As the second quarter of 2025 unfolds, U.S. shippers, manufacturers, and e-commerce players are under much pressure from mounting tariffs and fast-evolving trade policies. Less-than-truckload (LTL) rates are rising even as freight volumes soften, and ports are bracing for sharp import declines.
Manufacturers, squeezed by costs and unpredictable demand, face new production hurdles. At the same time, fast fashion giants and online sellers are scrambling to restructure fulfillment models as the end of the de minimis exemption pushes more imports into the tariff spotlight.
Across the board, flexibility and speed are becoming non-negotiable in freight strategy. Here’s where the trade headwinds are hitting hardest — and what industry leaders are doing to adapt.
LTL Rates Climb Despite Freight Slowdown
LTL carriers continued to secure rate increases in Q1 even as freight volumes declined and shippers grew cautious. Major carriers like Saia and ABF Freight reported subdued demand starting in March, attributing the softness to tariff-driven uncertainty and reduced factory output.
Despite shipment declines, Saia alone reported a $25 million to $40 million revenue hit, and contractual LTL renewal rates climbed 4% to 6% on average. Capacity remains tight, partly due to Yellow’s 2023 collapse. It is this tight capacity that has helped raise LTL rates and prices. XPO’s CEO noted that pricing discipline remains intact.
However, experts warn that while LTL carriers benefit from domestic inventory positioning, a shift in demand or replenishment cycles could quickly change the balance.
West Coast Ports Brace for Steep Import Declines
U.S. West Coast ports, particularly Los Angeles and Long Beach, expect a 35% to 38% drop in imports for May and June as the U.S.-China trade dispute deepens. Fifty-nine sailings have been blanked, eliminating 65,000 to 71,000 TEUs weekly. The ports of Seattle-Tacoma and Oakland also report increased blank sailings, with terminals scaling back gate hours.
The ILWU has warned of job losses, given China’s dominance as a source of containerized imports. By contrast, Canadian ports like Vancouver remain stable, as U.S. tariffs have less impact on them. Port officials fear prolonged trade tensions will disrupt employment, cargo flows, and vessel schedules into late 2025.
Tariff Turmoil Drives Manufacturing Slump
The ISM Manufacturing PMI fell to 48.7% in April, signaling contraction, with production dropping sharply to 44% and export orders down to 43.1%. Tariff-driven cost pressures and policy uncertainty are stifling demand and factory output. Timothy Fiore of ISM described a widespread case of “tariff whiplash” among manufacturers, which are pulling back on production amid volatile trade policies.
Slower customs processing is delaying material deliveries, but lower demand mutes the impact. S&P Global’s PMI remained barely positive at 50.2, citing cost inflation and demand weakness. The sector awaits more stable trade policies, but forecasts suggest continued volatility through Q3.
Temu Shifts to US Fulfillment Model
Fast fashion retailer Temu has shifted to a U.S.-based fulfillment model to avoid the 145% tariffs on imports from China and the loss of the de minimis exemption for goods under $800. Temu had previously announced price hikes, but now says U.S.-based sellers will handle all domestic orders.
The move intensifies competition with Amazon and Walmart while Temu faces margin pressures from shifting supply chains and excess inventory. Rival Shein has also raised prices but appears less impacted due to narrower product categories and stronger logistics flexibility. Analysts say Temu’s pivot could reshape its U.S. strategy, though profitability challenges remain.
E-Commerce Sellers Scramble as De Minimis Exemption Ends
The U.S. ended the de minimis exemption for shipments from China and Hong Kong on May 2, subjecting small-value imports to the full 145% tariff. This move threatens the business models of thousands of e-commerce sellers and has already prompted price hikes from major platforms like Temu and Shein.
The exemption had covered 1.36 billion shipments in fiscal year 2024. More than 80% of e-commerce executives surveyed said the policy change jeopardizes their viability. U.S. brands like Kuru Footwear and ThirdLove are shifting supply chains to U.S. fulfillment or Vietnam sourcing to avoid higher tariffs, but many fear broader cost increases and product shortages ahead.
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