The newly announced 12-month trade truce between the United States and China may ease tensions, but it won’t stop the downward spiral in global ocean freight rates, according to new analysis from Xeneta, the ocean and air freight rate benchmarking platform.

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Announced in Busan, South Korea, the agreement includes a 10% reduction in fentanyl-related tariffs and the suspension of port fees, offering short-term relief for shippers. However, spot container rates on the China–U.S. West Coast trade have already plunged 59% year-on-year to $2,147 per FEU, while East Coast rates are down 48% to $3,044 per FEU as of October 31.

“The U.S.–China truce is a positive development, but it will not suddenly breathe life into weakening ocean container shipping demand on Transpacific trades,” said Emily Stausbøll, Senior Shipping Analyst at Xeneta.

Weak Demand and Oversupply Pressure Rates

The rate decline mirrors a broader slowdown in trade volumes. Container shipping demand from China to the U.S. fell 13% year-on-year in August, as importers continue to manage bloated inventories built up earlier in the year.

According to Xeneta’s latest outlook, global spot rates are expected to drop by up to 25% through 2026, while long-term contract rates could fall another 10%, leaving prices about 20% below December 2023 levels — before the Red Sea crisis escalated.

“Overcapacity of container shipping supply will be rampant in 2026 against subdued demand,” Stausbøll warned. “Carriers face an almighty struggle to fill vessels on the critical China–U.S. trades because the tariff reductions announced this week won’t fundamentally change market dynamics.”

What’s in the Trade Truce

The agreement delivers a temporary pause in tariff escalation. The U.S. will cut fentanyl-related tariffs from 20% to 10%, reducing the average tariff burden on Chinese imports from 57% to around 47%.
In return, China will suspend its new export controls on rare earth minerals and magnets for one year and has committed to purchasing 12 million metric tons of U.S. soybeans during the current marketing season.

The Trump administration also paused new port fees on Chinese-built, -owned, and -flagged ships — charges that had added millions in voyage costs since October 14. The fees were designed to revive U.S. commercial shipbuilding, but Stausbøll noted they were halted “without any progress being made on the issue that was nominally cited as the reason they were needed.”

Uncertain Horizon Beyond 2026

While the truce averts a threatened 100% tariff on Chinese goods, analysts caution it offers little stability for long-term supply chain planning.

“It takes longer than 12 months to set up manufacturing facilities in another nation if a shipper wants to shift supply chains out of China,” Stausbøll added. “No one can say with certainty what the situation will be when the truce expires — or even if it will last the full 12 months.”

For now, the fragile ceasefire between the world’s two largest economies provides short-term political relief, but the structural imbalance between capacity and demand is expected to keep container freight rates under pressure well into 2026.