Insights 
VT 
US-China tariffs have been temporarily reduced, creating a rush for orders during a 90-day period. The situation replicates the post-lockdown surges from late 2020, where global supply chains faced increased strain as shipments rose sharply.
The Global Supply Chain Pressure Index reflects these pressures, with its impact expected to become evident in the latter half of the year. This remains uncertain due to ongoing US-China negotiations, which could extend beyond the initial 90 days.
Supply Chain Inflexibility
Supply chains are not as flexible as tariff policies, meaning changes in the latter do not instantaneously resolve supply chain issues. This week, ocean freight bookings from China to the US increased by 275% compared to last week, indicating potentially heightened pressures.
Concerns remain that the tariff easing might contribute to rising prices and inflationary pressures, similar to those seen in 2021 and 2022. Central banks previously termed such pressures as “transitory,” though the timeline remains unclear.
It is important to monitor data, such as the Global Supply Chain Pressure Index, to assess the material impact of current changes on supply chains and broader economic factors.
We’ve seen this before. When tariffs are cut, even temporarily, everyone rushes to place orders before the window closes. The current 90-day reprieve has echoed the frenzy observed just after restrictions lifted in late 2020. Then too, exporters raced against time, flooding ports with goods amid uncertainty over what would follow. And we all recall how that played out — backlogs, uneven pricing, shortages in some corners and overstocking in others. The chain didn’t snap, but it certainly buckled.
This week’s 275% rise in ocean freight bookings out of China isn’t just a statistical hiccup. It’s an early sign. When a single lane of trade reacts so suddenly, it often hints at broader shipment adjustments downstream. We should expect spot rates for containers to behave erratically — climbing sharply on stressed routes, spilling into short-term contracts and raising short-haul domestic logistics costs as warehouses fill out of order.
Powell and his colleagues tried to frame the last episode of supply-driven pricing pressure as temporary, but we spent months trying to assess where and when the inflation would flatten. While Fed language may now be more cautious, the market implications are quicker to surface, and far harder to ignore. When importers buy aggressively during a tariff lull, they often front-load inventories. If those orders collide with restocking cycles already underway, demand for freight jumps while available capacity stutters. That’s when price runs look less like recoveries and more like disruption.
Understanding The Implications
We shouldn’t rely solely on headline trade data — the Global Supply Chain Pressure Index gives a better reflection of tightness across logistics and manufacturing. Particularly in a setting where production schedules are shaped less by end-user demand and more by artificial policy windows, input costs and shipping premiums become difficult to predict.
The US–China negotiation process will almost certainly lean past the 90-day mark. But traders should work with what’s in place now, not what’s hoped for. Up until an agreement is formally confirmed, market participants will likely act as if the window won’t be extended — which, in practical terms, means consortium bookings, early fulfilment requests, and premium freight rates gaining ground over standard scheduling.
Yellen and her team’s stance on core inflation readings was always dependent on forward-looking metrics. In this context, weekly freight bookings, port congestion snapshots, and average lead times take on greater weight. Inflation isn’t just influenced by rates — it’s shaped by how efficiently goods can move. If that mobility is visibly strained, pricing pressure moves upstream quickly.
For those of us reading derivative signals from this kind of dislocation, the key isn’t in the tariff direction itself, but in mismatches between what suppliers can deliver and what importers demand. When those diverge too far, hedging activity intensifies — first in rates tied to shipping capacity, and then further along into energy costs and cross-currency movements.
Keep in mind: supply corrections don’t always follow demand. They lag. So while the initial response may look like strength — heightened bookings, upbeat order volumes — we should be cautious about how that strength plays out. Inventory glut in late quarters can suppress margins quickly.
We’ll continue watching short-term rates on containerised freight alongside regional warehouse capacity indexes. These give better leading clues than traditional inflation reports, which tend to smooth past the very bumps that can inform trade positioning.
