Air freight rates soar as Trump tariffs spur rush to import goods

Air freight costs from China to the US have jumped 37% as businesses rush to import goods to avoid Trump’s new tariffs. But the market is facing a sharp downturn as the US government prepares to eliminate exemptions for small shipments.

Air freight costs soar as demand to avoid US tariffs

Air freight costs soar as demand to avoid US tariffs (Photo: The Caribbean Council / Phaata)

The cost of air freight to the US has risen sharply as businesses rush to get products into the country before new tariffs are imposed under President Donald Trump’s policies.

Exporters, from pharmaceutical companies to technology hardware makers, are paying nearly 40% more to ship goods from China to the US than they did four weeks ago. Some businesses are still accepting higher prices to import by air before Trump’s new round of tariffs takes effect in the coming days, according to transport operators.

However, the market is also bracing for a “seismic shock” as the Washington administration pledges to eliminate tariff exemptions for small shipments. This mechanism has helped boost demand for air freight in recent years, especially from Chinese online retailers.

According to the latest data from market tracker Xeneta, the cost of shipping goods from China to the US on a spot basis increased by 37% between the first and last weeks of March, to $4.14/kg. This price had been gradually decreasing since the peak of the Christmas shopping season.

The average cost of shipping goods from Europe to the US by air also increased by 7%, to $2.61/kg in the same period.

Businesses Boost Air Freight to Avoid Tariffs

The surge in demand for air freight—which is faster but more expensive than ocean freight—shows that businesses are willing to absorb higher costs to avoid being hit by Trump’s new tariffs.

Logistics operators have repeatedly warned that the increased costs of Trump’s tariffs will soon be passed on to consumers.

Although China-US air freight rates remain below their peaks a year ago, strong export demand from Chinese retailers and attacks on ships in the Red Sea by the Houthi militia group have boosted air freight at the time.

On what Trump called “Liberation Day,” he announced a new minimum tariff of 10% on all imports into the US. For imports from China, Trump imposed an additional 34% tariff on top of the 20% tariff already in place since the beginning of the year.

Before the announcement, a senior executive at a global logistics group said: “lots of companies were trying to push in more products by air than they normally would, especially over the last three weeks.”

This included producers of high-cost goods like European pharmaceutical companies and Asian manufacturers of data centre equipment, he added.

On Thursday, Danish shipping and logistics group AP Møller-Maersk also predicted a further wave of air freight orders to the US ahead of the new tariffs. Washington announced that the 10% tariff would take effect on April 5, before higher tariffs were imposed on April 9.

A big shock to the air freight market?

While shipping companies are benefiting from the increased demand, the market is also worried about a sharp decline in the coming period after Washington announced it would eliminate “de minimis” tariff exemptions for shipments under $800 as soon as the additional tax collection system is established.

The exemption has allowed retailers such as Shein and Temu to ship goods from China to the US at low costs, boosting air freight demand and revenues for airlines and cargo operators.

“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,” said Niall van de Wouw, director of air freight at Xeneta.

“Ecommerce has been the main driver behind air cargo demand. If you suddenly and dramatically remove the oxygen from that demand, it will cause a seismic shock.”

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