China-US Trade Surge Expected as Tariffs Slash 91%

Following the implementation of the outcomes from the Geneva trade talks between China and the United States on Wednesday, May 14, many industry experts anticipate a significant increase in trade between the two countries over the next 90 days. As negotiators work towards further progress, businesses are expected to ramp up their inventory stockpiling efforts, with U.S. importers potentially launching a new wave of purchasing.

The joint statement released on Monday from the Geneva trade talks highlighted substantial progress, including a significant reduction in bilateral tariffs. The U.S. has canceled 91% of the additional tariffs imposed, while China has reciprocated by canceling 91% of its retaliatory tariffs. Additionally, the U.S. has suspended the implementation of a 24% "reciprocal tariff" for 90 days, with China also suspending its 24% retaliatory tariffs for the same period.

Given the clear window of reduced import costs for U.S. importers over the next three months, Philip Sun, an analyst at Goldman Sachs, posed a question on Tuesday: "Imagine this: How eager will Chinese exporters and U.S. importers be to place orders during this 90-day tariff suspension period?"

Sun elaborated, "We are in a highly uncertain world. Who knows what will happen in 90 days (or even during this period)? Should retailers like Walmart stock up on Christmas goods, perhaps not just to meet 2025 demand, but even to prepare for 2026?"

Sun's bold prediction was that "China's exports will skyrocket in the next 90 days. 'Front-running' will be the key word."

Several market participants share similar views with the Goldman Sachs analyst. Scott Kennedy, a senior advisor on China business and economics at the American Center for Strategic and International Studies, stated that due to companies' urgency to move goods across the Pacific during the period of lower tariffs, he expects trade between China and the U.S. to accelerate during the 90-day negotiation period.

Kennedy believes that trade between the two countries should increase, and some companies may see a significant jump in their shipping volumes. These companies may still be uncertain about the situation a few months from now and need to use this breathing room to expand their imports and accelerate trade.

Some industry insiders are drawing parallels between the current situation and the end of last year. Compared to the same period in 2023, China's exports to the U.S. surged by 15.6% in December 2024, as many U.S. companies preemptively stockpiled goods in anticipation of tariffs being imposed after the inauguration.

It is worth noting that on Tuesday, some U.S. importers were reported to have excitedly "jumped out of bed to make calls" to Chinese suppliers on Monday morning, urging them to ship goods to secure container slots.

Ryan Petersen, CEO of international freight forwarding company Flexport, stated, "Since the first day the trade agreement was reached, our sea freight orders from China to the U.S. have increased by 35%. A large number of orders are about to be backlogged, and container slots will soon be snapped up."

Some international shipping giants are already preparing for this. French shipping company CMA CGM and other freight forwarding companies have described the 90-day suspension and the reduction in tariff rates between China and the U.S. as "good news." A spokesperson for Maersk said, "Now, our customers have a clear 90-day window of reduced tariffs, and we are working hard to help them make the most of this opportunity."

Luo Ting, chief economist for China at Nomura, wrote in a report on Monday, "Many exporters may have delayed shipments to the U.S. in April, so the significant tariff reduction is likely to stimulate a wave of suppressed exports."

Indications suggest that this surge in trans-Pacific shipping has already caused short-term freight rates to skyrocket. Analysts at Jefferies noted that container freight rates on trans-Pacific routes have risen from around 2,000 USD per 40-foot equivalent unit in mid-April to approximately 2,500 USD this week.

The analysts at Jefferies stated, "The container shipping industry is expected to see a substantial improvement in spot freight rates, primarily driven by two fundamental factors: the recovery of normal cargo volumes and the usual peak season starting in July. Given the tightening of trans-Pacific capacity, shipping companies are fully in control of driving up freight rates."