Image Source : CNN
In a landmark move to ease trade tensions, the United States has announced a dramatic reduction in the “de minimis” tariff on small-value shipments from China, cutting the rate from 120% to 54%. The decision, effective May 14, 2025, is part of a broader 90-day tariff reprieve agreed upon by Washington and Beijing, signaling a significant thaw in the long-running US-China trade war.
Tariff Cut from 120% to 54%:
The US government has slashed the “de minimis” tariff-applied to low-value parcels, typically under $800-from 120% to 54%, a 55% reduction. This move is expected to provide immediate relief to Chinese exporters and US consumers, particularly those purchasing from popular e-commerce platforms like Shein and Temu.
Part of a Wider Trade Deal:
The tariff reduction is part of a temporary 90-day agreement between the US and China, under which both countries have agreed to pause and reduce a range of retaliatory tariffs. Most US tariffs on Chinese goods will drop from 145% to 30%, while China will cut its tariffs on US imports from 125% to 10%.
Relief for E-Commerce and Consumers:
The adjustment is a major boon for Chinese exporters, who have seen business disrupted by the steep tariffs imposed earlier this year. US consumers, especially those shopping for affordable goods online, are expected to benefit from lower prices as the cost burden on importers is eased.
Background and Policy Shift:
The “de minimis” exemption, which previously allowed small packages to enter the US duty-free, was scrapped earlier this year by the Trump administration, resulting in a sudden spike in tariffs on low-value Chinese goods. The new agreement partially rolls back those measures, though a flat import fee will double from $100 to $200 starting June 1 for certain shipments.
Market and Diplomatic Impact:
The announcement has been welcomed by businesses and markets on both sides. Chinese exporters expressed elation at the reprieve, while US stock futures rose on news of the deal. Treasury Secretary Scott Bessent characterized the talks as “very productive,” emphasizing the shared interest in balanced trade and global economic stability.
Temporary Nature and Next Steps:
The reduced tariffs are set for a 90-day period, during which both sides will continue negotiations in hopes of reaching a more permanent trade arrangement. The move is seen as a confidence-building measure, with both governments signaling willingness to resolve disputes through dialogue rather than escalation.
“The move meets the expectation of producers and consumers in both countries, serves the interests of both sides and the common interests of the world,” said a spokesperson for China’s Ministry of Commerce.
With the new tariff regime taking effect on May 14, 2025, the US-China trade landscape is poised for a period of reduced friction, benefiting businesses, consumers, and global supply chains alike.
Source: Bloomberg, Axios, Indian Express, Supply Chain Dive, DimSum Daily
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