Trade Risk Shifts From the Border to the Route Already Taken

Customs and Border Protection has paid out $100 billion in refunds tied to tariffs the Supreme Court later invalidated, an agency official said in a July 31 court filing reported by Supply Chain Dive. The same week, the White House trade office released a report flagging elevated transshipment-risk indicators on trade routes running through more than 40 countries, including Mexico, Canada, the European Union, India, Japan and South Korea, according to the report described by Fortune. The report does not accuse those countries of wrongdoing; it identifies routes the administration says warrant closer screening for goods that may have originated elsewhere.

Alongside that report, the administration is reportedly building an AI-assisted screening system paired with expanded Customs authority, per Fortune's account of the plan. Taken together with the refund disclosure, the two moves show a tariff system that is not just setting rates at the border but revisiting routing decisions made months or years earlier.

Ocean freight remains elevated. Supply Chain Dive reported Aug. 12 that Freightos data showed Asia-to-U.S. East Coast spot rates at $9,144 per forty-foot container, up 1% week over week, while Asia-to-West Coast rates rose 11% to $6,826. Freightos called the persistence of these levels a surprise to most observers.

Part of the pressure has a physical cause. The Panama Canal Authority is tightening draft limits again, with the maximum allowed draft at the Neopanamax locks set to fall August 26 and again September 3, according to the Journal of Commerce, which reported that the largest vessels serving the East and Gulf coasts will not be able to load fully heading into peak season.

A separate fight is unfolding over U.S. rail. Seven Republican state attorneys general told the Surface Transportation Board this week that Union Pacific's proposed purchase of Norfolk Southern, an $85 billion deal that would create the first coast-to-coast freight railroad, offers a competitive-pricing remedy that would apply to only 0.9% of U.S. rail traffic, according to FreightWaves' reporting on the filing.

Upstream of shipping and rail, the Commerce Department's Bureau of Industry and Security opened a public comment period Aug. 6 on adding 14 more products, including aluminum powder and flatbed trailers, to the Section 232 tariff list, per the Federal Register notice. Comments close Aug. 27, a week before the next Panama Canal draft reduction takes effect.

None of these four developments would typically share a news cycle. Read together, as reported by their respective outlets, they suggest the same operators, carriers, railroads and importers, are facing tighter constraints on both the physical and regulatory sides of trade at the same time. We will continue verifying the underlying dollar estimates in the transshipment report and will follow up once they are confirmed.

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