U.S. Tariff Policy Update: Impacts on Shippers in May 2025

Key Developments in U.S. Tariff Policy

• Closure of De Minimis Exemption: Effective May 2, 2025, the U.S. ended the de minimis duty-free exemption for low-value imports from China. Previously, parcels valued under $800 could enter the U.S. duty-free, a policy that had facilitated a surge in e-commerce imports. 

• Tariffs on Imports from Other Nations: A 25% tariff has been applied to all goods imported into the U.S. from any country purchasing Venezuelan oil, either directly or through third parties. 

  
  

Impacts on the Shipping Industry

• Decline in Container Shipments: U.S. ports, particularly the Port of Los Angeles, have experienced a significant drop in shipments from China due to the new tariffs. Container shipments from China have plummeted, with cancellations around 50%, leading to major declines in port activity.

• Operational Challenges for Shippers: Shipping companies are facing increased operational complexities. Logistics firms are suspending or altering routes, and domestic freight is expected to slow dramatically, potentially leading to layoffs and a recession by summer.

• Economic Uncertainty: Companies like Cummins Inc. have withdrawn their 2025 financial forecasts, citing economic uncertainty stemming from the broad import tariffs. This decision reflects the broader industry challenges, including oversupply and tariff disruptions.

Adaptive Strategies in the Shipping Sector

• Rerouting and Origin Washing: In response to high tariffs, Chinese exporters are increasingly turning to "origin washing," routing products through third countries such as Malaysia, Vietnam, and South Korea to disguise their Chinese origin and evade U.S. tariffs.

• Investment in Compliance and Technology: Shippers are investing in advanced logistics software and customs brokerage services to navigate the complex tariff landscape and ensure compliance with new regulations.

  
  

What You can Do During These Complex Times:

The U.S. trade environment has shifted dramatically in 2025, as new tariffs—especially on Chinese imports—continue to disrupt global shipping and logistics. From rising costs to plummeting container volumes, shippers are facing one of the most challenging operating environments in recent years.

But challenges also create opportunities. By adapting strategically, shippers can ease supply chain pressures and position themselves for long-term resilience. Here are several practical steps companies can take today.

1. Diversify Your Supplier Base

Heavy tariffs on Chinese goods—now up to 145%—are forcing companies to reevaluate sourcing strategies. One of the most effective ways to reduce exposure is to diversify your supply chain:

• Shift procurement to countries like Vietnam, India, Mexico, and Indonesia.

• Build multi-vendor sourcing networks to reduce dependency on any one supplier or region.

• Assess geopolitical risks and develop contingency plans for alternative sourcing when needed.

  
  

2. Take Advantage of Foreign Trade Zones (FTZs)

FTZs allow businesses to bring goods into specially designated areas within the U.S. without immediately paying duties. These zones can provide significant benefits:

• Delay or reduce customs duties on imports.

• Avoid tariffs entirely when re-exporting goods.

• Increase inventory flexibility by keeping goods in FTZs until needed.

FTZs are especially valuable for companies dealing with high-volume, tariff-heavy imports.

3. Optimize Inventory and Forecasting

Unpredictable transit times and rising costs mean it's critical to manage inventory with greater precision:

• Use AI-powered demand planning tools to forecast sales and supply needs more accurately.

• Consider holding additional safety stock for essential items—but balance this against warehousing and capital costs.

• Review inventory turnover metrics to ensure you're not tying up too much capital in stagnant stock.

  
  

4. Rethink Product and Classification Strategy

Many companies are using "tariff engineering" to legally lower their duties by modifying products or reclassifying them under more favorable codes:

• Work with a customs broker or trade attorney to analyze tariff codes.

• Reassess your Bill of Materials (BOM) to see if changes can reduce duty rates.

• Ensure compliance with origin labeling and documentation requirements to avoid penalties.

  
  

5. Invest in Supply Chain Visibility Tools

Real-time data is more valuable than ever. Advanced Transportation Management Systems (TMS), shipment tracking tools, and predictive analytics platforms help shippers:

• Track shipments end-to-end and flag delays before they become crises.

• Optimize routing and scheduling based on port congestion or customs bottlenecks.

• Manage exceptions quickly and effectively to minimize disruption.

  
  

6. Explore Nearshoring and Onshoring

Reducing reliance on distant manufacturing hubs is becoming a top priority. Many companies are bringing production closer to U.S. markets:

• Mexico is a popular nearshoring destination due to its trade agreements and proximity.

• Some manufacturers are investing in domestic (onshoring) production to regain control of lead times and avoid tariffs altogether.

This trend is accelerating in response to tariff volatility and increasing labor costs in Asia.

7. Strengthen Carrier and Freight Partnerships

Capacity shortages and fluctuating fuel prices mean strong carrier relationships are critical:

• Renegotiate freight contracts with flexibility clauses and rate review periods.

• Explore long-term agreements to lock in capacity and reduce exposure to spot rate volatility.

• Maintain open communication with 3PLs and freight forwarders for early alerts on routing changes or customs delays.

  
  

8. Stay Informed and Engage in Advocacy

With trade policy shifting rapidly, staying informed is essential:

• Subscribe to updates from U.S. Customs and Border Protection (CBP), the U.S. Trade Representative (USTR), and key industry associations.

• Consider joining coalitions or advocacy groups that can lobby for favorable trade terms, exemptions, or reforms.

• Engage your government affairs team or legal counsel to monitor policy that may impact your operations.

  
  

The Bottom Line

While today’s tariff climate presents serious challenges, it also opens the door for operational improvements and competitive advantage. Shippers who act now—by investing in visibility, rethinking sourcing, and building resilience into their networks—will not only weather the storm but emerge stronger. Talk to one of RCD's experts today, to see how we can implement these strategies for you.