Trends to Watch

Talking Tariffs

• Mexico to Implement Tariff of Up to 50% on China: On December 10, the Mexican government approved tariffs of up to 50% on China and a number of other nations without a trade agreement with Mexico. The duties will take effect in January.
  • Chinese exports to Mexico have surged in recent years, accounting for about 20% of all Mexican imports in 2024. Mexico’s upcoming duties will significantly impact Chinese auto exports in particular, with China representing 20% of total car sales in Mexico last month.
  • President Trump has repeatedly pressured Mexico’s President Claudia Sheinbaum to minimize Mexico’s reliance on China, after previously expressing concerns that Mexico is a “backdoor” for Chinese goods entering the U.S. under United States-Mexico-Canada Agreement (USMCA) trade terms. Mexico’s tariff announcement comes ahead of next year’s scheduled USMCA review and re-negotiation process.
• U.S.-Indonesia Trade Agreement Faces Uncertainty: On December 9, the Financial Times reported that the trade deal the U.S. and Indonesia struck in July could soon unravel, given a lack of agreement on certain binding terms.
  • U.S. trade officials have indicated that Indonesia is now “backtracking” on its earlier commitment to eliminating non-tariff barriers on U.S. industrial and agricultural exports, as well as barriers to digital trade. U.S. Trade Representative Jamieson Greer is scheduled to resume negotiations with Indonesia’s Coordinating Minister for Economic Affairs this week.
  • The trade agreement struck in July established a 19% U.S. tariff on Indonesia, while stipulating that Indonesia will eliminate non-tariff barriers on a range of U.S. exports. The 19% tariff took effect on August 7, alongside dozens of other modified country-specific reciprocal tariffs implemented that day. Other terms of the U.S.-Indonesia deal have yet to take effect, and are subject to change as negotiations continue.
• President Trump Indicates Possible Tariff Increase on Mexico: In a December 8 Truth Social post, President Trump announced plans to impose an additional 5% tariff on Mexican goods if Mexico does not release 200,000 acre-feet of water—just over 65 billion gallons—before December 31.
  • President Trump asserted that Mexico’s ongoing failure to release water to the U.S. violates the 1944 Water Treaty, which regulates the cross-border allocation of water from the Rio Grande and the Colorado River.
  • Following President Trump’s announcement, President Claudia Sheinbaum affirmed Mexico’s commitment to the treaty and announced plans to release more water to the U.S. However, she indicated that an immediate large-scale water release may not be possible due to infrastructure limitations.
• President Trump Suggests “Severe Tariffs” on Canadian Fertilizer: At a White House roundtable on December 8, President Trump stated that he may impose “severe tariffs” on Canadian fertilizer products in an attempt to bolster U.S. production. He did not indicate a timeline for implementation.
  • Canada is the U.S.’s largest supplier of potash, a potassium-based fertilizer. Currently subject to a 10% duty rate, Canadian-origin potash has accounted for more than 80% of all potash imported into the U.S. since 2020.
  • The Trump administration has increasingly focused on the U.S. agriculture sector in recent months. Earlier this week, President Trump announced that American farmers would receive $12 billion in the form of one-time bridge payments, funded by tariff revenue. And last month, President Trump expanded the list of agricultural imports exempt from reciprocal tariffs, as well as the list of goods exempt from the additional 40% IEEPA tariff on Brazil. Additionally, a number of recent trade agreements—including frameworks reached with Switzerland, Liechtenstein, Argentina, and other nations—emphasize the removal of tariff and non-tariff barriers on U.S. agriculture exports.
• Other Recent Developments:
  • Retroactive to November 14, 2025, most Korean goods imported into the U.S. are subject to a minimum tariff of 15%. Korean autos and auto parts are subject to the same duty structure, retroactive to November 1 instead of November 14. Korean furniture and vanity products are subject to a reduced 15% Section 232 tariff, while certain civil aircraft and aircraft parts are exempt from Section 232 and reciprocal duties.
  • On January 1, 2026, the Mexican government will introduce a series of customs reforms, including new regulatory controls on its Manufacturing, Maquiladora, and Export Services Industry (IMMEX) program. Businesses still leveraging IMMEX will face stricter documentation requirements concerning industrial processes, transactions, contracts, and inventory records. The upcoming customs reforms will also increase administrative penalties, with steep fines for non-compliance with certain import regulations.
  • On December 1, the U.S. and the U.K. announced an agreement in principle on pharmaceutical pricing. Per the agreement, the U.K. has agreed to a 25% increase in the net price it pays for new medicines. In return, the U.S. will exempt U.K. pharmaceuticals, pharmaceutical ingredients, and medical technology from Section 232 tariffs, once those duties take effect. The U.S. will also abstain from targeting U.K. pharmaceutical pricing in any future Section 301 investigation that takes place during the remainder of President Trump’s term.
  • Find the latest tariff and trade developments on our live blog.

Calculate your tariff and landed cost impacts in real time with the Flexport Tariff Simulator.

Ocean

TRANS-PACIFIC EASTBOUND (TPEB)

• Capacity and Demand:
  • Capacity levels remain relatively high, stabilized at 80-87% for the remainder of December. Total blanks are down year over year, from 30 in December 2024 to 21 this year.
  • Demand remains stable and flat, as the market did not experience a volume surge following the previously anticipated November 1 tariff hike.
• Freight Rates:
  • Carriers are continuing to mitigate rates for December 1. Carriers have announced a General Rate Increase (GRI) for December 15, driven by low rate levels rather than demand.
  • The Peak Season Surcharge (PSS) remains postponed until January.

FAR EAST WESTBOUND (FEWB)

• Capacity and Demand:
  • Ocean bookings have increased significantly following a recovery in European demand for consumer electronics and auto parts, along with businesses accelerating shipments ahead of the upcoming 2026 EU carbon regulations.
  • Congestion at key Asian and European ports is tightening available capacity, as operational inefficiencies reduce vessel turnaround and absorb effective space.
  • Far East: Ningbo is experiencing berthing delays of one and a half days, related to weather and dredging. Shanghai remains stable, but with occasional fog impacts. Southern Chinese ports are operating efficiently, but face potential container shortages. Congestion in Southeast Asia has led to feeder schedule delays in Vietnam and Cambodia.
  • Northern Europe: Rotterdam and Hamburg are experiencing operational delays due to winter storms and yard congestion. Inland transport is constrained by potential rail strikes and low water levels in the Rhine.
  • One voyage from East/South China to Belgium/Netherlands/Germany has undergone a last-minute cancellation. More last-minute blank sailings may occur in mid-to-late December, given ongoing delays in eastbound vessel returns driven by congestion at North European ports.
• Freight Rates:
  • Freight rates have seen a steady upward trend over the past month, marked by clear momentum despite minor short-term volatility.
  • The market is fundamentally supported by a pre-Chinese-New-Year shipment surge, which is driving a significant seasonal spike in demand.
  • Carriers are aggressively pushing General Rate Increases (GRIs) to elevate rate floors, with hikes of up to 40% announced for the second half of December. Carriers are strategically leveraging high spot rates to secure favorable terms in annual contract negotiations.
  • In the months ahead, a pivotal freight rate determinant is a potential resolution in the Red Sea, which could release substantial vessel capacity and alter the balance between supply and demand.

TRANS-ATLANTIC WESTBOUND (TAWB)

• Capacity and Demand:
  • North Europe and West Mediterranean: Demand remains weak, pushing carriers to reduce rates and manage capacity through blank sailings.
  • East Mediterranean: Stronger demand supports newly announced General Rate Increase (GRI) and Peak Season Surcharge (PSS) increases, effective January 1, 2026.
• Equipment:
  • Critical container and chassis shortages persist across Austria, Slovakia, Hungary, Southern and Eastern Germany, and Portugal, disrupting operations and limiting equipment availability.
  • While Southern European ports are experiencing fewer constraints, supply remains tight throughout the network.
• Freight Rates:
  • North Europe and West Mediterranean: Weak demand and excess capacity continue to maintain low rates, with spot levels stable at historic lows.
  • East Mediterranean: Strong demand previously triggered PSS announcements for November. However, carriers postponed implementation until January of 2026, as current volume growth remains insufficient to offset weak demand in the West Mediterranean.

INDIAN SUBCONTINENT TO NORTH AMERICA

• Capacity and Demand:
  • Supply continues to outstrip demand on routes from the Indian subcontinent to the U.S., related to August’s tariff escalation. Activity remains positive from other countries in the region, such as Pakistan, Bangladesh, and Sri Lanka.
  • To the U.S. East Coast: Blank sailings are ongoing.
  • To the U.S. West Coast: Capacity remains available, given supply dynamics on the TPEB into the U.S. West Coast.
• Freight Rates:
  • To the U.S. East Coast: Heading into the back half of the month, rates are holding steady.
  • To the U.S. West Coast: August’s tariff increases and oversupply on core TPEB lanes continue to maintain low rate levels.

Air

• North China:
  • Activity from this region remains elevated, driven by strong demand for general cargo and ecommerce shipments. However, early signs suggest demand may begin to moderate toward mid‑December.
  • As the season progresses, reduced charter operations could slightly ease capacity pressure, leading to a gradual market correction by late December.
• South China:
  • Peak season demand continues to generate strong market activity, despite some flight cancellations and temporary capacity constraints.
  • Shippers aiming for timely pre‑holiday deliveries are encouraged to confirm bookings early, while more flexible shippers may benefit from potential discounts after the peak period later in the month.
• Taiwan:
  • Market conditions are expected to remain firm through the end of the year, supported by strong technology-related cargo flows that are keeping aircraft capacity tight.
  • Operational challenges caused by equipment issues and weather‑related disruptions continue to limit available space, particularly on Trans-Pacific services.
• Vietnam:
  • Ongoing congestion at origin points is adding several days to transit times.
  • Capacity remains fully booked until mid‑December, and some destinations are temporarily closed for new bookings. Shippers are encouraged to plan ahead or consider alternative routings where possible.
• Cambodia:
  • High demand continues to exceed available air capacity; earlier bookings are required for key long‑haul routes.
  • For shippers looking to secure uplift during this busy period, advance scheduling of up to two weeks is now common practice.
• South Korea:
  • As strong demand persists, direct flight space remains limited. Some destinations are temporarily unavailable, and carriers are prioritizing smaller consignments.
  • Forward planning and early bookings remain essential for ensuring uplift.
• Malaysia:
  • Congestion at major air hubs has extended overall transit times. Most carriers have indicated limited capacity until mid‑December.
  • Shippers should book well in advance to secure space and minimize additional delays.
• Indonesia:
  • Strong export demand persists, with congestion reported at primary gateways and transshipment hubs.
  • Shippers should place bookings about a week before cargo readiness to avoid delays, while keeping customers informed of variable transit conditions.
• Thailand:
  • Local market demand remains high, and terminal operations are recovering from recent backlogs.
  • While the situation is gradually improving, most carriers remain highly booked and new capacity is limited.

(Source: Flexport)

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North America Vessel Dwell Times

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Ocean Timeliness Indicator

Transit time decreased from China to the U.S. West Coast and China to North Europe, and increased from China to the U.S. East Coast.

Week to December 8, 2025

Transit time decreased from 34.9 to 32.6 days from China to the U.S. West Coast; increased from 52.5 to 61.7 days from China to the U.S. East Coast; and decreased from 60.8 to 54.2 days from China to North Europe.

See the full report and read about our methodology here.