Hello Customers, Colleagues, and Friends,
We are writing to inform you of major developments in U.S. trade relations with China and the United Kingdom. These updates may impact tariff treatment on your current and future import/export activity.
Update on China Tariffs
According to the latest communication from the White House, the United States will lower the “reciprocal” tariff on imports from China (IEEPA) from 125% to 10%. China has agreed to reduce its retaliatory tariffs on U.S. imports from 125% to 10% as well. These changes will go into effect May 14, 2025, and are expected to remain in place for at least 90 days. Additionally, China has committed to suspend or remove non-tariff countermeasures it imposed on U.S. goods. This step is part of an agreement to re-engage in formal negotiations to address the trade imbalance and implement enforcement mechanisms from the Phase One trade deal.
Key Point: It is important to note that all U.S. imports from China will remain subject to applicable most-favored-nation duty rates (Standard Rate of Duty), an IEEPA tariff of 20%, and either the IEEPA reciprocal tariff of 10% or a Section 232 tariff of 25%. Longstanding Section 301 tariffs of 7.5% or 25% will still apply.
U.S.–United Kingdom Trade Agreement
In a separate but impactful development, the U.S. and U.K. have announced a historic bilateral trade deal designed to expand U.S. export opportunities and protect shared security interests. The key points include:
- The reciprocal tariff rate of 10% remains in effect for U.K.-origin goods.
- The agreement opens $5 billion in new export opportunities for U.S. farmers and manufacturers, including ethanol, beef, produce, shellfish, textiles, and more.
- A quota of 100,000 vehicles per year is set for U.K. car manufacturers at the 10% tariff rate; quantities above that will be subject to a 25% tariff.
- A new steel and aluminum union and secure pharmaceutical supply chain framework will be established.
What this means for you
- Lower costs on imports from China ; pending clarification from CBP on implications of recent past imports
- Review HTS classification of your products for accuracy to ensure correct tariff treatment on all imports
- Prepare for supply chain disruptions
Above updates are subject to interpretation as these regulations complex and the implementation is being debated amongst the trade community. The situation remains fluid. The mechanics of the above trade agreements have not yet been clarified by US Customs to the trade community.
Sincerely, Your friends at Krenz and Hannan International