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A 90-Day Reset: U.S.-China Tariffs Rolled Back, For Now

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Easing Tensions

The United States and China have entered a new phase in their trade relationship. On May 14, 2025, a presidential order formally suspended a significant portion of recently elevated U.S. tariffs on Chinese goods for 90 days, in response to China's engagement in bilateral talks. The temporary adjustment, grounded in the authority of the International Emergency Economic Powers Act (IEEPA), marks a calculated pause in escalating trade penalties rather than a full reconciliation.

Key changes:

• U.S. duties on Chinese goods are reduced to 10%, down from up to 34% or more.
• Specific postal and low-value import duties have been softened, though still retained at impactful levels.
• China is recognized as having taken “significant steps” toward resolving non-reciprocal trade arrangements.

Markets have responded cautiously but positively, and global trade watchers are calling this a pivotal—but fragile—moment of economic diplomacy.

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Tariff Breakdown: What’s Actually Changing

U.S. Tariff Changes Effective May 14, 2025:

• All Chinese goods (including those from Hong Kong and Macau) are now subject to a 10% ad valorem rate.
• Tariffs previously imposed at 125% (and 34% under EO 14266) are now suspended for 90 days.
• Low-value imports saw the rate drop from 120% to 54%, with the $100 postal item fee retained, avoiding the planned increase to $200.

Harmonized Tariff Schedule (HTSUS) Updates:

• Heading 9903.01.63 amended to reflect new 34% baseline (before suspension).
• Subchapter III, Chapter 99 provisions for low-value items and synthetic opioids have been revised to maintain targeted pressure.

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Why the 90 Days? A Tactical Window for Compliance and Diplomacy

This is not a permanent reversal. The 90-day period:

• Buys time for continued negotiation on broader economic and security issues.
• Tests China’s commitment to addressing the U.S.’s long-standing grievances.
• Allows U.S. agencies to assess market effects and trade behavior compliance in real time.

The President made clear that further modifications—up or down—will depend on China's behavior and the perceived efficacy of their cooperation.

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Implications for Global Trade and U.S. Importers

Short-Term:

• Landed costs on goods from China will fall—at least for the next 90 days.
• Retailers, electronics importers, and logistics providers will benefit from margin relief.
• Companies with deferred procurement plans may now accelerate orders to capitalize on the lower rates.

Strategic:

• This move does not resolve structural tensions such as IP theft, forced transfers, and tech surveillance.
• It may encourage just-in-case inventory rebuilding, especially in sensitive categories like electronics and industrial components.
• Firms need to prepare for tariff whiplash if negotiations stall or political winds shift again this summer.

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What Exactly Says the White House?

The official language reflects both a legal recalibration and a diplomatic signal:

“Since I signed Executive Order 14266, the United States has entered into discussions with the PRC to address the lack of trade reciprocity... Conducting these discussions is a significant step by the PRC toward remedying non-reciprocal trade arrangements and addressing the concerns of the United States relating to economic and national security matters.”

This statement underscores that tariff relief is performance-based and reversible—not a reward, but a test.

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Takeaways for Supply Chain and Trade Leaders

This reset is a chance to act, not relax. Strategic steps to take now:

1. Audit all tariff classifications and update landed cost models.
2. Run 90- and 180-day forecast scenarios under different tariff expiry outcomes.
3. Coordinate compliance, procurement, and legal teams to interpret the latest USTR and Chinese Ministry of Commerce updates.

It’s also a moment to reassess geographic dependencies and re-evaluate dual sourcing or nearshoring initiatives in case volatility returns.

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A Tactical Reset, Not a Trade Resolution

This 90-day tariff reduction is best viewed as a structured pause. It gives both sides breathing room and Supply Chain stakeholders a rare window to recalibrate strategies. However, without follow-through, the gains may be temporary.

In this reset, the challenge—and the opportunity—is to use the time wisely.

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Sources:

• ART OF THE DEAL: U.S., China Ink Initial Trade Deal – The White House
• U.S. and China agree to slash tariffs for 90 days – Investors Business Daily
• AP News: US-China announce tariff relief window
• NPR: Tariff Truce Highlights Fragile Progress
• MODIFYING RECIPROCAL TARIFF RATES TO REFLECT DISCUSSIONS WITH THE PEOPLE’S REPUBLIC OF CHINA

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