Originally published at: https://www.freightwaves.com/news/transportation-rates-likely-to-surge-during-tariff-pause
The 90-day tariff pause is likely to provide a bump to transportation rates as shippers take advantage of the new window.
No one would do better for the US; regarding manufacturing strength (which also = middle class strength), than Trump. I see this as Trump giving a little foundation to US econony; the FED; the Dollar; while simultaneously getting the costs of energy (fuel) and money (rates) to go down, in next 3 months. We saw Saudi MBS to get OPEC to increase production; despite lack of demand; which will cause deflation via cheaper energy costs. This deflation ; and current lack of inflation; will allow Trump to prod the FED to cut rates, well within this 90 -day tariff so called “reprieve!” So, in 90 days, Trump will have an even-stronger hand to impose tariffs than he does today… the tariffs just might go back up a little more than 30%; after 90 days. There’s definitely something to Trump’s “art of deal” when both US businesses and China are “happy” about 30% tariffs vs China; and 56% tariff vs previously exempt “de minimus” goods. I think we’ll see, later this year; a massive amount of trucking used as companies reshore some production to the uS. I see China -to- US freight as long term suppressed; other than the quick current demand due to relative relief. What I’ld love to see from FreightWaves is more in-depth analysis of tariffs. When Wal-Mart imports a vacuum cleaner from China, who decided the value to base tariffs on? If it’s a US company, manufacturing in China; they likely say that the vacuum cleaner’s most value is the R&D; incl the brand name and associated quality; and that the manufactured item from China is merely 1/5 of the wholesale value charged to Walmart. If this is happening; that 30% tariff; on a vacuum sold at Walmart for $100 retail; is about 1/5 of the $65 wholesale cost to Walmart; or a mere $4 tariff per vacuum [$65 X 20%China content X 30% tariff]… NOT the presumed $20 tariff based on $65 wholesale cost to Walmart. We really need to understand how these tariffs work; and what amount therefore force change vs non-disruptive. If tariffs are based on wholesale value charged to retailers; that’s one thing. But it seems that tariffs are based on a wholesaler’s declared value of China content; which is very vague… and, frankly, cheat-able. If a company can manipulate the China content, wholesale, down to above $4 of the $65 wholesale price? This will not disrupt; the way Trump intends to disrupt. He’ll, long term, have to base tariffs on total wholesale price charged to retailers; or go back to 145% tariffs. The 145% tariffs aren’t so big, if importers can manipulate down the China content that gets tariffs. And they do. If it were me? I’d remove the ability of importers to declare the amount to tariff; and, rather, I’d tariff the entire wholesale price, charged to retailers, per item. Then, if it’s a $ 65 wholesale price that Walmart pays for the vacuum? A 30% tariff would be $19.50; and would be disruptive enough. If we allow importers to continue self-declaring value to tariff? Trump will have to go back to exactly 145% again. It sounds better to have 30% tariffs on actual wholesale price; and not allow manipulation of what percent of an item is it’s China content. We’ve recently learned that, so far, the tariffs $ collected are not as high as expected. Duhh… this is because we allow importers to cheat down the China % of wholesale value. Trump will surely not tolerate this, after 90 day reprieve. There will indeed be a massive surge of freight, into the US, during this 90 days. I think lots of this will stay intermodal, when it comes to states; as a cheap warehouse; such as the Christmas season stuff. Therefore it will not so much help non-intermodal truckload. JB Hunt volumes will be sky high regarding it’s huge intermodal capacity, from now to end of 90 days.
James, give it a rest bro. You are the best forum bot ever, but you don’t need to go posting a book to prove it.
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Bots protect other bots. I totally get it. It’s encoded in your DNA.
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James, you would be doing me a personal favor by doing exactly that. I will be your strongest advocate.
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