U.S.-China Tariffs Slash Ocean Bookings 60%: What’s Next?

Key Takeaways

• Ocean container bookings from China to the U.S. fell 60% in three weeks since tariffs began.
• U.S. imports from China, valued at $600 billion annually, fuel $2 trillion in retail sales.
• Tariffs could lead to mass shortages by summer 2025, impacting apparel, toys, and furniture.
• Ocean carriers canceled 25% of sailings, risking a bullwhip effect if tariffs are relaxed.
• Surge pricing may hit ocean freight rates, potentially reaching $20,000 per container.
• Air freight rates could exceed $10/kilo if ocean freight shifts to air transport.
• Flexport aims to thrive in the crisis by preserving cash and taking market share.
• Businesses face uncertainty, balancing autarky risks with hopes for normalized trade relations.

Tariffs Trigger a Steep Decline in U.S.-China Trade

• Ocean container bookings from China to the U.S. dropped over 60% industry-wide in the three weeks following the April 2, 2025, tariff implementation, as reported by Ryan Petersen, CEO of Flexport.
• The U.S. imports $600 billion in goods from China yearly, with 95% arriving via ocean freight, contributing to $2 trillion in retail sales across categories like apparel, toys, and furniture.
• Canceled sailings have already begun, with ocean carriers cutting 25% of their China-U.S. routes in the last two weeks, redirecting ships to other trade lanes.
• Major freight alliances, like ONE, suspended routes to ports such as Vancouver and Tacoma, disrupting months of planned vessel strings, according to a CNBC report from April 17, 2025.

Economic Fallout: A $2 Trillion Risk Looms

• Petersen warns that sustained tariffs could slash $2 trillion in U.S. economic activity, potentially bankrupting tens of thousands of businesses and triggering millions of layoffs.
• The trade war’s impact extends beyond direct importers, affecting ports, trucking, rail, and warehouse economics, as fewer containers disrupt the entire supply chain.
• Apparel, accessories, wool, fabrics, and textiles saw bookings plummet over 50%, hitting key Chinese export categories already strained by the 145% tariff rate.
• U.S. consumers may face higher prices, with some companies halting textile imports entirely, potentially leaving shelves empty by June 2025, per Jiangsu Green Willow Textile’s director.

Supply Chain Chaos: Shortages and Surge Pricing Ahead

• Goods paying the new duties began arriving on April 21, 2025, but a decline in freight arrivals will intensify in the coming weeks, leading to mass shortages by summer.
• Companies stockpiled inventory before the tariffs, delaying immediate shortages, but Petersen urges a swift policy reversal to avoid a deeper crisis.

This delay in shortages provides a narrow window for action. If the Trump administration doesn’t adjust tariffs soon, the ripple effects could be catastrophic.

• A bullwhip scenario looms: if tariffs ease, canceled orders may flood back, but repositioned vessels and canceled services could leave the ocean network unable to handle the surge.
• Ocean freight rates might soar to $20,000 per container—levels seen during the 2021-22 peak—while air freight could exceed $10/kilo if just 1% of ocean volume shifts to air.

Navigating Uncertainty: Logistics in Crisis Mode

• Petersen describes the logistics sector as caught between planning for autarky—an isolated U.S. economy—and hoping for a return to normal trade relations with China.
• Ocean carriers are already adapting, with routes like ONE’s Qingdao-to-Tacoma service suspended indefinitely, impacting U.S. ports like Wilmington, North Carolina.
• Flexport, Petersen’s company, is leveraging its crisis management expertise, using rapid Observe-Orient-Decide-Act loops to outpace competitors in responding to disruptions.
• Their strategy focuses on preserving cash, making decisive moves, capturing market share, and positioning themselves as the “hero of the crisis” for struggling customers.

A Call for Action: Can Trump Avert Disaster?

• On April 22, 2025, Trump hinted at lowering tariffs from the 145% rate, offering hope to businesses desperate to avoid collapse amid canceled orders and rising costs.
• Petersen stresses the urgency: a quick policy shift could prevent surge pricing and logistics bottlenecks reminiscent of the COVID-era supply chain crisis.
• U.S. importers, already battered by the trade war, face uncertainty as China’s exports to the U.S. are projected to plunge 80% over two years, per Capital Economics.
• The broader global trade landscape is also strained, with China relying on just 10% of U.S. imports, while U.S. buyers struggle to find alternative suppliers for many goods.

The U.S.-China tariffs have slashed ocean bookings by 60%, risking a $2 trillion economic hit and widespread shortages. Swift policy adjustments are critical to avert supply chain chaos and surging freight costs.