wednesday, saying, 'What we saw were foreign companies abusing the system and taking advantage of it and building a commercial…case for their entire business on it. And that ended up undermining a lot of a lot of retailers here in the United States.' Greer stated that the administration believes 'it's important to make sure that that tool is used for its original purpose, and not for… other countries to avoid duty payments or things like that.' News of the decision was naturally eclipsed by the spectacle of Washington and Beijing trading tariffs throughout the week. As it stands, U.S. goods will face 84-percent duties when imported into China, and Chinese goods will face tariffs worth 104 percent when they enter the U.S.
