Hello Customers, Colleagues, and Friends,
We are writing to inform you of several key trade and tariff updates that may impact your import operations. These updates relate to recent federal guidance on tariff stacking, the elimination of the de minimis exemption for China and Hong Kong, and new Section 232 tariffs on certain automobile parts.
White House Clarifies: Tariffs Should Not Stack
In an Executive Order issued April 29, 2025, the White House clarified that multiple tariff programs should not be applied cumulatively to the same imported goods unless explicitly stated. This means that only the highest applicable tariff should be assessed for each article, rather than stacking overlapping tariffs such as Section 301, IEEPA, and Section 232. View the Executive Order.
Key Point: If an item is subject to a 25% Section 301 tariff and a 10% IEEPA tariff, only the 25% should be applied, not 35%. Consider the highest applicable tariff rate in your import considerations.
De Minimis Exemption Eliminated for China – Effective May 2
As of 12:01 a.m. EDT on May 2, 2025, goods from China and Hong Kong will no longer qualify for the de minimis exemption under 19 U.S.C. §1321(a)(2)(C). CBP has issued firm guidance that all shipments from China/Hong Kong, regardless of value, must be formally entered. Low-value (<$800) shipments will no longer be cleared duty-free. See CSMS #64917563 for details
Section 232 Tariffs on Auto Parts – Effective May 3
A new 25% tariff under Section 232 will take effect on May 3, 2025, for certain automobile parts imported from all countries. These measures are outlined in Presidential Proclamation 10908 and impact parts used in Passenger vehicles (sedans, SUVs, crossovers, minivans, cargo vans), Light trucks. See the CSMS# 64916652 for further details.
Negotiations of China / US trade policy allegedly underway
China and the US have begun discussing the tariffs both nations have placed on one another. Numerous media outlets, including Chinese state media, have reported that the two nations are opening an official dialogue to address the ongoing trade war. As the situation evolves and more information becomes available, we ask your patience in waiting for official Whitehouse and CBP directives to ensure accurate import procedures are being followed.
What this means for you
- Review HTS classification of your products for accuracy to ensure correct tariff treatment on all imports
- Review all China/Hong Kong shipments scheduled to arrive after May 2 for de minimis impact.
- Evaluate auto parts imports for potential exposure to Section 232, and consider revising sourcing or FTZ strategy where applicable.
Above updates are subject to interpretation as these regulations complex and the implementation is being debated amongst the trade community. The situation remains fluid. Per CBP instruction, more updates regarding the refund process will be released by the end of May. We are closely monitoring further updates and CBP processing instructions. If you need assistance evaluating your risk exposure or revising your compliance strategy, please reach out to our team.
Sincerely, Your friends at Krenz and Hannan International