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- October 17, 202613°
- BIST10011,722-2.89%
- USD49.45+0.05%
- EUR55.62+0.37%
- GOLD4,181.10+0.26%
- INTEREST37.00%-1.00
- BITCOIN81,159-0.42%
- October 17, 202613°
US customs tariff expectations push freight rates to 2-year high
Forced-labor tariffs imposed by the US on 60 countries and Trump's digital tax threats have driven global shipping costs to their highest level in two years. According to a Financial Times report, the freight index climbed 80 percent, while experts see opportunities for Arab markets.
Global shipping costs have hit their highest level in two years as companies rush to boost inventories ahead of new US customs tariffs.
Freight index rises 80 percent
According to a Financial Times report, container shipping costs between Asia and Europe and between Asia and the US East Coast have reached their highest level since the summer of 2024. During that period, Houthi attacks in the Red Sea had significantly increased freight and insurance costs.
The Platts index, which measures container ship freight prices, has risen 80 percent to its highest level since April 2022.
Senior executives told the FT that expectations of new US customs tariffs in July have prompted retailers to accelerate stockpiling, which they normally do ahead of the holiday shopping season, thus boosting demand.
Forced-labor tariffs on 60 countries
According to a New York Times report, US Trade Representative Jamison Greer said investigations had revealed that 60 countries have not enacted or effectively enforced laws banning the import of goods produced through forced labor. Greer stated that this situation forces American workers to compete on "unequal terms."
As a result, the US administration decided to impose a 12.5 percent customs duty on 60 countries, including China, India, Brazil, South Korea, Switzerland, and the United Kingdom. Products imported from the European Union, Canada, and Mexico face duties of approximately 10 percent, while most goods that comply with Canadian and Mexican rules of origin are exempt from these tariffs.
Reaction and alternative legal path
After the Supreme Court ruled that the president had exceeded his authority to impose tariffs under the International Emergency Economic Powers Act, the Trump administration now plans to reimpose the tariffs using Section 301 of the Trade Act of 1974. With the current tariffs set to expire at the end of July, the administration is accelerating its search for a legal basis.
Meanwhile, in a post on Truth Social on Friday, Donald Trump threatened to impose a 100 percent customs duty on European countries that impose digital services taxes on US companies such as Apple, Amazon, and Alphabet, the owner of Google. Trump stated that such taxes would take effect immediately and could override previous trade agreements.
Opportunity for Arab markets
London-based economist Ziyad al-Hashimi, in an assessment for Al Jazeera, said the US tariffs could redirect China and India toward Arab markets. Al-Hashimi noted that after Trump's first-term tariffs, China sought alternative markets, particularly in the Middle East and Africa.
According to al-Hashimi, Arab countries can benefit from this shift by obtaining discounted prices or more favorable deals. Additionally, Arab ports could gain from a heavier flow of goods from Asia.
The economist also emphasized that the tariffs would increase the cost of intermediate goods US companies source from Asia, thereby raising domestic prices in the US, while affecting costs in Arab countries to a lesser extent. He added that the full reopening of the Strait of Hormuz would have a much greater impact than the current freight rate increases.
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