Impact of Trump Tariffs and Container Rates on RORO Shipping

Executive Summary

This report analyzes the impact of the tariff measures implemented under the Trump administration, the current container shipping rate trends, and how these factors affect cargo transportation via Roll-on/Roll-off (RORO) vessels. The Trump tariffs have significantly influenced international trade volumes, particularly affecting goods such as automobiles and construction machinery that are likely to be transported by RORO vessels. Container shipping rates fluctuate due to various factors including fuel prices, supply and demand balance, and port congestion. These fluctuations may encourage the use of RORO vessels for certain types of cargo. This report provides a detailed examination of the overall impact of the Trump tariffs and container rate fluctuations on RORO vessel operators and related industries.

Trump Administration Tariff Measures

Overview of "Reciprocal Tariffs" and Other Measures:

• President Trump announced a "reciprocal tariff" targeting countries with trade surpluses against the United States. This measure is not limited to specific countries, suggesting the potential for broad impact.
• The underlying intent of these tariffs is clear: to address unfair trade practices, currency manipulation, and trade barriers. This approach is rooted in the long-standing U.S. trade deficit.
• As of April 5, 2025, a base tariff of 10% on nearly all imports from abroad has taken effect. This measure was implemented under the authority of the International Emergency Economic Powers Act (IEEPA) of 1977.
• For countries with the largest trade surpluses against the U.S., higher, individualized reciprocal tariffs came into effect on April 9, 2025. These tariff rates were calculated based on the tariffs and non-monetary trade barriers that those countries impose on U.S. goods.
• Exemptions to the base tariff include books and other informational materials, steel and aluminum products, automobiles and auto parts (which are already subject to Section 232 tariffs), copper, pharmaceuticals, semiconductors, timber, raw metals, and energy products.

Analysis:
The implementation of a nearly universal base tariff alongside targeted higher tariffs for countries with significant trade surpluses indicates a broadly protectionist approach. By including both tariffs and non-monetary trade barriers in the calculation of higher tariffs, a layer of complexity is introduced that may increase the likelihood of trade disputes. The exemptions suggest a strategic prioritization of specific critical industries and goods.

Chain of Thought:
The Trump administration's strategy can be viewed as twofold. First, a general tariff exerts pressure on all trading partners. Second, higher tariffs target specific countries with large trade surpluses, using their own trade barriers to justify the U.S. response. The exemption measures likely aim to minimize disruption to essential sectors and avoid double taxation on goods already covered by other tariff regimes.

Tariffs on Automobiles and Auto Parts

• Under Section 232 of the Trade Expansion Act of 1962, citing threats to U.S. national security and the domestic industrial base, a 25% tariff on imported passenger vehicles—including sedans, SUVs, minivans, and cargo vans—as well as light trucks, came into effect on April 3, 2025.
• Key automotive parts such as engines, transmissions, powertrain components, and electrical systems are also subject to a 25% tariff, scheduled to take effect by May 3, 2025. This measure may be expanded to include additional parts as deemed necessary.
• For automobile imports that comply with the United States-Mexico-Canada Agreement (USMCA), a provision allows the 25% tariff to apply only to the value of non-U.S.-origin content. An importer certification process will be implemented. USMCA-compliant auto parts will remain exempt from tariffs until the Secretary of Commerce, in consultation with U.S. Customs and Border Protection (CBP), establishes the procedures for applying tariffs to non-U.S.-origin components.
• These tariffs are expected to raise vehicle prices for U.S. consumers—by an estimated $5,000 to $10,000 or more for certain models—while increasing financial pressure on automakers that depend on global supply chains. This could price some prospective buyers out of the market.

Analysis:
Significant tariffs on automobiles and auto parts are a key component of the Trump administration’s trade policy, directly impacting international trade in goods typically transported by RORO vessels. The USMCA provisions suggest an attempt to balance protectionism with the maintenance of regional trade flows. The anticipated price increases may influence consumer behavior and lead to a reduction in import volumes.

Chain of Thought:
By invoking national security as the justification for auto tariffs, the administration reflects its belief in the necessity of a resilient domestic automotive industry. The exemption measures under the USMCA are likely aimed at minimizing disruption within North America. However, the broad 25% tariff on other imports significantly increases costs for both manufacturers and consumers, potentially reducing demand for imported vehicles—and thereby impacting RORO vessel shipping volumes.

Tariffs on Construction Machinery (Steel and Aluminum-Related)

• To strengthen domestic production, a uniform 25% tariff on all imported steel and aluminum products was enacted on March 12, 2025. As these metals are key components in the manufacturing of construction machinery, the tariffs directly impact the cost of such equipment.
• The aluminum tariffs have also been extended to include consumer goods such as beverage cans and beer cans, suggesting a broad scope beyond strictly industrial use.
• Not only are imported construction machines expected to see price increases, but domestically manufactured equipment may also become more expensive due to higher raw material costs. It is estimated that overall construction machinery prices may inflate by 4% to 21.5%.
• Additional tariffs on timber and wood products are under consideration, implying the potential for wide-ranging effects across the construction industry.

Analysis:
Tariffs on steel and aluminum directly raise production costs for both domestic and foreign manufacturers of construction machinery. This increase is likely to translate into higher prices for end-users and may reduce the volume of construction machinery traded—particularly machinery transported via RORO vessels.

Chain of Thought:
Construction machinery is heavily dependent on steel and aluminum. A 25% tariff on these inputs imposes a direct cost burden on manufacturers. While the policy aims to revitalize domestic metal industries, it simultaneously increases the cost of construction projects, potentially reducing demand for new machinery. This, in turn, could lead to a decline in the volume of construction machinery shipped by RORO vessels.

Country-Specific Reciprocal Tariffs (Examples)

• In addition to a previously announced 20% tariff, China is now subject to a 34% reciprocal tariff, bringing the total tariff burden on Chinese products to over 54%.
• Vietnam faces a 46% tariff, Cambodia 49%, the European Union 20%, Japan 24%, and South Korea 25%, placing significant pressure on these major exporters to the United States.
• Canada and Mexico were initially subject to a 25% tariff; however, goods compliant with the United States-Mexico-Canada Agreement (USMCA) have since been exempted. That said, non-USMCA-compliant energy and potash products remain subject to a 10% tariff, while other non-compliant goods are taxed at 25%.

Analysis:
High reciprocal tariffs on major manufacturing hubs such as China and Vietnam substantially increase the cost of goods imported from these countries—including automobiles and construction machinery components. This is likely to result in a decrease in trade volume via RORO vessels from these regions. The USMCA exemption reflects a differentiated approach toward trade within North America.

Chain of Thought:
High tariffs on manufacturing powerhouses like China and Vietnam significantly raise the cost of exporting to the U.S., which could lower demand for these goods. This, in turn, may reduce RORO shipping volumes from these countries to the U.S. The USMCA exemptions signal an effort to preserve relatively free trade within North America, although tariffs on non-compliant goods still present ongoing challenges.

Retaliatory Measures

• In response to the Trump administration’s tariff actions, China has announced a 34% tariff on all U.S.-made products, imposed restrictions on the export of rare earth elements, and introduced sanctions against U.S. companies.
• Canada and the European Union have also implemented or indicated plans to impose countermeasures on U.S. products in response to tariffs on steel, aluminum, and potentially automobiles.

Analysis:
Retaliatory tariffs further escalate trade tensions and could lead to a broader trade war, negatively affecting global trade volumes—including sectors tied to RORO shipping—on both inbound and outbound routes.

Chain of Thought:
When major trading partners impose retaliatory measures, it creates a chain reaction of tariff impositions that collectively reduce overall trade. For RORO shipping, this not only implies a potential decrease in imports to the U.S., but also presents challenges for exports—such as automobiles and construction machinery—that may face higher tariffs in other countries. This could result in a decline in RORO vessel volumes departing from the United States.

Table 1: Trump Administration Tariffs on Major RORO Cargo (April 2025)

Country/Region	Tariff on Automobiles	Tariff on Auto Parts	Tariffs Affecting Construction Machinery (Steel/Aluminum)	Reciprocal Tariffs (Base/High)
China	25%	25%	25%	54% (10% + 34%)
EU	25%	25%	25%	20%
Japan	25%	25%	25%	24%
South Korea	25%	25%	25%	25%
Canada	0% (USMCA)	0% (USMCA)	25%	10%/25% (non-USMCA)
Mexico	0% (USMCA)	0% (USMCA)	25%	10%/25% (non-USMCA)
Vietnam	25%	25%	25%	46%

Purpose of the Table:
This table provides a clear and concise overview of the complex tariff landscape specifically related to key types of cargo transported via RORO vessels—namely automobiles and construction machinery—from major trading partners. It highlights variations in tariff rates and the impact of trade agreements such as the USMCA.

Impact of Tariffs on International Trade Volume

Overall Global Trade Decline and Disruption:

• Tariffs have been widely criticized around the world as posing a threat of pushing the global economy into recession.
• Following the tariff announcements, U.S. stock markets suffered a sharp decline (approximately $6 trillion in value), and global markets were hit as well—indicating investor concerns over economic repercussions.
• Economists warn that "reciprocal tariffs" could overturn decades of trade policy and cause widespread disruption to businesses worldwide.
• According to the OECD, a scenario in which the U.S. increases non-primary goods imports by 10%, and all other countries increase their imports from the U.S. by the same margin, would result in a 0.3% drop in global production and a roughly 2% decline in global trade volume. As the Trump administration’s tariffs exceed this level, the actual impact may be even more severe.

Analysis:
Tariffs are expected to significantly and negatively affect global trade, leading to reduced demand for international shipping services—including RORO vessels. The scale of the tariffs and the potential for retaliatory measures suggest substantial disruption to established trade flows.

Chain of Thought:
Higher tariffs raise the cost of imports and reduce their competitiveness. This leads to declining demand for such goods and, consequently, a reduction in international trade volume. Due to the interconnected nature of global supply chains, tariffs in one sector can ripple through others, further suppressing trade.

Impact on Automotive Trade Volume:

• S&P Global Mobility forecasts that U.S. light vehicle sales could decline from 16 million units in 2024 to 14.5–15 million units annually over the coming years, with tariffs being a contributing factor.
• U.S. ports have expressed concern that the new tariffs will reduce automotive shipping volumes, with a decline in RORO shipments of vehicles expected.
• In the lead-up to the April 2025 tariff implementation, automakers accelerated shipments to U.S. ports in March, resulting in temporary shipping disruptions and congestion at terminals in Brunswick, Jacksonville, Baltimore, and others. However, in April, shipment volumes dropped significantly as OEMs began reevaluating trade routes and pricing models in response to the new tariff landscape.

Analysis:
Tariffs have caused immediate fluctuations in automotive trade, with a long-term trend toward decreased imports into the U.S. Efforts by companies to mitigate the impact of tariffs caused a short-term spike in shipment volumes, followed by a decline that reflects adaptation to new trade realities.

Chain of Thought:
In anticipation of the tariffs, companies increased imports temporarily to avoid rising costs. Once the tariffs took effect, rising prices led to a drop in consumer demand for imported vehicles, which is expected to reduce overall trade volume and RORO shipping activity.

Impact on Construction Machinery Trade Volume:

• According to independent analysis, the Trump administration’s tariffs are estimated to increase the cost of importing construction machinery into the United States by approximately $4.2 billion—representing a substantial 21.5% increase in the cost of imported equipment.
• Prices of domestically produced machinery are also expected to rise, with overall inflation in construction machinery prices projected to range from 4% to 21.5%.
• Following the imposition of new tariffs, owners and developers of commercial construction projects may hesitate to initiate new builds, potentially leading to cancellations, delays, or project downsizing. This could negatively impact demand for construction machinery.

Analysis:
Tariffs are expected to significantly raise the cost of construction machinery in the U.S., potentially slowing construction activity and reducing the trade volume of this RORO cargo category. The price increases will likely affect both imported and domestically manufactured machinery.

Chain of Thought:
The rising cost of imported equipment—combined with increased production costs for domestic manufacturers due to steel and aluminum tariffs—is expected to drive up overall construction machinery prices. As construction project costs increase, the number of new projects may decline, resulting in reduced demand for both imported and domestic machinery and potentially lowering RORO shipping volumes.

Current Container Shipping Market

Freight Rate Overview – April 2025:

• In the week ending April 3, 2025, the Drewry World Container Index rose by 2%, reaching $2,208 per 40-foot container. While this reflects a recent upward trend, it remains 79% below the peak seen in September 2021 during the pandemic. However, compared to the 2019 pre-pandemic average, it is still 55% higher, indicating that rates remain elevated.
• The year-to-date average composite index stands at $2,993 per 40-foot container, which is $105 above the 10-year average, a figure inflated by the exceptional market conditions from 2020 to 2022 due to the COVID-19 pandemic.
• As of April 4, 2025, the Containerized Freight Index sits at 1,392.78 points. While this shows 0% daily change, it represents an 8.09% decrease from the previous month and a 20.20% drop year-on-year, pointing to an overall downward trend.
• Rates have risen significantly on major transpacific routes:
  • Shanghai to Los Angeles: up 10% or $239 to $2,726
  • Shanghai to New York: up 8% or $272 to $3,894
• Conversely, rates on other routes such as:
  • Shanghai to Rotterdam: down 3% or $66 to $2,304
  • New York to Rotterdam and Rotterdam to New York also declined, showing route-dependent variations.

According to another source, freight rates in April 2025 are expected to decline compared to March, especially due to the 20% U.S. tariffs on Chinese goods. On China–U.S. routes, 20-foot container rates are projected around $1,400, and 40-foot containers around $1,550.

Analysis:
The container shipping market in April 2025 presents a complex picture. While some indices show an overall year-on-year decline, key transpacific routes have experienced rate increases. Rates remain significantly higher than pre-pandemic levels. Tariffs, particularly those between China and the U.S., may be contributing to declining rates on certain trade lanes.

Factors Influencing Container Freight Rates:

• Fuel Prices:
  The cost of bunker fuel remains a major operational expense for container carriers and directly affects freight rates. (Implicit knowledge)
• Supply and Demand Dynamics:
  • In January 2025, export volumes from East and Southeast Asia surged. However, high inventory levels in destination markets led to a decline in shipments in February and March, lowering rates on some routes.
  • An increase in newly built vessels continues to raise concerns of overcapacity in the container market, which could cap freight rate increases even if demand recovers.
  • New U.S. tariffs and retaliatory actions are affecting sourcing decisions, potentially reducing container demand on routes that include tariff-affected goods.
• Geopolitical Disruptions:
  • Ongoing instability in the Red Sea has led more vessels to reroute via the Cape of Good Hope, increasing voyage times and operational costs, potentially pushing up rates on affected routes.
  • Uncertainty surrounding the full reopening of the Suez Canal also remains a factor; prolonged disruption may constrain shipping capacity.
• Port Congestion:
  • While port congestion has eased compared to pandemic peaks, delays and inefficiencies persist in certain regions, affecting vessel turnaround times and contributing to rate increases.
  • Tariff implementation under the Trump administration may lead to increased activity at specific ports while reducing throughput at others, potentially creating new bottlenecks.
• Carrier Strategies:
  • Container lines are actively managing capacity through blank sailings and fleet redeployments to maintain rate levels in a softening market.
  • Restructuring among major shipping alliances is also affecting rate structures and transit times through network optimization and shifting competitive dynamics.
• Tariffs and Trade Policy:
  • U.S. tariff actions have a direct impact on trade flows and may reduce container shipping demand on affected lanes.
  • The uncertainty these policies introduce can lead to short-term volatility in freight rates.

Table 2: Major Container Freight Rates (April 2025)

Route	Rate (USD/40ft Container)	Weekly Trend	Year-to-Date Trend
Shanghai to Los Angeles	$2,726	Rising	Rising
Shanghai to New York	$3,894	Rising	Rising
Shanghai to Rotterdam	$2,304	Falling	Rising
New York to Rotterdam	$831	Falling	Rising
Rotterdam to New York	$2,124	Falling	Rising
Los Angeles to Shanghai	$705	Falling	Falling
China to U.S. (20ft container)	Approx. $1,400	Falling	Falling
China to U.S. (40ft container)	Approx. $1,550	Falling	Falling

Drewry : https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index-assessed-by-drewry

Gorto : https://gortofreight.com/container-rates-from-china-to-us/

SINO : https://www.sino-shipping.com/china-freight-market-update-april-2025/

RORO Vessels: Overview

Definition and Types of Cargo:

• RORO (Roll-on/Roll-off) shipping refers to a method of transporting wheeled cargo—such as cars, trucks, buses, heavy construction machinery, agricultural equipment, and rail vehicles—by driving them on and off specially designed vessels equipped with ramps.
• The main advantages of RORO vessels are efficiency and cost-effectiveness when transporting large volumes of wheeled cargo.
• There are several types of RORO vessels:
  • PCC (Pure Car Carrier): Designed exclusively for cars
  • PCTC (Pure Car and Truck Carrier): Handles both cars and trucks
  • ConRo Ships: Carry both containers and wheeled cargo
  • RoPax Vessels: Transport both passengers and wheeled vehicles
  • Trailer Ships: Specifically for truck trailers
    
    The loading capacity of RORO vessels is typically measured in lane meters (LIM) or car equivalent units (CEU).
• RORO vessels come in various types, including Pure Car Carriers (PCC) designed exclusively for automobiles, Pure Car and Truck Carriers (PCTC) capable of handling both cars and trucks, ConRo ships that can transport both containers and wheeled cargo, RoPax vessels that also carry passengers, and trailer ships specifically for truck trailers.
• The loading capacity of RORO vessels is typically measured in lane meters (LIM) or car equivalent units (CEU).

Major Global RORO Shipping Routes:

Major global RORO shipping routes include the following:

• Europe to West Africa (mainly used vehicles, trucks, and construction machinery)
• Japan to Southeast Asia (new vehicles, motorcycles, and heavy equipment)
• North America to Europe (luxury cars, trucks, agricultural machinery, and construction machinery)
• South Korea to the Middle East (new and used vehicles, heavy equipment, and construction machinery)
• China to Africa (construction machinery, commercial vehicles, new and used vehicles)
• Australia to New Zealand (vehicles, agricultural machinery, and industrial machinery)
• Northern Europe to the Mediterranean (new and used vehicles, trucks, and industrial machinery)
• Northern Europe to North America (luxury cars, trucks, agricultural machinery, and industrial machinery)
• India to East Africa (vehicles, motorcycles, and industrial machinery)
• Turkey to Northern Europe (new vehicles, trucks, and industrial machinery)
• Australia to Southeast Asia (vehicles, agricultural machinery, mining machinery, and industrial machinery)

Major global RORO ports include New York, Rotterdam, Baltimore, Bremerhaven, Southampton, Zeebrugge, Yokohama, Laem Chabang, Busan, Jebel Ali, Shanghai, Dar es Salaam, Melbourne, Brisbane, and Istanbul.

Comparison of RORO and Container Ships:

• Advantages of RORO Vessels:
  For transporting large volumes of vehicles, RORO vessels are generally more cost-effective due to lower handling costs and shorter loading and unloading times. They simplify logistics for wheeled cargo and are suitable for oversized vehicles and heavy equipment that may not fit into standard containers.
• Disadvantages of RORO Vessels:
  Cargo is less protected during transport, being more exposed to weather conditions and potential damage. Personal belongings are restricted from being loaded inside vehicles. RORO shipping is limited to wheeled or towable cargo. Compared to container ships, there may be fewer available routes to specific destinations.
• Advantages of Container Ships:
  They provide a secure and weather-resistant environment for cargo, reducing the risk of damage. They can accommodate a wide variety of cargo types, including non-wheeled items and personal belongings. They are accessible at more ports equipped with container cranes.
• Disadvantages of Container Ships:
  For transporting large volumes of vehicles, container shipping is generally more expensive than RORO. The loading and unloading process takes more time and requires specialized equipment.

Analysis:
RORO shipping remains a primary transport method for large-scale shipments of new vehicles and heavy construction machinery due to its efficiency and cost-effectiveness. Container shipping is a viable alternative when security, the need to transport additional items, or access to ports without RORO facilities is a key consideration. The choice between the two depends on the shipper’s specific needs, the type of cargo, and the destination.

Impact of Trump Tariffs on RORO Cargo Trade Patterns

Changes in Trade Routes and Shipping Volumes:

• Due to the imposition of a 25% tariff on imported vehicles from Europe, RORO vessel traffic along transatlantic routes is expected to decline.
• As major exporters such as Japan and South Korea express concern over the tariffs, negative impacts on both vehicle carrier shipping volumes and overall revenues are anticipated. A 10% drop in U.S. auto sales could reduce demand for approximately 40 car carrier vessels.
• To avoid the tariffs taking effect in April 2025, automakers accelerated shipments to the U.S. in March, causing a temporary spike in RORO shipping volumes. However, as the tariffs took effect and OEMs adjusted their strategies, volumes are expected to decline—highlighting short-term distortions in trade patterns.

Analysis:
The Trump administration's tariffs are likely to reduce RORO vehicle shipments to the U.S., especially from regions subject to high tariff rates. This may necessitate adjustments in trade routes, potentially resulting in excess capacity on some lanes while creating new opportunities on others. The initial surge in shipments reflects efforts by companies to pre-stock inventory ahead of tariff implementation.