U.S. Economy
As the March 4 implementation date of the plan to impose 25% tariffs on goods imported from Mexico and Canada, citing drug trafficking and illegal immigration, approaches, the economies of border regions including Texas are expected to be hit first, with Goldman Sachs predicting that the higher tariffs will increase U.S. inflation by 0.7% and decrease gross domestic product (GDP) by 0.4%. Also on Thursday, February 27, President Trump announced plans to increase tariffs on Chinese goods by an additional 10%, effective March 4, for a total of 20% tariffs. The Chinese government responded with plans to impose additional tariffs on domestic oil, coal, and other products. In addition, on Thursday, February 27, President Trump announced plans to impose a 25% tariff on imports from the European Union (EU). In addition to steel and aluminum, he ordered a study to consider imposing universal tariffs on copper and copper products imported into the U.S., adding to the uncertainty in the global economy. Meanwhile, President Trump's speech to Congress is scheduled for Tuesday, March 4, and the subsequent economic impact and market reaction will be closely watched.
U.S. tech giant Apple plans to spend and invest more than $500 billion in the U.S. over the next four years amid fears of President Trump's high tariffs, Bloomberg reported Thursday. Apple announced it will bark a new factory in Houston, Texas, double its Advanced Manufacturing Fund and increase its investment in AI. The announcement suggests that Apple, which has been profiting from global sourcing and competitive pricing by having production bases outside the U.S., has changed its production plans in response to President Trump's tariffs. During Trump's first term, Apple's CEO Tim Cook convinced Trump to exempt Apple from the tariffs. The Wall Street Journal (WSJ) also reported that wind energy companies are delaying some projects due to Trump's opposition. Trump has previously stated that “we're not going to do wind power,” and that “big, ugly wind turbines ruin neighborhoods.” Expect to continue to see the industry shaken by Trump's comments.
Maritime Cargo Market Trends
North America Vessel, Rail Dwell time (Week 9 / Flexport)
USTR Announces Proposed Sanctions on Chinese Shipping Companies and Ships
The U.S. Trade Representative (USTR) announced a proposal to impose higher fees on Chinese shipping companies and Chinese-made ships entering U.S. ports. Container ships typically call at 2-3 U.S. ports per loop, and under the proposal, China could face additional costs of more than $3 million per trip, which translates to $250-$300 per TEU. With only 18 U.S.-flagged vessels in China, this proposal would have a significant impact on the country's shipping industry.
ILA (U.S. East and Gulf Ports Union) Ratifies New 6-Year Contract
Members of the International Longshoremen's Association (ILA) ratified a new six-year master agreement covering U.S. East and Gulf Coast ports. The new contract will be retroactive to October 1, 2024, and will run through September 30, 2030, and will be officially signed on March 10th. While the employer, USMX, claims to have gained room to increase efficiencies through remote operation of terminal equipment and the use of operator-assisted technology at the ports, along with a 62% wage increase, the new contract, like the previous one, includes a ban on marine terminals implementing any type of full automation without human supervision and requires a more thorough vetting process to implement semi-automated technology in terminals, resulting in a complete victory for the union. As a result, productivity gains are unlikely to be seen in the near future in the U.S. East and Gulf ports, which are already suffering from extreme congestion and all sorts of extra costs.
Air Cargo Market Trends
Air demand flat in February due to Trump's crackdown on e-commerce in China
Air cargo demand in February 2025 grew only 2% year-on-year as growth slowed. There is still a possibility that e-commerce demand, especially from China to the U.S., will continue to decline sharply due to tariffs and trade restrictions, as well as the elimination of de-minimis benefits. This is expected to have a significant impact on air cargo volumes, with experts predicting a slowdown in demand amid geopolitical tensions and inflationary concerns. In addition, the repeal of de-minimis will make logistics more complicated, with a range of fallout expected, including increased shipping delays and costs, and higher consumer prices. On the other hand, some industry experts believe that “in the short term, efficiency and productivity will take a big hit and each step will add costs. In the long term, exporters are likely to shift from shipping individual B2C international parcels to more efficient bulk transportation within the U.S., which is more efficient.”