Flexport CEO Ryan Petersen on Tariffs and Global Trade

New Tariffs Trigger Disruption in Global Trade

Last Thursday, following President Donald Trump’s announcement of extensive new tariffs – an initiative he termed “Liberation Day” – Ryan Petersen, founder and CEO of Flexport, addressed over 2,300 concerned customers in a live online session. The 12-year-old global logistics and customs brokerage firm had been preparing for the complexities of the new regulations.

Livestream Platform Overwhelmed

Petersen jokingly mentioned that their livestreaming platform experienced failures due to the high demand. “We need to get a better one,” he stated during the TechCrunch’s StrictlyVC event in San Francisco.

Rapid Changes to International Commerce

Within a single day, the landscape of global trade underwent a significant transformation. Cumulative tariffs reaching as high as 79% are slated to be applied to various products originating from China, including household furniture like sofas.

The previously advantageous direct-to-consumer shipping models, benefiting from the under-$800 duty-free de minimis threshold, are now subject to revised customs requirements. Furthermore, U.S. ports are preparing for a potential rule that could impose penalties of up to $1.5 million per port call on vessels constructed in China, or those with pending orders from Chinese shipyards.

Existential Concerns for Businesses

“It’s horrifying for our customers,” Petersen conveyed at the event. “These changes represent potentially life-or-death decisions for many of the companies we serve.”

Flexport's Response and Customer Outreach

As one of the largest customs brokerages in the U.S., Flexport has rapidly increased its support efforts. Petersen reported personally engaging with 200 customers this year, many of whom had shifted production to Vietnam in anticipation of avoiding Chinese tariffs.

However, Petersen expressed that the 46% tariff imposed on Vietnam was anticipated. “I expected duties to be implemented broadly, and that is precisely what occurred.”

De Minimis Program Changes

A surprising development, he noted, was the announcement of the U.S. terminating the de minimis program for global imports. This change significantly impacts the business strategies of major e-commerce platforms like Temu and Shein, as well as the numerous Shopify stores utilizing fulfillment centers in Mexico.

“Over 30% of major e-commerce brands have established fulfillment operations in Mexico,” Petersen explained. “The duty-free benefits associated with this arrangement are now at risk.”

Early Insights and Information Dissemination

Petersen, known for his proactive “founder mode” approach – engaging with up to 50 employees daily – immediately began analyzing the new regulations. “I had to delve into the details to gain a clear understanding,” he shared with the audience.

He subsequently published a blog post regarding the de minimis changes, attracting attention from hedge fund managers and investors. “We were the first to identify the semiconductor carve-out,” Petersen added, recounting a conversation with a prominent Nvidia investor.

Providing Stability During Uncertainty

Beyond logistical guidance, Flexport aimed to provide reassurance in the wake of the new tariff war. Petersen emphasized the importance of leadership during a crisis. “Rule one in a crisis is to rally around the calmest person in the room,” he stated. “As a leader, you must remain composed, even internally, to prevent widespread panic within your company.”

Flexport’s customers also require a steady hand during this period of volatility. Clients are seeking Flexport’s expertise to navigate the fluctuating tariff tables, customs rules, and shipping costs.

Potential Port Fees and Supply Chain Impacts

Further disruption is anticipated with a proposed rule from the U.S. Trade Representative. This proposal could impose substantial port fees on ships built in China, and even those operated by carriers with Chinese-made vessels.

“The proposed fee for ships constructed in China is around $1 million to $1.5 million per U.S. port call,” Petersen clarified.

The administration’s stated goal is to bolster American shipbuilding. Petersen, however, believes this will likely lead to increased costs for U.S. importers and potential job losses in the maritime industry as ships seek to minimize port stops.

Looking Ahead: Negotiations and Reciprocity

Despite the current challenges, Petersen remains optimistic that these changes may not be permanent. “Likely, this is not permanent,” he said. He revealed a conversation with a Cabinet member who suggested “Liberation Day” is merely the beginning of a larger process.

He was encouraged by the immediate responses from other nations. “Vietnam and Israel both eliminated all duties on American goods this week,” Petersen pointed out.

A Path Towards a Reshaped Supply Chain

This suggests a potential path forward: negotiations, reciprocal trade agreements, and a restructuring of the global supply chain. In the interim, Petersen and his team are focused on providing support, sharing information, and maintaining stability within the supply chain.

The full interview, including Petersen’s insights on AI and founder mode, is available below.