US-China Tariff Truce? 90-Day Pause Begins May 14

The agreement decreases the China reciprocal tariffs to 10% and provides much needed but time-limited relief for many importers while leaving the majority of other duties imposed upon Chinese goods in place. Companies with cross-border supply chains should move quickly to understand the scope and duration of the suspension and to adjust sourcing and compliance strategies accordingly.

Scope of the Suspension

• As outlined in the White House Fact Sheet and Executive Order, on May 14, both governments will suspend 24% of the additional 34% ad valorem tariffs that were announced on April 2. During the 90-day suspension period, a residual 10% “baseline” tariff will continue to apply to the same universe of goods.
• The United States will remove in their entirety the incremental tariff increases announced on April 8 and April 9, which had increased the total reciprocal tariff on Chinese goods (including goods from Hong Kong and Macao) to 125%. China will similarly remove the retaliatory measures it announced on April 4, and will withdraw all non-tariff countermeasures adopted since April 2.
• The tariffs applicable to postal shipments under the de minimis actions will also decrease. The ad valorem tariff rate will decrease from 120% to 54% and the per postal item charge will remain at $100 rather than escalating to $200 on June 1.
• Absent further action and unless the two nations extend the pause or reach a broader agreement, the suspended tariffs may automatically revert back on August 12 (the first business day after the 90-day suspension period).

Tariffs That Remain Unchanged and Stacking

Despite these tariff reductions, which temporarily reduces reciprocal tariffs from 125% to 10%, aggregate tariffs on China origin products remain high due to the other tariff regimes that continue to be applicable:

• 20% tariffs imposed under the International Emergency Economic Powers Act (IEEPA) to combat fentanyl.
• Section 301 China tariffs.
• 25% Section 232 tariffs on steel and aluminum and derivative articles.
• 25% Section 232 tariffs on automotives and auto parts.
• Most-favored nation (MFN) general rates under the Harmonized Tariff Schedule of the United States.

Goods subject to the Section 232 tariffs above will continue to be exempt from the 10% reciprocal tariffs.

Mechanism for Continued Negotiations

The United States and China agreed to establish a standing dialogue led by US Secretary of the Treasury Scott Bessent and US Trade Representative Jamieson Greer and China’s Vice Premier He Lifeng. Meetings may rotate among venues in the United States, China, or a mutually agreed third country. Working-level consultations are authorized to address technical issues, signaling both governments’ preliminary intent to use the 90-day window to explore longer-term solutions.

Practical Considerations for Importers

• Watch for Procedural Guidance: US Customs and Border Protection and China Customs are expected to publish implementation instructions and further guidance. The applicable Chapter 99 provisions will be affected.
• Explore Mitigation Strategies: As the overall tariffs on China origin products remains high despite these reductions, importers should continue to explore tariff mitigation strategies to legally lower duty liability.
• Update Supply Contracts: Suppliers and customers should address pricing adjustments tied to the temporary duty reduction and include clear language addressing potential snap-back scenarios.
• Continue Compliance: Section 301, 232, and IEEPA-fentanyl tariffs remain unaffected. Companies should ensure accurate entry summaries, product classifications, certificates or origin, and exclusions where available.

Outlook

The 90-day tariff pause offers immediate, albeit partial, relief to many industries that were hit with steep duties in April. Whether the respite will evolve into a more permanent solution will depend on the progress of the newly formed negotiating channel. In the meantime, importers and exporters should treat the suspension as a narrow window of opportunity and plan for multiple scenarios, including a full re-imposition of the additional tariffs.

For assistance in understanding the current tariff landscape or for preparing and implementing tariff mitigation strategies, please contact the authors or any member of the AFS Customs & Import Compliance team.