The Trans-Pacific Contract Negotiation Season Begins, U.S. Tariff Policy Will Face Variables Again

As the end of February approaches, the annual contract negotiation season for trans-Pacific routes is about to officially kick off. For the global shipping industry, this time of year is a critical window period for cargo owners and shipping companies to compete on freight rates, shipping spaces and cooperation terms for the next year. However, just as the negotiations are about to enter a substantive stage, U.S. tariff policy has once again become the focus of market attention, adding new variables to the already complex negotiation environment.

Over the past year or so, the U.S. freight market has continued to be affected by declining container volumes and lower freight rates, and many importers have reduced inventory levels to lows. In this context, every change in tariff policy may directly affect the cargo owner’s purchasing decisions, delivery rhythm, and contract negotiations. And just in late February, a ruling by the U.S. Supreme Court completely broke the original policy pattern.

On February 20, local time, the U.S. Supreme Court ruled by a vote of 6 to 3 that the large-scale tariff measures implemented by the Trump administration in accordance with the International Emergency Economic Powers Act (IEEPA) lacked clear congressional authorization and constituted an ultra vires exercise of administrative power. Chief Justice Roberts stated in the majority opinion: "When Congress grants tariff authority, it does so in clear terms and with careful limitations, but Congress did not do so in this case."

This ruling means that a series of tariff policies previously implemented by the Trump administration based on the IEEPA framework—including “fentanyl tariffs” on specific goods and so-called “reciprocal tariffs”—will be suspended. According to estimates from the Wharton Budget Model of the University of Pennsylvania, the total amount of tariffs imposed under this law since February 2025 has exceeded 5 billion, and this huge tax is at risk of being refunded.

After the ruling was announced, Trump immediately launched a rapid counterattack. Later that day, he announced that he would invoke Section 122 of the Trade Act of 1974 and impose a 10% temporary tariff on all goods imported into the United States for 150 days. The next day, he raised the tax rate to 15% on social media and said it would take effect immediately. According to Article 122, these measures are only temporary in nature and must be approved by Congress if they need to be extended.

The U.S. Customs and Border Protection (CBP) officially issued an announcement on February 23, confirming that it will terminate all tariffs imposed under IEEPA starting at 12:01 a.m. Eastern Time on February 24. The announcement also clarified that this move will not affect tariffs authorized under other laws, including measures under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974.

Calculations from the Yale University Budget Laboratory show that this policy change has reduced the overall effective tariff rate in the United States from 13.6% to 6.5%, a decrease of more than half. The degree of impact varies significantly between different countries and regions:

• Brazil is the biggest beneficiary, with its effective tariff rate on goods exported to the United States falling sharply from 40% to 13.6%.

   

• Tariff rates on goods exported to the United States from China and Vietnam dropped by about 5 percentage points

   

• Overall EU tariff levels remain unchanged

   

• Due to the adjustment of applicable rules for some products in the UK, the tariff rate increased by 5%.

Analysis by Judah Levine, director of research at Freightos, pointed out: "Significantly lower effective tariff rates may stimulate shipments from places such as Brazil. Some imports from China and Vietnam may also be attracted by lower tariffs and increase orders. However, compared with last year, the overall reduction is limited, and coupled with high uncertainty, a surge in orders is unlikely. With the recovery of manufacturing after the Spring Festival, any rebound may not appear until early March."

Lars Jensen, founder of Vespucci Maritime and shipping analyst, said that in a market environment where demand is weak and global shipping capacity is expected to continue to be oversupplied in the next few years, although cargo owners are in a favorable position, long-term decision-making will also be in a dilemma: "This has created an extremely difficult decision-making environment for cargo owners. They not only have to commit to specific freight volumes in the next 12 months, but also need to determine the origin of some goods."

From the perspective of freight rates, the short-term market may experience the following changes:

• Tariff rates in some countries have dropped significantly, which may stimulate a rebound in shipments on related routes and push up spot freight rates in the short term.

   

• If shipments are started intensively, it may lead to chain delays in ports, trucks, railways and other links, further exacerbating freight price fluctuations.

   

• In order to avoid uncertainty, cargo owners may prefer to sign short-term flexible contracts instead of traditional annual long-term contracts.

Dramatic changes in U.S. tariff policy have also aroused vigilance among major trading partners. On February 23, local time, the European Union stated that it was prepared to suspend the approval process of the trade agreement with the United States and requested the Trump administration to provide more details about its new tariff plan. Zeljana Zovko, the chief negotiator of the European People's Party group responsible for the US-EU trade deal negotiations, said that the EU had "no choice" but to postpone the ratification process to seek clarity on the current situation.

Relevant cargo owners and freight forwarders are reminded: Currently, it is a critical window period for trans-Pacific contract negotiations. In the face of frequent changes in policies, it is recommended that relevant companies clearly agree on the party responsible for future tariff changes in the annual long-term contract to avoid subsequent disputes due to policy adjustments. In the short term, you can consider ordering in batches and small batches to reduce the risk exposure of one-time lock-in. At the same time, you should promptly check the commodity exemption information released by the U.S. Customs to confirm whether your goods are subject to the new regulations. Section 122 temporary tariffs require congressional approval within 150 days,

The follow-up trend is still the focus of market attention, and it is recommended to closely follow policy developments. As manufacturing production capacity gradually recovers after the Spring Festival, it is recommended to plan shipping space in advance according to route conditions to avoid congestion and cost increases caused by concentrated shipments, and to reasonably arrange the pace of post-holiday shipments.