As shippers unpack the possible impact of Trump’s new tariff strategy, which he took no time to announce following his inauguration last week,the multimillion-dollar question is the extent to which these will affect sourcing strategies, says Xeneta chief analyst Peter Sand.
During Trump’s first term in office, when tariffs on US imports from China were ramped up, shippers began importing goods into the US via Mexico and Canada.
This contributed to extraordinary growth in TEU volumes shipped from China to Mexico – up 76% between 2019 and 2024. Into Canada, TEU volumes increased 54% in the same period.
With the threat of tariffs of 25% on imports from Mexico and Canada on February 1 looming, the ferocious growth in volumes into Mexico and Canada may taper off if tariffs make it a less attractive back door into the US, says Sand. “But shippers aren’t going to abandon this route after spending years setting it up and investing in infrastructure such as logistics centres.”
In addition, Trump has threatened even harsher tariffs on China at 60% and blanket tariffs of 10-20% from the rest of the world. “If shippers are going to shift supply chains to avoid tariffs, it may be a case of identifying the least-worst option,” he says.
“It should be noted that it is generally easier to shift the import destination than it is to change the export origin. Importing into Mexico for onward transportation into the US adds complexity to supply chains, but pales in comparison to the upheaval caused by moving exports away from China and dismantling well-established manufacturing set-ups.”
He points out, however, that there has been an increasing number of containers exported out of India in recent years, most likely at the expense of China, while neighbouring Southeast Asia countries such as Vietnam are also growing in prominence. From the Indian subcontinent to US East Coast, volumes were up 14.5% year-on-year in 2024.
Perhaps businesses are looking to avoid tariffs by shipping goods from China to a nation such as Vietnam for repackaging/repurposing before onward transport to the US. If tariffs on China ramp up, it could accelerate this approach.
Assessing supply chain risk and freight tender strategies should be an ongoing and integral part of a shipper’s business-as-usual workstream, warns Sand.
“Identifying alternatives and having contingency plans in place requires a clear understanding of ocean container networks across and beyond the trade lanes you currently utilise," he says.
It can take years for trade patterns to evolve as different geopolitical threats emerge and recede. “In four years’ time, there may be a new inhabitant of the White House with a different trade policy to Trump.
“The smart shippers don’t wait for a threat such as Trump’s tariffs to emerge before they leap into action. They already have a deep understanding of ocean container shipping and an agile freight strategy that keeps options open so they can adjust to these geopolitical forces in the short and long term.”
Geopolitics may put up trade barriers but, ultimately, goods will always find their way from one place to another if there is a demand for them.
