Tariffs put pressure on raw materials
The anticipation of and response to tariffs were key drivers of month-over-month price increases across almost all commodities.
Zoom out: On February 10, China’s counter-tariffs took effect in response to President Trump’s 10% tariff implemented on February 4. President Trump also announced a 25% tariff on all steel and aluminum imports under Section 232 of the Trade Expansion Act, set to take effect on Wednesday, March 12, which is a few days after the 30-day pause on Canadian and Mexican tariffs is set to expire.
Refer to the Fact Sheet to read more on tariffs and trade impacts.
Commodity ripple effects:
- Oil and resin costs remain stable. Storm season has had minimal impact on resin production. However, tariffs could influence oil prices in the coming months.
- The U.S. relies heavily on Canadian lumber imports, which make roughly 30% of U.S. lumber supply. Despite a 30-day extension on Canadian tariffs, the potential impact has driven up lumber prices.
- Earlier this month, the U.S. Treasury announced sanctions targeting individuals and tankers for transporting Iranian crude oil to China, while President Trump’s announced tariffs on steel and aluminum could affect the U.S. energy sector, as oil drillers are reliant on specialty steel not produced domestically.
- PVC pipe suppliers attempted to raise prices amid rising labor and transportation costs and growing demand. PVC prices are currently expected to fall throughout 2025.
Bipartisan bills aim to boost supply chain resilience
Bipartisan proposals introduced in December 2024 and January emphasized collaboration between the government and private sector to identify and address supply chain vulnerabilities, helping to maintain stocked shelves and potentially reduce costs.
Why it matters: These U.S. legislative initiatives aim to strengthen supply chain resilience, prevent disruptions, support American manufacturing and secure critical goods. Further impacts will become clearer if the legislation is enacted.
Labor market is strong despite slower job growth
While job growth slowed in January with 143,000 jobs added, falling short of the anticipated 175,000, the overall labor market remained strong. Unemployment remains low at a stable 4%, average hourly earnings increased, and the labor force participation rate held steady.
Why this matters: The Federal Reserve (Fed) might use the stable low unemployment rate as a reason to delay interest rate cuts until June, maintaining a cautious approach to monetary policy. The Federal Open Market Committee will meet again Tuesday–Wednesday, March 18–19.
By the numbers: The Consumer Price Index, which measures price changes across commonly purchased goods and services, rose to 3%, remaining above the Fed’s 2% target. This marks the fourth consecutive month of rising annual inflation after reaching 2.4% in September 2024. The Producer Price Index, which tracks average price changes experienced by producers and manufacturers, rose 0.4% in January, further supporting expectations that the Fed will not cut interest rates before the second half of the year. Economist also predict that President Trump imposing broad tariffs could drive consumer prices higher.
Global container prices and U.S. trucking volumes soften
Global container prices have softened by an average of 18% over the past 30 days, driven primarily by the tentative ceasefire deal reached between Israel and Hamas.
Why it matters: The ceasefire has contributed to a decline in global container costs, potentially easing trade flow disruptions and lowering costs for shippers. Meanwhile, the U.S. trucking industry has reached an equilibrium, balancing capacity with demand despite a slight drop in volumes.
The big picture: The Suez Canal Authority expects traffic to gradually return to normal by late March and fully return to normal operations by midyear if the cease-fire holds, positively impacting container costs and transit times. U.S. imports remained strong in January, reaching a record high — 10% above the prior year — as shippers moved goods ahead of tariff actions the Lunar New Year.
By the numbers: Despite softening post-pandemic, container rates remain elevated 60% higher than historical averages. In 2024, more than 13,000 small-to-medium carriers exited the market, reducing capacity by 4%. While available capacity is tightening, spot and contract freight rates remain at historical lows due to stable diesel prices and a balanced market.