Flexport CEO Ryan Petersen: tariff chaos continues as 90-day pause expires, companies stuck waiting to plan

Summary

The 90-day pause on reciprocal tariffs that rattled global trade in April expired July 8, with rates reverting to their original April 2 levels at midnight. Ryan Petersen, CEO of Flexport, notes that a subsequent Truth Social post moved the effective collection date to August 1, creating a roughly three-week window for importers to rush goods in at the 10% baseline rate before higher country-specific duties kick in. That short runway is already shaping shipping decisions, though Petersen cautions that booking data is too fresh to draw firm conclusions.

China Tariffs: The Real Pressure Valve

The tariff move that genuinely disrupted freight markets was the 145% China rate announced in April. Its reduction to 30% has stabilized the situation considerably. Petersen describes customer sentiment as broadly normalised compared to 90 days ago, when he says importers were warning him of mass insolvencies. The caveat is that new country-level rates announced in the 24 hours before the interview had not yet filtered through freight booking behaviour.

Transshipment Rules: Undefined and Consequential

The administration has signalled that goods transshipped through Vietnam will face higher duties, but no formal rule has been published in the Code of Federal Regulations. Under existing customs law, transshipment has no effect on duty liability unless a product undergoes "substantial transformation" in the intermediate country, meaning it legally becomes a product of that country. Until the administration defines what it means by transshipment in this new context, supply chain teams cannot model the risk. Petersen argues the underlying goal is to pressure third countries like Vietnam to impose their own duties on Chinese inputs, effectively building a tariff coalition against China.

Vietnam, which offered the US duty-free access on American goods as a concession, still ended up with a 20-25% rate plus the unresolved transshipment provision, suggesting the floor for even cooperative trading partners is meaningful. The UK, which runs a trade deficit with the US, secured a 10% rate along with automotive exemptions, signalling to other countries that 10% is likely the best achievable outcome regardless of trade balance.

Tariff Structure: Three Variables Driving Every Decision

Duty liability on any shipment is determined by three factors: country of origin, product classification (including whether goods contain steel or aluminium components), and valuation. Petersen highlights a case where a US bicycle manufacturer that imports components and assembles domestically now faces duties on those components while finished imported bicycles received an exemption, creating a perverse incentive to offshore the assembly entirely.

Temu and Shein: De Minimis Disruption Fading

Both Temu and Shein appear to be transacting again after a brief halt when the de minimis exemption was closed. Because customs duties apply to the wholesale declared value, not the consumer retail price, the effective price increase to shoppers is meaningfully smaller than headline tariff rates suggest. Meanwhile, US apparel brands that compete directly with Shein report sales up materially, with Flexport's own fulfilment data showing customers exceeding forecasts, likely as consumer spend shifts away from the Chinese platforms.

Amazon's Structural Exposure

Petersen flags that 60% of Amazon marketplace sellers have no US legal entity, importing directly as foreign companies without a domestic party accountable to customs or product safety law. A bipartisan effort in Washington is pushing legislation that would require a US-registered importer of record. If passed, this would structurally disadvantage the long tail of Chinese-origin marketplace sellers that dominate commodity search results on Amazon today.

Strait of Hormuz: Market Scepticism

Despite heightened Middle East tensions, oil prices showed no sustained reaction, and when Iran threatened to close the Strait of Hormuz, prices actually fell 6%. Petersen reads this as markets treating the threat as non-credible, partly because roughly 25% of global oil supply transits Hormuz and China is a primary beneficiary, making Iranian action against that flow strategically self-defeating. Containerised trade through the strait represents only about 2% of global container volume, making the conflict largely irrelevant for freight markets.

Interest Rates and Inventory Financing

Petersen expects a rate cut cycle to trigger a significant capital expenditure and inventory investment surge, arguing that the low-rate era of 2% borrowing costs trained businesses to underinvest and that the lesson has been learned. He notes Amazon aggregators with heavy debt loads are already showing stress in the current rate environment, consistent with broader reports of that business model contracting.