By year-end, the U.S.–China trade relationship showed its first sign of forward motion after months of contraction. December broke a year-long pattern as U.S. exports to China finally edged past their 2024 levels, a shift that followed renewed diplomatic engagement earlier in the quarter. Imports, however, told a very different story. Volumes from China into the U.S. remained well below last year’s pace, underscoring that the imbalance in the trade relationship has yet to meaningfully unwind.
Shipping data points to a parallel adjustment in how the market is operating. The sharp spike in blank sailings seen after the April tariff rollout has largely eased, with carriers pulling fewer services as demand and capacity realigned. Volatility has not disappeared, but it has narrowed. What is taking shape is not a return to old trade patterns, but a recalibrated system in which freight volumes, sailing schedules, and sourcing decisions are being made against a permanently higher tariff backdrop rather than a temporary disruption.
The tariff reset that shaped 2025
The most consequential trade development of 2025 occurred on April 2, when the U.S. government implemented a broad revision of its tariff framework under the Liberation Day initiative. A uniform 10 percent tariff was applied across the majority of imported goods, while targeted sectors including steel, aluminum, automobiles, and auto parts were subject to materially higher duties under Section 232. Several auto-related categories reached tariff levels of 25 percent, and the expanded application of the International Emergency Economic Powers Act further widened the scope of affected products. In certain cases, total tariff exposure rose beyond 40 percent.
The market response was swift and largely predictable. Import costs increased immediately, carrier networks and sourcing plans were disrupted, and companies moved quickly to reassess procurement strategies, pricing assumptions, and inventory positioning. Front-loading activity accelerated ahead of implementation deadlines, followed by a pronounced slowdown as higher landed costs and policy uncertainty weighed on demand. While these reactions were framed as short-term adjustments, they set in motion structural shifts that continued to influence trade flows and shipping behavior through the remainder of the year.
From disruption to normalization in ocean schedules
Carrier capacity responded quickly to the policy shock introduced in the second quarter. Blank sailings surged in April as operators reduced services to manage abrupt shifts in demand and heightened uncertainty. Across six major U.S. trade lanes, April recorded a total of 131 blank sailings, the highest monthly figure in 2025. The Asia–U.S., China–U.S., and U.S.–China corridors accounted for the majority of cancellations and remained the most exposed to volatility over the course of the year.
Conditions began to stabilize in the months that followed. By December, total blank sailings had declined 53 percent from the April peak, falling to 62 across the same routes. Although this marked a 35 percent increase compared to November, the level aligns more closely with standard capacity management practices than with the exceptional measures seen earlier in the year.
Taken together, the data indicate that carriers have adjusted network planning to operate within the constraints of the revised tariff environment. The aggressive capacity withdrawals of early 2025 have largely been replaced by more measured scheduling decisions, suggesting that while variability remains, the market is no longer operating in a reactive mode.
A closer look at December sailing patterns
December figures broadly support the view that sailing schedules have stabilized, though not uniformly across all lanes. Asia–U.S. recorded the highest number of blank sailings at 22, followed by U.S.–China at 16 and U.S.–Asia at 9. On a year-over-year basis, most routes showed meaningful improvement. Blank sailings declined 64 percent on the China–U.S. lane, fell 40 percent on U.S.–Asia, and dropped 36 percent on U.S.–China compared to December 2024.
The Asia–U.S. lane stands apart from this trend. Blank sailings on this route increased 69 percent year over year, representing nine additional cancellations. This divergence is likely linked to recent tariff measures announced by Mexico on imports from several Asian countries, set to take effect in January 2026. Market anticipation of these tariffs appears to be influencing routing and shipment timing decisions, placing additional pressure on Asia–U.S. services even as capacity on other trade lanes continues to normalize.
U.S.–China trade: lower volumes, uneven adjustment
Despite more constructive diplomatic signaling and limited tariff easing, trade flows between the United States and China remain materially below prior-year levels. The data points to a structural adjustment rather than a temporary slowdown.
On the import side, shipments from China to the U.S. were running 34 percent below December 2024 levels, with full-year volumes down 28 percent year over year. This trajectory reflects a pattern that persisted throughout 2025: elevated activity ahead of tariff implementation followed by sustained softness as higher landed costs and inventory normalization reduced demand.
At the same time, China continued to deepen trade relationships beyond the U.S. Its trade surplus exceeded $1 trillion for the first time, highlighting that declining dependence on U.S. demand has become an operational reality rather than a strategic objective.
U.S. exports to China experienced even greater pressure. Year-to-date volumes were down 38 percent, largely reflecting retaliatory tariffs imposed by Beijing. Late-year data, however, suggests a modest inflection. November recorded the smallest year-over-year decline of the year, and December registered a 13 percent increase compared to December 2024, marking the first month of positive growth for U.S. exports to China in 2025.
While renewed high-level engagement in late October likely contributed to this improvement, its effects have thus far been confined to export flows. Import volumes from China have yet to show a comparable response, reinforcing the asymmetry in the current trade adjustment.
The China pullback runs deeper than tariffs
Category-level data suggests the pullback is structural, not just cyclical. In May 2025, U.S.-bound exports from China declined sharply across key product groups, with electrical machinery, industrial equipment, furniture, and toys all posting double-digit year-over-year contractions. Notably, electronics such as smartphones and computers continued to weaken despite being exempted from additional reciprocal tariffs, underscoring that tariff relief alone has not been enough to revive demand. The U.S. share of China’s total exports has continued to shrink, while ASEAN’s share has expanded, reinforcing the sense that sourcing realignment is now embedded rather than tentative.
Sourcing shifts beyond China
As U.S. import volumes from China declined, sourcing strategies continued to evolve, with Southeast Asia absorbing a growing share of displaced demand. Indonesia and Thailand emerged as the most prominent alternatives, recording year-over-year import growth of 34 percent and 29 percent, respectively, compared to 2024.
This expansion occurred despite both countries remaining subject to tariff increases of approximately 19 percent since January, in addition to product-specific surcharges. The persistence of demand growth suggests that diversification in 2025 has been driven less by short-term cost considerations and more by supply chain risk mitigation and longer-term sourcing resilience.
Performance across the region, however, has been uneven. Thailand posted year-over-year declines in both November and December, extending a two-month contraction. Given the country’s exposure to consumer goods linked to seasonal demand, these declines are more likely indicative of softer end-market consumption than of a shift away from Thailand as a sourcing location. Indonesia, in contrast, continued to register growth through year-end, reinforcing its position as an increasingly central node in U.S. import diversification strategies.
Legal uncertainty remains a key variable
While operational indicators suggest that market conditions have stabilized, the underlying policy environment remains unresolved. A pending Supreme Court case will determine the constitutionality of the administration’s expanded use of tariff authority under the International Emergency Economic Powers Act. At the same time, several major importers have initiated legal actions seeking refunds for duties they contend were improperly assessed.
Although diplomatic engagement has resulted in limited tariff relief for certain allied countries, the flat 10 percent baseline tariff and additional sector-specific surcharges remain firmly in place. Until legal and regulatory outcomes are clarified, the potential for renewed disruption persists, even as shipping activity appears relatively orderly in the near term.
Implications for the market
By the close of 2025, global trade had moved beyond its most volatile phase. Blank sailings peaked in April and declined as carriers adjusted capacity and demand patterns stabilized. U.S.–China trade volumes remain materially lower than a year earlier, but the improvement in exports late in the year indicates that commercial ties have not fully disengaged. In parallel, sourcing diversification, particularly toward Southeast Asia, has shifted from a tactical response to a more established operating model.
The market is no longer responding to an acute shock. Instead, it is functioning within a redefined framework shaped by sustained tariffs, legal uncertainty, and geopolitical considerations. Whether this framework holds will depend less on near-term shipping dynamics and more on policy decisions still unfolding through judicial and diplomatic channels.