U.S.-China Trade Talks Spur Resumption Of Shipments

China-based shipping agents have started purchasing container space for goods destined for the United States again, following a series of cancellations caused by U.S. tariff hikes. This shift comes as the U.S. and China are set to resume trade talks in Switzerland, raising hopes for a potential de-escalation of tensions between the world’s two largest economies.

Trade flows have dwindled significantly since April 10, when U.S. President Donald Trump imposed a 145% tariff on goods made in China, prompting Beijing to retaliate with levies of 125% on U.S.-made products. These tariffs, which impact roughly 80% of goods shipped from China to the U.S., led to a 60% drop in sailings from China in April, according to logistics firm Flexport. Meanwhile, Hapag-Lloyd reported that 30% of shipments from China were canceled that same month.

However, since late April, there has been a noticeable uptick in container bookings for mid-May, signaling that exporters are beginning to re-engage with U.S. markets. Two executives from freight forwarding companies in China, speaking anonymously due to company policies, confirmed that demand for shipping capacity has increased. Additionally, four China-based exporters, including those working with major U.S. retailers like Walmart, indicated they plan to resume shipments in the coming weeks.

The growing optimism stems from the U.S. and China adopting a more conciliatory tone in recent weeks. With trade talks scheduled to begin in Geneva this Saturday, many exporters are hopeful that the two countries will soon reduce tariffs. President Trump recently suggested that tariff reductions might be forthcoming, further fueling expectations of a resolution.

One manufacturer, Liu, a second-generation toy producer from Dongguan, expressed cautious optimism, saying, “We are obviously all looking forward to a relaxation of the tariff situation this month. I believe it will happen.” Liu’s business has been hit hard, with half of her orders previously coming from U.S. customers like Walmart.

Despite the optimism, the underlying problem remains: many U.S. retailers are running low on inventory. Products like toys, home furnishings, and Bluetooth speakers—which are difficult to source quickly from countries other than China—have been stuck in China due to the tariff escalation. Chinese exporters have warned that without shipments before June, U.S. store shelves could begin to empty.

Jonathan Chitayat, the head of Genimex Group, which works with U.S. clients on consumer goods manufacturing, noted that the risk of inventory shortages is pushing U.S. clients to resume shipments. “Companies are running out of inventory, and Trump has toned down his China rhetoric,” he said. Chitayat added that many U.S. businesses will need to ship goods soon, regardless of the tariff situation.

Liu also pointed out the impact of tariffs on U.S. consumers, explaining that if shipments arrive in the U.S. without a tariff reduction, “American consumers will bear the entire burden” of the additional costs.

Experts believe some recovery in shipping volumes is inevitable. Judah Levine, head of research at Freightos, a freight-booking platform, explained that the decline in shipments followed months of front-loaded orders made in anticipation of the tariffs. As those orders run out, there is growing expectation for a tariff reduction, which could help ease the supply chain crisis.

Walmart responded to inquiries by noting that it continues to work with suppliers to manage the fluid situation. “We are working every day with our suppliers, item by item and category by category, to navigate this fluid situation for our customers and members,” a spokesperson said.

Shipping rates may also see a rise. Dominic Desmarais, Chief Solutions Officer at Liya Solutions, indicated that freight prices could increase by $500 per container after May 15 due to the uptick in shipping activity. According to Freightos, a 40-foot container shipping from Shanghai to Los Angeles in early May costs between $2,640 and $3,781.

Despite the resurgence in shipping activity, some industry players are skeptical about a quick resolution to the trade war. Desmarais cautioned that past trade negotiations have taken years to resolve, citing the two-year span between the 2018 imposition of 25% tariffs and the eventual U.S.-China agreement.

“In 2018, it took two years for the U.S. and China to reach a deal,” he said. “I don’t think discussions in Switzerland will do it.”