The United States and the Republic of China announced a significant step toward easing longstanding trade tensions, with both nations agreeing to lower a series of tariffs imposed during the ongoing trade dispute. The announcement marks a notable shift in bilateral trade policy — particularly given the defiant positions China’s officials staked out regarding when and if they would come to the bargaining table — and may have immediate implications for companies engaged in cross-border commerce, particularly in industries such as technology, agriculture and manufacturing.
Under the new arrangement, the United States will reduce tariffs on Chinese imports, including certain electronics, machinery and textiles. In exchange, China has committed to lowering tariffs on American goods. As of May 14, 2025, all articles imported into the customs territory of the United States from China, including Hong Kong and Macau, are subject to an additional ad valorem rate of duty of 10% for the next 90 days. This is a reduction in the “reciprocal” tariffs announced early April.
Customs and Border Protection (CBP) has confirmed that the 10% duty applies on top of tariffs put in place prior to April 2, 2025, such as the 20% tariffs related to the fentanyl crisis announced Feb. 1, 2025, and existing product-specific Section 301 and Section 232 tariffs.
Previous tariff exemptions under the reciprocal tariffs remain valid and include energy products, semiconductors and electronic integrated circuits, along with other items such as smartphones, solid-state non-volatile storage devices, flat panel display modules and monitors.
On Aug. 12, 2025, the 10% tariff rate will be updated to 34% if no additional extension or changes are made to the executive order.
In addition, as of May May 14, 2025, tariffs on de minimis items (e.g., low value imports from China, ending duty-free access for packages worth less than $800) have been lowered from 120% to 54%. In lieu of the 54% tariff, suppliers may decide to utilize the $100 flat fee rate until amended by further executive order.
For businesses, the reduction in tariffs could ease supply chain pressures, lower costs and improve market access. Companies that have previously sought tariff exclusions or relocated sourcing to other jurisdictions may now find it advantageous to reevaluate their global procurement strategies. However, it remains critical to monitor CBP guidance as implementation details emerge, including changes to Harmonized Tariff Schedule classifications and applicable duty rates.
Legal and compliance teams should be aware of potential changes to export controls, rules of origin and enforcement mechanisms embedded in trade-related agreements. While the reduction of tariffs may alleviate immediate cost burdens, businesses must remain vigilant regarding regulatory compliance, as both countries retain the right to reimpose duties in the event of future disputes.
McGuireWoods and McGuireWoods Consulting will continue to monitor developments closely and are available to assist clients with assessing the impact of these changes on their operations, revising import/export strategies and ensuring compliance with the evolving trade framework.