One key chart to watch out for in the months ahead

From the previous trade embargo, it’s basically a complete reversal in circumstances now. Customers and businesses are all piling in orders during this 90-day rush period. But what does it all really mean? Well, all you have to do is think back to the second half of 2020 of the Covid pandemic. We went from major lockdowns across the globe and then restarting everything again.

That increased pressure on supply chains as global shipments suddenly skyrocketed again. This time around, the “lockdown” period is less and it mainly only pertains to China. However, that still has a major impact on supply chains and it will likely only start showing up more evidently in the months ahead and in the second half of the year.

And even more so when we still don’t know the fate of US-China negotiations in the coming 90 days or longer.

As mentioned before: Tariffs policy can change overnight but supply chains cannot

With the easing on tariffs earlier this week, it is reported that ocean freight bookings from China to the US are already up 275% this week compared to last week (h/t @ typesfast). That’s the first step of how things are going to play out as per the linked post above.

Eventually, the main worry here is that all of this will be one part that leads to higher prices and in turn, higher inflationary pressures. That was part of the equation that contributed to the surge in price pressures in 2021 and 2022.

Central banks at the time kept insisting that it was all “transitory” but look where we are today. Sure, it looks to be that way but nobody said anything about the timeline for “transitory” I guess.

So, just be wary of the situation that’s unfolding now as US-China tariffs do come down for the time being. This chart above is going to be one to watch to see how material the impact might be on the supply chain, amongst other hard data.

This article was written by Justin Low at www.forexlive.com.