Flexport CEO Ryan Petersen on tariff shock: 'It's really ugly for our customers already'

Summary

Flexport CEO Ryan Petersen describes the tariff environment facing his customers on April 2nd — the day the Trump administration unveiled its 'Liberation Day' tariff package — as 'really ugly already,' before the announcement had even landed.

The stacking on China is the sharpest immediate pressure. The existing 25% tariff had already been raised by 20 percentage points. On top of that, a new 25% levy tied to Venezuela's oil trade with China hit the same day, pushing effective duties toward 70% for most goods and into the low 80s for anything with steel or aluminum components. Petersen is openly uncertain how much higher China tariffs can practically go.

The bigger unknown is everyone else. Which countries get hit, and at what rate, is the wild card that is paralyzing supply chain decisions. Companies that have already concluded they need to leave China cannot pick an alternative destination — Malaysia, Vietnam, India — when those countries may face their own tariffs the following week. Canada is a specific example of how the unpredictability compounds: if a close neighbor gets tariffed, no destination feels safe.

A cabinet secretary told Petersen last week that April 2nd is a starting point, not an endpoint. The administration's stated expectation is that countries will face heavy initial rates, then come to the table to negotiate them down. Petersen thinks the playbook is legible — he half-jokes that foreign governments should read The Art of the Deal — but acknowledges the risk that some countries retaliate instead of negotiating, triggering further escalation.

On the structural question of whether tariffs can actually reshore manufacturing, Petersen is skeptical. The US dollar's strength as the reserve currency makes imports cheaper than domestic production even after significant duties. He walked away from a conversation with a garlic importer the day before the interview concluding that California's world-class growing conditions still cannot compete with Chinese prices even at current tariff levels. A weaker dollar would help, but there is no political appetite for that.

Petersen's preferred policy design would have been gradual escalation — raising rates 1% per month over two years so businesses could plan around a known trajectory. Treasury Secretary Bessant reportedly floated something similar during the campaign. Instead, some measures have gone live within days of announcement. Petersen's example: a friend importing stuffed animals had a $100,000 container on the water when the duty rate jumped, landing him with an unexpected $20,000 bill.

Inside Flexport, the picture is mixed. Air freight is the exposed segment — roughly 50% of all global air freight now originates from Chinese e-commerce, and Petersen expects air freight prices to collapse if that flow shrinks. The customs advisory business, by contrast, is booming. Flexport is targeting $140 million in duty refund recoveries for customers this year, against a $7 billion annual pool of unclaimed refunds that existed even before the current tariff wave. Domestic trucking — around 200,000 loads per year, mostly unconnected to international freight — would likely grow if manufacturing shifts toward the US. Petersen is not particularly alarmed at the macro level: Flexport's market share sits around 0.25%, meaning even a halving of the total market would barely register relative to what the company can still capture.

When new tariff schedules drop, Flexport's plan is to ingest the data and publish it to customers within minutes, with account teams following within the hour to walk through the cost implications and advisory options — including legal strategies to reduce the assessed valuation of goods and recover overpaid duties.

On technology and future logistics, Petersen is bullish on autonomous trucking: a self-driving truck running 24 hours a day could cross the country three times faster than the legally permitted eight-hour-per-day human driver, which currently requires expensive 'team trucking' with multiple drivers rotating shifts. He is more skeptical about autonomous ships, arguing that a 20,000-container vessel crewed by 20 people has so little labor to begin with that automation saves almost nothing — most of the crew is doing maintenance, not steering. Nuclear-powered container ships face a harder regulatory path than technical one; no port wants a reactor in its harbor.

The technology he finds genuinely compelling is an airship concept backed by Elad Gil that can carry the same volume as a 747 and cross an ocean in three days rather than 15 hours. That positions it between air freight and ocean freight on both speed and cost — a new tier that could attract meaningful volume for certain goods. The founder's model would land directly at warehouse facilities, bypassing ports entirely. Petersen also flags Zipline's imminent Walmart drone delivery launch in Dallas: 24,000 of the 25,000 SKUs in a typical Walmart are small enough to fit the drone, with a stated delivery target of under five minutes. Restaurant delivery is reportedly next.

Petersen's message to his team as the tariff announcement approached: you don't have to outrun the bear, you just have to outrun the other campers.