According to the joint statement from the China-US Geneva Trade Talks released on Monday this week, significant substantive progress has been made in the trade negotiations between China and the United States, particularly with respect to tariffs. The key point of the agreement is that the US has agreed to cancel 91% of the additional tariffs, and China has reciprocated by canceling 91% of its retaliatory tariffs. Additionally, both sides have agreed to suspend the implementation of 24% "reciprocal tariffs" for 90 days. This measure provides strong momentum for the recovery of bilateral trade relations, and it is expected that trade between China and the US will see significant growth in the next 90 days.

Impact of the Trade Negotiations

First and foremost, the substantial reduction in tariffs will directly lower the import costs for businesses, especially for US importers and Chinese exporters. The reduction in tariffs means that goods between the two countries will flow more smoothly, helping to restore trade that had been restricted by high tariffs in the past. Specifically, US importers are expected to begin large-scale procurement of Chinese goods again, to make up for the purchasing delays caused by the increased tariffs. Additionally, US exporters may increase their supply to the Chinese market, particularly in high-tech, machinery, and raw materials sectors, which could lead to new growth opportunities.

Impact on Shipping

From a shipping perspective, as bilateral trade recovers, there is a notable upward trend in shipping demand, particularly for container shipping on trans-Pacific routes. According to reports, the cost of shipping a 40-foot container on trans-Pacific routes has risen from $2,000 in mid-April to approximately $2,500 this week. This increase indicates that as trade between China and the US grows, the surge in demand has forced shipping companies to raise prices to handle the overload of transportation pressure, which may lead to higher transportation costs for some companies.

On the other hand, shipping companies stand to benefit from this trend, especially those primarily operating on trans-Pacific routes. In this context, shipping stocks have seen a significant rise. For example, Sealand International saw a nearly 7% increase, Kingdom Group and Pacific Shipping both saw gains of over 6%, while Orient Overseas International and TSL Shipping increased by more than 5%, indicating investor optimism about the industry’s future prospects.

(Image Source: uSMART HK)