President Donald Trump confirmed the end of duty-free de minimis treatment for low-value imports from China and Hong Kong, which will start on 2 May 2025.
After this date, all relevant postal items valued at or under $800 which previously qualified for de minimis exemption will become subject to a duty rate of either 30% of their value or $25 per item, rising to $50 per item after 1 June.
It was one of many announcements made by President Trump to impose sweeping global import taxes on goods into the US from 9 April.
Air cargo demand is likely to suffer from other countries taking retaliatory measures.
Niall van de Wouw, Chief Airfreight Officer of Xeneta, says, “In my 30 years working in the air freight industry, I cannot remember any other unilateral trade policy decision with the potential to have such a profound impact on the market at a global level.”
He added that e-commerce has been a major driver of air cargo growing, saying, “If you suddenly and dramatically remove the oxygen from that demand, it will cause a seismic shock to the market.”
China to US e-commerce shipments account for half of capacity on the eastbound corridor and 6% of global demand.
The March data suggested that shippers and forwarders were hedging their bets and buying time before committing to long-term contracts, waiting to see what impact the tariffs and trade tensions will have.
Demand in March grew by 5% year-on-year against a strong comparison of 12 months ago.
Shippers are increasingly looking at short-term contracts with 79% lasting three months or less in Q1, up 20 percentage points on last year.
Freight forwarders placed 45% of volumes on the spot market.
Van de Wouw says, “With the growth of rates slowing overall, we’d normally expect to see shippers making longer capacity commitments to achieve more competitive rates, but, right now, this is clearly a gamble few shippers are ready to take – and this is before we’re even seeing tariffs impacting volumes.”
The tariffs will hit US consumers with higher prices and borders are likely to become more congested as US Customs and Border Protection process more shipments.
The US Department of Commerce says it has adequate systems in place to collect additional tariff revenue on the four million de minimis shipments entering the US a day.
Looking at different trade lanes, spot rates from Northeast Asia to Europe remained unchanged month-on-month at $4.28 per kg as airlines added more capacity to meet demand.
Spot rates on the Northeast Asia to Europe lane are 14% higher than last year due to strong e-commerce demand.
The trade imbalance means that rates declined 2% month-on-month and 14% year-on-year to $1.37 per kg.
Northeast Asia to North America spot rates increased 9% month-on-month to $4.17 due to the temporary removal of the de minimis threshold for Chinese shipments in early February.
Spot rates from North America to Northeast Asia were down 1% month-on-month in March and 20% year-on-year.
Fronthaul and backhaul rates both increased on the transatlantic corridor with westbound rates up 2% month-on-month to $2.51 per kg and 22% year-on-year.
Eastbound rates increased 4% month-on-month to $1.11 per kg and were 1% higher than last year.
Looking ahead, van de Wouw says no one benefits from uncertainty, saying, “Clearly, everyone will be waiting to see how the removal of the de minimis threshold and all the global tariffs already announced and those still to come will impact trade, as well as how quickly there will be less demand and, consequently, less airfreight. It’s all expectations right now, but we must expect the situation will get worse before it gets better.”