US Logistics Update [Aug 2, 2025]-English

Updated: Aug 4

On July 30, the US Federal Reserve (Fed) decided to keep the benchmark interest rate at 4.25-4.5% despite President Trump's pressure to lower interest rates, saying it would wait and see how the tariff policy plays out. Meanwhile, Christopher Waller and Michelle Bowman, who were nominated by President Trump, voted against the decision, marking the first internal disagreement since 1993. The Fed explained that the labor market remains strong but inflation is somewhat high (see the Fed's preferred PCE personal consumption expenditure index graph below). It also emphasized that uncertainty about the economic outlook remains high, while deleting the phrase “has diminished.” The unemployment rate rose slightly to 4.2% in July.

The Economist reported that following the Trump administration's implementation of tariff policies,

the effective tariff rate in the US, which averaged 2% last year, has exceeded 16%. This is the

highest level since the 1930s, and most economists expect US consumers to suffer as a result.

However, the Trump administration has taken the position that overseas exporters should lower

their prices to absorb the tariff burden. However, according to various studies, tariffs imposed on

imported goods are mostly passed on to consumers. Overseas export companies maintain their

existing prices, and the tariff amount is added to the price, resulting in consumers bearing the

burden. However, the U.S. debt is expected to decrease from $3.4 trillion to $2.8 trillion due to tariffs.

After contracting in the first quarter, the US economy grew at an annual rate of 3% in the second quarter, significantly exceeding economists' forecasts of 2.3%. However, this was due to the positive impact on overall growth of a 1.8% decline in exports and a 30.3% decline in imports, both of which were influenced by trade policy. Consumer spending, which accounts for 70% of GDP, increased by 1.4% thanks to a stable job market.

Trump-related tariff uncertainty no longer dominates the trans-Pacific shipping market
JOC reported that the Trump administration's tariff policy is no longer a key factor influencing trade volumes between Asia and the United States. U.S. retailers, fed up with the uncertainty of tariff policies, have effectively abandoned their strategy of avoiding tariff deadlines and are now focusing on aligning logistics with their needs. Shipping companies are reducing supply on Asia-U.S. routes in August to defend against falling freight rates, but excess capacity and overall weak demand are expected to lead to a significant decline in cargo volume in the fourth quarter. China-U.S. West Coast shipping rates have fallen 70% year-on-year, and GRI is not supported by the market. Shippers have already brought in a significant portion of their fall cargo early and plan to quickly transport urgent demand by sea or replace it with air transport.

UP announces acquisition of NS railway company... Market reaction is negative
Union Pacific, a freight railway company, is set to acquire Norfolk Southern for $71.5 billion, creating a single freight railway company connecting the west and east coasts. Union Pacific claims that the merger will improve service and facilitate port access for manufacturers through the resulting transcontinental freight rail connection, but most experts are concerned about rising costs and deteriorating service. In other words, even under the current competitive system, service and costs fall far short of customer expectations, and the merger is expected to exacerbate this situation. Additionally, the legal approval of the merger is uncertain, as the United States has a long tradition of not tolerating railroad monopolies.

De Minimis Termination (as of August 29), applicable to all countries
President Trump announced on July 30 an executive order to terminate the application of De Minimis to all countries from August 29, 2025, meaning that duty-free will no longer be available. The De Minimis rule was originally expected to end on July 1, 2027, following the enactment of the OBBBA (One Big Beautiful Bill Act), but it has been terminated early. As a result, starting August 29, all commercial shipments will require formal customs clearance and be subject to duties, regardless of origin or value. This applies to air, sea, and courier shipments, and international mail shipments (e.g., shipments sent via postal services such as China Post → USPS) will be subject to a flat fee ($80–$200) for six months, after which they will transition to the ad valorem tariff model (IEEPA). This is expected to cause various inconveniences and increased costs. In other words, even for small-value, small-quantity shipments, full paperwork will be required, and new fees, delays, and penalties are expected to occur frequently.