US Logistics Update [Nov 1, 2025]-English

The Federal Reserve announced at its FOMC meeting on the 28th and 29th that it would cut the benchmark interest rate by 0.25 percentage points from the existing 4.00–4.25% to 3.75–4.00% and suspend quantitative tightening (QT) starting December 1st. The Fed explained that while the unemployment rate has risen slightly since the beginning of the year, it remains low, and inflation remains somewhat elevated. However, it diagnosed that the labor market is gradually cooling and downside risks have increased, stating that labor market weakness was the basis for this rate cut. However, the Fed faces a deep dilemma: continuing rate cuts to protect the labor market could keep inflation above the 2% target, while raising rates to combat inflation could worsen unemployment. Chairman Powell stated that a December rate cut is not certain and that the Fed's policy is approaching a ‘neutral’ level, suggesting limited scope for further cuts. Accordingly, the CME Group's FedWatch Tool significantly lowered the probability of a December rate cut (from over 90% to 67%). It also projects three rate cuts possible through next year (December this year, April and July next year, each by 0.25 percentage points).

The Fed's decision to cut rates in October despite current inflation levels (3%) exceeding its target

(2%) has raised concerns in some market circles about potential damage to the Fed's credibility.

Specifically, with inflation expected to persist around 3% until 2026, the corresponding neutral Fed

rate is considered to be around 4%. If the Fed continues lowering rates, it risks undermining its

credibility due to perceptions that it is swayed by political pressure (demands for rate cuts) and

doubts about its ability to achieve its price stability goal.

Meanwhile, the Trump administration is currently collecting $30 billion monthly in tariffs. Until now,

companies have borne most of the tariff burden, limiting the impact on consumers, but now it is

beginning to weigh on prices. According to Goldman Sachs data, through August this year, U.S.

companies announced that 37% of new tariffs were passed on to consumers, 9% to suppliers, and

51% absorbed internally. However, going forward, tariffs are expected to squeeze corporate profits

and drive up prices.

President Trump and Chinese President Xi Jinping announced an agreement on a trade and tariff truce regarding the trade war that had been ongoing for months amid chaos. Accordingly, tariffs on China will be reduced by 10 percentage points compared to previous levels, to approximately 45%, including Reciprocal Tariffs at 10%, fentanyl at 10%, and Section 301 tariffs at 25%. Both sides also agreed to waive port fees for each other's ships for 12 months. Additionally, China announced it would delay implementing export controls on rare earths for one year, resume purchasing U.S. soybeans, and begin procedures to purchase U.S. energy products, including crude oil and gas from Alaska. President Trump stated that while no trade agreement had been reached, a deal was possible “soon” and signaled a visit to China in April. While the industry expressed relief that President Trump's planned 100% tariff hike was canceled, it is projected that despite this truce, uncertainty remains unresolved. Therefore, changes in importers' order patterns or supply chain operation strategies are unlikely to be expected.

Bloomberg reports that AI investment is the primary driver of U.S. economic growth. Analysis indicates that AI investment is fueling a surge in spending on AI-related equipment and software, data centers are driving a construction boom, and profits from soaring AI-related stocks are boosting U.S. consumer spending. Bloomberg estimates that AI contributed a full 1% to U.S. economic growth in the first half of this year, with its contribution to economic growth expected to grow even larger.

Global auto industry faces production disruptions amid semiconductor chip shortage
The global auto industry is on high alert due to the fallout from Dutch chipmaker Nexperia's “China-origin export halt,” the WSJ reported. The situation began when the Dutch government took control of Nexperia's management over security concerns, prompting the Chinese government to retaliate by blocking exports of vehicle semiconductor products processed in China (80% of the total). The EU/Netherlands and China are scheduled to hold technical talks in Brussels this week to discuss rare earths, magnet export permits, and the Nexperia issue. The industry is concerned that supply disruptions could begin in earnest as early as this week, as approval for alternative parts and re-procurement takes time, and inventories typically only cover 2-3 weeks. Honda halved production at its North American plants due to the semiconductor shortage, and its Alliston plant in Ontario, Canada, partially suspended operations this week as disruptions spread. Ford warned that “production disruptions in the fourth quarter are inevitable without a swift breakthrough.” The industry fears a recurrence of the production disruptions caused by the semiconductor shortage several years ago.

U.S. Treasury Secretary Announces China to Import 12 Million Tons of Soybeans This Year
U.S. Treasury Secretary Scott Bessent stated that China has agreed to purchase 12 million tons of soybeans this year and import at least 25 million tons annually over the next three years. This is expected to significantly impact U.S. vessel supply for the remainder of this year, which has about two months left. Meanwhile, China has consistently imported over 25 million tons of soybeans annually from the U.S. every year except during Trump's first term in 2018 and his second term in 2025. (See graph below)

U.S. Government Shutdown Impacts Air Traffic Controllers
U.S. Transportation Secretary Sean Duffy warned that prolonged government shutdowns could worsen flight delays at airports. In an interview with Fox News, Secretary Duffy explained that many air traffic controllers are working “exhausted” due to their status as essential personnel required to work without pay during the shutdown. Meanwhile, CNN reported that over 50 incidents of air traffic controller shortages were reported at airports across the U.S. between October 24 and 26, with over 3,000 flights delayed on October 26 alone.

U.S. Revokes Approval for 13 Air Routes from Mexico
Reuters reported that the U.S. revoked approval for 13 routes operated by Mexican airlines to the U.S. on the 28th, citing Mexico's violation of the bilateral aviation agreement. Transportation Secretary Sean Duffy accused Mexico of violating the bilateral aviation agreement by massively canceling slots for U.S. flights since 2022 and forcing all cargo flights to operate from other airports. This revocation order will cancel flights operated by Mexican carriers Aero Mexico, Volaris, and VivaAerobus from Mexico City to San Juan, Puerto Rico; New York; Newark, New Jersey; Austin/Dallas/Houston, Texas; Denver, Colorado; and Miami/Orlando, Florida.