Before his inauguration, President Donald Trump threatened to impose tariffs on several key international partners, which has many industries worried about potential repercussions on global trade dynamics. The tariff threats have been directed at politically (and geographically) near and far trade partners. While relations with China have been lukewarm at best in the last few years, the second Trump term might make them worse.
After hitting more than 100 vessels and sinking two ships in the Red Sea, the Houthis have announced an end to their attacks, a move that comes amid the ceasefire agreement between Hamas and Israel.
Continue reading to find out more about what is happening around the freight world.
Trump’s Tariffs Threaten Global Trade and Diplomacy
The president threatened a 25% tariff on imports from Canada and Mexico, citing concerns over illegal immigration and fentanyl trafficking. Canadian Prime Minister Justin Trudeau and Mexican government officials have indicated readiness to respond with counter tariffs, but they have also made it clear that they would rather collaborate to avoid a trade war.
Furthermore, in a bid to combat rising drug imports, President Trump has also proposed an additional 10% tariff on Chinese imports. The move has leaders reiterating their opposition to protectionism and emphasizing the lack of winners in trade conflicts. There have also been threats to the European Union because of the perceived trade imbalances and then more sanctions on Russia unless there is an end to the war in Ukraine.
There is a debate about the effectiveness of these tariff threats, especially considering how interdependent these economies are with the United States. However, what is certain is the growing strain on international trade relations, with nations considering protective measures while navigating the challenges of these potential tariffs.
Houthi Rebels Release Ship Crew and Halt Attacks
Houthi rebels in Yemen have freed the crew of the Galaxy Leader, a ship operated with a crew of 25 and with Israeli ownership ties, after holding the vessel for more than a year. They have also announced a pause in their attacks on ships transiting the Red Sea. This decision follows the Israel-Hamas ceasefire agreement, with Houthi leader Abdul Malik al-Houthi expressing solidarity with Gaza. However, the group has warned that attacks could resume if the ceasefire agreement collapses.
The halt in attacks is a welcome reprieve for international shippers, considering how much it disrupted trade between Asia and Europe. Although major shipping companies have welcomed the pause, security measures must be strengthened before normal operations resume. Meanwhile, in the U.S., President Trump reinstated the designation of the Houthis as a foreign terrorist organization, a decision reversed by President Joe Biden in 2021 to ease humanitarian aid to Yemen.
Shipbuilding Surges Despite Industry Challenges
Despite the present industry challenges, container ship orders have reached unprecedented levels. However, the demands were mainly fueled by the transition to alternative fuels and the replacement of aging vessels. By late 2024, global orders totaled 8.3 million twenty-foot equivalent units (TEUs), representing nearly 28% of the active fleet. Despite high new building costs and uncertain demand, carriers continue placing orders, supported by surplus cash reserves.
Major players like Evergreen, CMA CGM, and MSC are pursuing significant fleet expansions. Alternative fuel-powered vessels accounted for 69% of 2024 orders, with liquefied natural gas (LNG) and methanol being the leading choices. Ship deliveries are expected to peak between 2025 and 2029, with annual capacity additions averaging 1.9 million TEUs. Analysts have suggested that maintaining fleet balance will require steady new orders and enhanced scrapping rates. As the industry adapts to fuel regulations and operational demands, the push for fleet renewal is expected to remain strong for years.
Southern California Ports Stand Firm on Green Goals Amid Policy Uncertainty
Following President Trump’s inauguration and a slew of executive orders, there is fear that many environmental policies might be affected. However, ports like Los Angeles and Long Beach have reiterated their commitment to maintaining their environmental programs, even if federal policies shift under the Trump administration. Over the past two decades, these ports have significantly cut emissions while managing record container volumes.
Long Beach reports reductions of 92% in diesel particulate matter, 71% in nitrogen oxide, 98% in sulfur oxide, and 17% in greenhouse gases. Los Angeles reports similar achievements, including a 24% cut in greenhouse gases. In 2024, container traffic hit record levels, with Long Beach handling 9.6 million TEUs and Los Angeles processing 10.3 million TEUs. This demonstrates the ports’ ability to balance environmental goals with commercial growth. Port leaders have vowed to defend and expand these programs to maintain their position as global trade leaders while addressing environmental concerns.
US Shippers Accelerate Imports Amid Tariff and Supply Chain Concerns
U.S. shippers are fast-tracking imports, focusing on goods from China. The trend stems from uncertainty surrounding Trump’s tariff policies, including the possibility of new import taxes on Canada, Mexico, and China. A CNBC survey revealed that 78% of shipping clients requested accelerated freight timelines driven by tariff hikes and port congestion concerns.
Companies are diversifying suppliers and shifting manufacturing to countries like Vietnam, Cambodia, India, and Malaysia. Infrastructure materials for construction projects were prioritized to avoid delays tied to tariff increases or logistical bottlenecks. Survey respondents expect freight rates to rise in early 2025, reflecting the heightened activity and strategic shifts in response to ongoing trade and supply chain uncertainties.
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