Tariff Update: Where things are heading next

The buzz around tariffs has settled down over the last few weeks. Progress is being made in many areas, so the purpose of today’s post is to share an update and the latest details, in follow up to last month’s post.

Businesses navigating international supply chains still face a high level of uncertainty—but with tariff deals reached with the UK as well as a 90 day pause put on Chinese tariff negotiations, the logistics industry has a chance to catch its breath and level-set. But don’t pause too long, as commerce quickly resumes with China, we’re anticipating a sharp spike in demand for ocean capacity that will drive up ocean bookings and related freight rates within the next 30 days.

Legacy Supply Chain continues to closely monitor developments, focusing on the immediate realities, near-term consequences, and potential long-term outcomes. For companies reliant on global sourcing and logistics, understanding these dynamics and proactively planning for possible scenarios is more critical than ever. Here’s what you need to know about the current state of tariffs—and how to prepare for what’s next.

What’s happened since “Liberation Day” on April 2

Let’s take a quick glance back at what’s happened in the last 30 days:

Since mid-april, negotiations and threats of retaliation were numerous and varied between the US and its trading partners in Mexico, Canada, China, the UK and the European Union. The state of those negotiations were summarized in our last blog post.

Since then, two major things have happened:

• On May 8, the US and the UK reached a trade deal. A reciprocal tariff rate of 10% remains in effect as announced on Liberation Day. Specific deals for automotive, steel and aluminum products were also established and agreed to. (Read more)
• On May 12, the US and China agreed to a 90-day pause on implementing new tariff mandates, giving US and Chinese negotiators more time to iron out a more substantive agreement. For the 90-day de-escalation period, US tariffs on Chinese goods will remain at 30%, while China’s tariff rate on US goods will remain at 10%.

During the 40-day period from Liberation Day on April 2 until May 12, uncertainty caused importers, suppliers, and manufacturers to enact multiple contingency plans, including:

• Redirecting where goods were sourced from; relocating from China to other countries such as India
• Halting or pushing out ocean bookings, causing massive interruptions to shipping schedules
• Temporary postponement and reduction of production schedules in manufacturing overseas in order to identify relocation options and/or delay the shipping of finished goods

These reactions to the uncertain tariff negotiations caused significant disruption in the global flow of goods. As commerce resumes, shippers will look to correct the backlog of imports that currently exists. The result will be a demand spike in ocean capacity.

Where we stand as of today

In the short term, commerce and ocean crossings to bring Chinese imports to the US are quickly returning to normal levels. Many manufacturers and suppliers put a hold on outbound cargo pending negotiations, and that means there will now be a spike in demand for ocean capacity to bring those goods into the US.

“At Legacy, our Customs and Compliance team is already seeing a rapid increase in ocean rates, as well as requests for quotes from shippers looking to increase their ocean bookings immediately,” affirmed Aaron Zofkie, Vice President of Transportation at Legacy. There will be a cascading impact on port capacity throughout the US West Coast, and domestic transportation to inland distribution centers will also fill up quickly.

With the US coming off a two-year freight recession in the first quarter of 2025, excess domestic capacity was scaled back and removed from the market to right-size freight supply with waning demand. For this reason, there’s widespread belief that the spot market freight rates shippers were paying in June of 2024 will be much higher in June 2025.

In the long term, negotiations are ongoing between the US and China over the next 90 days to strike a trade deal on tariff rates going forward. There remains a significant level of uncertainty around the negotiations, especially since the 90-day pause period will end at a time when ocean freight is typically at its highest, in anticipation of the US Holiday Retail Season. Most importers stage their products and goods near US retail stores by Halloween, which means they must cross the ocean and clear customs by no later than mid-September, right when the 90-day period is slated to expire.

What shippers should watch for

These are the top 3 recommendations we’re making to shippers, in light of tariff volatility:

Quote and Book Ocean Freight Quickly. According to this Journal of Commerce article, ships are currently sailing 85-90% full already, so given the huge backlog, they will very quickly reach full capacity. Don’t get caught without a way to get your goods and products into the US.

Prepare for Continued Ocean Freight Volatility. Businesses should anticipate ongoing instability in steamship sailing schedules between now and peak import season in the fall of 2025, with carriers likely manipulating capacity and scrambling to offer new capacity. Businesses should monitor carrier announcements closely and maintain flexibility to speed up or slow down bookings in order to mitigate disruptions, manage transportation costs more effectively, and capture capacity exactly when you need it.

Closely Monitor Over the Road Capacity Nationwide as Carriers Rush to the Coasts. A surge in container volumes at West Coast ports is making it a hotspot for over-the-road (OTR) carriers seeking business. As trucks shift west to take advantage of this heightened port activity, other areas of the country may face tightening capacity and potential service disruptions.

Evaluate Sourcing Alternatives: To circumvent tariffs and reduce exposure with any single manufacturing source, companies should explore sourcing products from alternative regions, particularly leveraging agreements like the USMCA. Goods produced in Canada or Mexico currently enjoy tariff-free status, making these countries increasingly attractive as nearshoring options. Transitioning to new suppliers will require careful evaluation of their production capabilities, lead times, regulatory compliance, and logistics infrastructure to ensure smooth integration into existing supply chains.

Legacy’s Experts Can Help

If you need assistance, Legacy Supply Chain offers a variety of services and a wealth of experience that can inform your supply chain strategy.

• Customs & Compliance. Our in-house Customs Brokers offer specialized guidance on tariff implications, assist with accurate product classification (HTS codes), and advise on potential duty deferral opportunities.
• Transportation Advisory. Legacy acts as a trusted consultant, providing detailed guidance to help shippers navigate complex and evolving transportation issues effectively.

Here are some specific ways that Legacy Supply Chain can provide support for your business:

• In-Bond Transit from Mexico to Canada. Legacy has successfully managed in-bond shipments from Mexico to Canada, providing an alternative to traditional cross-border transit.
• Foreign Trade Zone (FTZ) Analysis. FTZ options may exist for importers seeking duty deferral, navigating complexities related to IEEPA and Section 232 tariffs.
• Product Classification Solutions. Legacy routinely conducts detailed HTS product classification analyses to ensure accurate compliance and cost management.
• International Transport Consultation. We continuously advise customers on tariff implications, specifically focusing on managing freight and import costs effectively.
• Domestic Transportation Capacity. As capacity becomes more and more volatile across the US and Canada, lane opportunities are becoming evident that can provide shippers with viable options to keep products moving domestically.
• Warehousing and Distribution. Legacy offers flexible short-term warehousing and distribution solutions to manage inventory strategically during times of tariff volatility.

Conclusion

It’s clear that the state of global shipping will remain volatile and unpredictable over the next 90-120 days. The most important thing is not to panic and act precipitously. Consider your options carefully and consult an expert like Legacy Supply Chain to provide critical expertise that can help you develop the right strategy for your business and your supply chain. To talk to one of our experts, contact us today at https://legacyscs.com/contact/ or email us at [email protected].

About Legacy Supply Chain

Legacy Supply Chain has been a trusted partner for businesses seeking greater control over their dynamic supply chains for nearly 40 years. With over 30 operations across the United States and Canada, Legacy offers tailored warehousing & distribution, eCommerce fulfillment, and transportation solutions, enabling businesses to deliver exceptional customer experiences.