Key insights:

1. President Trump announced plans for 10% tariffs starting February 1st on Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland over their Greenland sale opposition, with threats to increase to 25% by June without a deal.

2. Unlike previously, EU leaders are prepared to retaliate, with options including implementing suspended tariffs on $100B of US exports, withholding approval for parts of the EU-US trade deal, closing US military bases, or deploying the "bazooka” anti-coercion instrument which includes powers to tariff services, limit intellectual property rights, and control exports.

3. With little time before February, transatlantic ocean frontloading isn't viable; Freightos Air Index Europe-N. America rates have risen 2% to $2.21/kg since the announcement, but this bump is an extension of pre-existing trends.

4. Trump’s scheduled meetings with leaders in Davos suggest the Greenland issue may follow last year's pattern of maximalist threats used as negotiation leverage; additional uncertainty stems from likely IEEPA reliance for these tariffs despite the pending Supreme Court decision on their validity.

5. Maersk announced its MECL service will resume Red Sea transits next week, while CMA CGM has reversed course on some of their Red Sea services. These mixed signals suggest a full return some time soon is still not a given, and that we may see a gradual, mixed, approach rather than a more disruptive wholesale return.

6. Ocean rates on major east-west lanes eased slightly last week, indicating carriers aren't pushing mid-month GRIs and that pre-LNY demand may have peaked; Asia-Mediterranean prices fell 5% to $4,623/FEU and Europe rates decreased 3% to $2,893/FEU, marking the first reductions since mid-October.

7. Transpacific rates – which had been up and down in Q4 – also softened after reaching January highs the previous week, with West Coast prices down 3% to $2,668/FEU and East Coast down 2% to $3,947/FEU; Rates on all these lanes are still likely to remain elevated in the lead up to LNY and then ease, with carriers announcing blanked sailings for the seasonal demand dip.

8. Air cargo rates remained stable for Asia-Europe at $3.62/kg from China and about $2.90/kg from South East Asia despite some carriers avoiding Iranian airspace; China-US prices continued cooling, falling 8% to $5.46/kg, while SEA-US rates increased by 3% to $4.18/kg.

Ocean rates - Freightos Baltic Index:

• Asia-US West Coast prices (FBX01 Weekly) decreased 3% to $2,668/FEU.

• Asia-US East Coast prices (FBX03 Weekly) decreased 2% to $3,947/FEU.

• Asia-N. Europe prices (FBX11 Weekly) decreased 3% to $2,893/FEU.

• Asia-Mediterranean prices (FBX13 Weekly) decreased 5% to $4,623/FEU.

Air rates - Freightos Air index:

• China - N. America weekly prices decreased 8% to $5.46/kg.

• China - N. Europe weekly prices decreased 1% to $3.62/kg.

• N. Europe - N. America weekly prices increased 2% to $2.15/kg.

Analysis

"President Trump announced on social media over the weekend intent to impose 10% tariffs starting February 1st on Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland for opposing the sale of Greenland to the US, and that tariffs will increase to 25% in June if there is no deal by then.

The EU accounts for 20% of total US imports by value. Last year Germany – the largest European exporter to the US – the UK and France exported more than $300B in goods to the US through October, with pharmaceuticals, medical supplies and devices, and vehicles and automotive goods accounting for most of it.

While Europe opted not to retaliate for US tariffs last year, this time seems different. EU leaders have scheduled an emergency meeting in Brussels to discuss their options. They could let retaliatory tariffs on $100B of US exports – approved last year but suspended until February 7th – go into effect; withhold pending approval of parts of the EU-US trade deal like reducing tariffs on some US goods to zero; or even close US military bases.

The EU also has an anti-coercion instrument, aka “the bazooka,” at its disposal which, among other steps, allows it to tariff services, limit intellectual property rights and access to public contracts, and control exports in response to economic aggression.

With a short runway before February transatlantic ocean frontloading isn’t an option. Freightos Air Index Europe - N. America rates have inched up 2% to $2.21/kg since the announcement, but this gain continues a gradual January rate rebound from the $2.00/kg mark at the end of last year.

The president is scheduled to meet with relevant world leaders to discuss the issue in Davos, and Treasury Secretary Scott Bessent is urging calm. Last year provided more than one example of Trump announcing maximalist tariff – including the April 2nd reciprocal tariffs – and other threats, that proved to be mostly leverage for pressurized negotiations and aimed at concessions somewhere short of the initial ask. Another factor adding to the uncertainty is that the White House would likely rely on the International Emergency Economic Powers Act to authorize these tariffs even while a Supreme Court decision on IEEPA-based tariffs’ validity looms.

What is certain is that the latest drama increases uncertainty yet again just as the US deescalation with China and announced agreements with several major trading partners toward the end of last year had seemed to firm up the 2026 trade war and tariff landscape.

Maersk announced last week that its MECL – Middle East and India to US East Coast – service will resume Red Sea transits starting next week. Maersk and CMA CGM are the first carriers to revert some full services back through the Suez Canal. But CMA CGM just advised that it will now reroute some of those services around the Cape of Good Hope once again, citing the current “uncertain international context.”

These steps forward and back suggest a full Red Sea return some time soon is still not a sure thing, and that the resumption may be quite gradual – and less disruptive than a wholecloth reboot – with carriers implementing a hybrid approach blending Red Sea transits for some sailings with the longer route for others for a while.

Ocean rates on the major east-west lanes eased slightly last week with no signs of a rebound so far this week, suggesting carriers aren’t moving forward with planned mid-month GRIs and that pre-Lunar New Year demand may have already reached its peak. Asia - Mediterranean prices fell 5% to $4,623/FEU and are down about $200/FEU from a January high two weeks ago. Rates to Europe decreased 3% to $2,893/FEU, down from about $3,000/FEU to start the month. These dips mark the first rate reductions for these lanes since prices started climbing in mid-October.

Transpacific prices meanwhile, increased but then retreated several times in Q4 though carriers succeeded in holding on to incremental gains that kept rates above mid-October year lows. Prices eased 3% to $2,668/FEU to the West Coast and 2% to $3,947/FEU to the East Coast last week after reaching their January highs the week before. Rates for all these lanes are still likely to stay elevated in the near term as the holiday approaches and then face downward pressure as demand eases post-LNY, with carriers already announcing blanked sailings.

In air cargo, some carriers continue to avoid Iranian air space, resulting in longer Asia - Europe flights, though rates were stable at $3.62/kg out of China and about $2.90/kg from South East Asia. China - US prices continued to ease last week, falling 8% to $5.46/kg though rates out of SEA ticked up by 3% to $4.18/kg."