Shippers face tight timelines and mounting uncertainty ahead of August 1 tariff shift

As the White House continues to send out letters to United States trading partners, regarding reciprocal tariffs that will be implemented in U.S.-bound imports, set to take effect on August 1—which was pushed back earlier this week from a previous July 9 deadline—there remains a general sense of supply chain and logistics uncertainty, for industry stakeholders, in terms of next steps.

That was made clear by National Retail Federation (NRF) Chief Economist Jack Kleinhenz this week, in the NRF’s Monthly Economic Review.

“This year began with high expectations for the strength of the U.S. economy,” Kleinhenz said—noting strong 2.8% year-over-year growth in gross domestic product in 2024 paced by consumer spending and helped by business and government spending. “Since then, anxiety and confusion have taken center stage in the economy and financial markets as uncertainty over public policy has intensified. It was difficult to judge how policy changes would impact the economy in early 2025 and it remains so now. Economic fundamentals appear solid at this juncture, but uncertainty is pervasive. There are many crosscurrents surrounding tariffs, immigration and deregulation, and everyone is sorting through what the tariff rates are going to be, how they will impact inflation for retail products and, importantly, how long they will be in place.”

Addressing the impact of tariffs on prices, Kleinhenz said that the impact has yet to be clearly seen, with the caveat that if the large increases in tariffs go into effect and are sustained, it will have a negative impact on consumer prices and reduce spending which could subsequently result in higher unemployment, coupled with the Federal Reserve not expected to cut interest months in July, while noting that remains a possibility in the fall.

Regarding the push back of the reciprocal tariffs to August 1, Paul Bingham, Director, Transportation Consulting, for S&P Global Market Intelligence, explained that ocean shippers have very little additional time to bring in imports avoiding the tariffs. Which he added is qualified now by the revised country-specific import tariff rates revealed in the 14 individual letters [sent on July 7 and now at more than 20] posted with rates of 25%-to-40%, which are lower than those originally announced for those countries in April, yet higher than in effect during the current pause. 

“The latest S&P Global Market Intelligence trade and economic forecasts continue to assume that there will not be a return to the U.S. reciprocal import tariff levels announced initially on April 2,” said Bingham. “However, the ‘reciprocal’ tariffs are not the only U.S. import tariffs affecting U.S. trade and the economy, as the commodity category-specific Section 232 tariffs are also influencing U.S. importer behavior.  S&P Global is now assuming a higher effective U.S. import tariff rate on copper, but lower effective tariff rates on pharmaceuticals, steel, and aluminum will be in place. The net effect of these latest US import tariff developments is a lower overall average effective import tariff rate than appeared likely in June.

An effect of somewhat lower effective tariff rates will be a slightly lower peak in U.S. inflation, according to Bingham, adding that U.S. core personal consumer expenditure (PCE) inflation, measured on a four-quarter basis, is now forecasted to rise from 2.8% in the first quarter of 2025 to a peak of 3.6% in the fourth quarter.  And with core inflation to peak late in 2025, S&P Global Market Intelligence expects the U.S. Federal Reserve Board to maintain its funds rate target range at the current 4.25-4.50% until December.

In looking at the White House’s approach to trade policy and tariffs, Dr. Walter Kemmsies, president of The Kemmsies Group, a provider of industrial and logistics real estate brokerage and consulting services, observed that President Trump is taking a lot of chances by changing a lot of things in the economy, both substantially and significantly, calling it a risky thing to do.

Regarding tariffs and the ongoing U.S.-China trade war, Kemmsies said the United States stance is vital, given China’s lack of what he called a proper economic policy, save for wanting to be “the ruler of the world,” and also “an existential threat.” And he added that taking on China economically is the right thing for the U.S. to do, but the approach taken by the White House on China, as well as other nations, has been miscalculated, as it can historically take two-to-four years to get a trade agreement done.

“And then, even when you have a free trade agreement, you have to a number of goods that would get imported or exported have to be approved by regulatory agencies in one or both countries,” he said. “It's a longer process, especially in countries that don't have a very, let's just say, you know, power concentrated, decision maker in place. So that's a that is the fundamental problem here. There is a misunderstanding by the Trump administration of who they're dealing with. But this is not going away regardless of what party is in office.”

With the tariffs situation remaining fluid and uncertain, Kemmsies stressed the need for shippers to have multiple supply sources and routes through which to bring cargo into stores or e-commerce delivery areas. Which includes things like a four- or five-corner port strategy and diversified suppliers.

“I would not abandon China if I was an importer, but I would start working with India as well,” he said. “What do you do as an importer? You source from everywhere. Maybe you go to El Salvador. Maybe you go to Nicaragua. Maybe you go to Nigeria. There's a lot of places that you can try to source from, and wherever you're going to have to teach the locals how to produce stuff to meet your specs for China. Everybody said it couldn't be done back in the year 2000 and look at China now. So that's what you should be doing—diversifying your supply chain roots and sources. You also need to teach and educate your suppliers on how you want things done and to follow accordingly. Do those things and you will be in good shape regardless of what the White House does. You need to be well-positioned, no matter what happens.”

In light of the myriad moving parts, at the moment, shippers are revaluating inventory and frontloading needs, noted Mike Short, Mike Short, president of global forwarding at C.H. Robinson. 

“Some shippers rushed to move freight before the previous July 9 deadline, while others cut it too close or weren’t able to ramp up production in time,” said Short. “The extension gives nearly a month of breathing room, but that’s not enough for most ocean shipments, which takes 20–30 days on average—and capacity could tighten as we approach peak retail season. Air freight remains an option for those looking to frontload before the new deadline, but it all depends on their inventory needs and supplier readiness. We can help assess whether it makes sense based on their specific situation. This isn’t the first time we’ve supported shippers through a tariff deadline. Before the April 2 cutoff, we worked with a customer to expedite their shipment and helped them reduce transportation and duty costs by over 50%. With the extension, similar requests may increase again.”

As tariff uncertainty continues, only British and Vietnamese imports have some clarity, however detailed agreements are yet to come, observed Andrei Quinn-Barabanov, Sr. Director–Supply Chain Industry Practice Lead at Moody’s.

“Several other major trade partners have just received tariff-rate notifications from the U.S..” he said. “The new higher-tariff-imposition deadline is August 1, and July should involve a lot of trade negotiations. While governments negotiate, those involved in supply chain will be focused on placing holiday orders in the midst of these uncertainties. The key supply chain issue will be how to divide the additional tariff costs between suppliers, customers and other value-chain participants. Clarity on suppliers’ financial situations will be a key guide to a fair split of these costs.  Without this clarity, price negotiations can turn adversarial and prolonged at the time when the tariff clock is ticking.”