Import and Export Prices Plunge in July on Energy Related Swing

Elite Academy Desk — here is a clear take on the latest market development for traders following the story.

The U.S. trade deficit fell by the largest amount on record in April as imports fell by over 16% after a surge in orders to beat President Trump's tariffs , but there's a worrying flip side for the consumer. As the trade war whipsaws global economic activity, supply chain data shows that the retail inventory crunch could be next and small business across the country are bearing the brunt of the pain. From freight orders to inventory and warehousing, the latest logistics data shows the inability of many importers to make business decisions related to inventory levels. One closely watched data point is the widening gap between inventory levels and inventory costs. These metrics generally track together, based on the Logistics Managers' Index. In 2024, the average space between these metrics was 12.1 points. But in May 2025, the gap has expanded to 26.8 points, the third-highest in the history of the index, said Zachary Rogers, associate professor of supply chain management and Colorado State University Supply Chain Management Forum director. When inventories are high and quickly expand, warehouses cost more. Traditionally, when warehouse inventories decrease, warehouse costs slow down as well. But because of the front-loading of products ahead of the tariffs in the January-March period, inventory is flat, with replenishment orders not coming in. But costs are still up because the inventory is being held longer. "The situation we're in now, inventories are up, and they're sitting there," said Rogers. "Essentially, imports in January, February, and early March looked a lot like what we would normally see in August, September, and early October." Normally in mid-October, holiday sales kick into gear, which would move inventory out of the warehouse. But given the uncertainty in tariffs and concerns about the financial health of the consumer, retailers have told CNBC they are not placing full orders. "Warehousing capacity is tight, which means there is no inventory movement, and the associated costs (e.g., warehousing prices and inventory costs) are much higher than what we would normally see at this time of the year," Rogers said. "This means the inventory is getting more expensive to hold." Ocean freight orders from around the world to the U.S. show the pause button in product orders continues. As President Trump and Chinese President Xi Jinping held their first call since a raft of new tariff threats on China in an initial attempt to de-escalate the trade war, data on Chinese ocean freight bookings to the U.S. shows a picture similar to the softness in global orders after the early 2025 surge. A recent drop in freight vessel sailings from China drove up the cost for imports as there has been less capacity available on ships. Peter Sand, Xeneta chief shipping analyst, said the recent 88% increase in ocean freight spot rates on the China to U.S. trade route indicates demand of some shippers willing to pay to pull forward their freight during the 90-day tariff pause. "still, this will not last because [vessel] capacity is heading back to the Transpacific and the desperation of shippers to get supply chains moving again will ease once boxes are on the water and inventories begin to build up," said Sand. "Spot rates are expected to peak in June before downward pressure returns," he added. The conditions in the freight market resulted in an advantage for larger firms over small businesses, based on Rogers. "Smaller firms were boxed out during the big rush of imports in Q1, so they have had to bring inventories over later, resulting in higher costs," he said. But since the larger companies aren't continuing to stock up, as the surge ends it is impacting smaller supply chain companies directly, too. The smaller firms in the Logistics Managers' Index survey sample are representative of the "middle mile" in supply chains, wholesalers and logistics service providers at the points in the supply chain where freight is transported between a supplier's warehouse, distribution center and the final destination of delivery, which could be a retail store or a customer's doorstep. They get hit when large manufacturers and retailers avoid inventory as much as possible — unlike the Covid shock era, they are now running leaner inventory overall, which further squeezes the "middle mile." "Essentially, it is the small businesses of Americ