UPDATE: May 12, 2025, Tariffs Slashed Between U.S. and China -What Business Owners & Importers Need to Know

On May 12, 2025, the United States and China announced a significant de-escalation in trade tensions. The two countries agreed to a 90-day period of tariff reductions that will last through August 10, 2025. This temporary truce is designed to create space for longer-term negotiations, while immediately reducing the financial burden on importers and exporters.

For small and mid-sized businesses (SMBs), particularly those sourcing goods from China, this announcement creates a window of opportunity. With steep tariffs temporarily rolled back, many businesses can reduce landed costs, restore suspended supplier relationships, and reassess sourcing strategies

Key Details of the Agreement

Tariff Reductions:

• The United States has reduced tariffs on Chinese imports from as high as 145% down to 30%.
• China has responded in kind, reducing its tariffs on U.S. goods from 125% to 10%.

Effective Dates:

• The agreement took effect immediately on May 12, 2025, and is scheduled to conclude on August 10, 2025. Both countries have committed to using this period to negotiate a longer-term trade arrangement.

Scope of the Agreement:

• Not all tariffs have been lifted. Several remain in place, including:
  • A 20% U.S. tariff targeting goods associated with the fentanyl crisis
  • Pre-existing tariffs on automobiles, steel, and aluminum

These exclusions mean that importers must carefully evaluate the classification and country of origin of each product they source.

What SMB Importers Should Do Now

1. Recalculate Landed Costs:
   With reduced tariffs, it may now be cheaper to source from China. Businesses should run updated landed cost analyses on their most critical SKUs to assess whether shifting or resuming China sourcing makes sense.
2. Accelerate or Place Purchase Orders:
   Businesses may want to fast-track inventory purchases during the 90-day window, especially for goods affected by previously high tariffs. This can help secure better margins and reduce Q3 procurement costs.
3. Revisit Supplier Relationships:
   If you moved production out of China due to tariffs, it may be worth re-engaging those suppliers, either to resume sourcing or use as leverage to renegotiate terms with current vendors.
4. Verify Customs Classifications and Documentation:
   Work with your customs broker to confirm product classifications under the Harmonized Tariff Schedule (HTS). Even under reduced tariffs, classification errors can lead to penalties or delays.
5. Reallocate Freed-Up Capital:
   With lower upfront costs at customs, some businesses will free up working capital. This cash can be used for inventory expansion, hiring, marketing, or servicing debt.
6. Coordinate Logistics and Compliance:
   Timing is key. Ensure your freight forwarder and customs broker are aligned on deadlines so that you don’t miss the tariff window. Keep in mind potential port congestion or backlogs as import volume increases.
7. Secure Certificates of Origin:
   If applicable, ensure you have the correct documentation for any goods that may qualify under trade preference programs (such as USMCA for North American origin goods).

What to Watch for Over the Next 90 Days

• Negotiation Progress:
  Monitor trade talks between U.S. and Chinese officials. If negotiations stall, tariffs could be reinstated as early as August 11, 2025.
• Sector-Based Exemptions:
  Tariffs remain in place for certain sensitive categories, including autos, steel, and some chemicals. Double-check whether your product lines are impacted.
• Ongoing Geopolitical Risks:
  Broader tensions around national security, intellectual property, and fentanyl-related trade may reintroduce volatility to tariffs or port inspections.
• Supply Chain Adjustments:
  A temporary drop in tariffs may cause short-term shifts in global sourcing. Businesses should remain alert to changes in lead times, freight capacity, and pricing fluctuations.

A Closer Look: How to Calculate Import Duties and Fees

To help businesses assess their true landed costs, here’s a breakdown of the common duties and fees that may apply when importing goods from China—even during a tariff reduction window.

Types of Tariffs and Fees

Original China Tariff – 25% (Section 301):

This tariff was introduced in 2018 and continues to apply to many Chinese-origin goods unless explicitly excluded. It is calculated on the customs value of the goods.

HTS (Harmonized Tariff Schedule) Duty – Varies by Product (Typically 2%–10%)
This is the standard import duty based on a product’s classification code under U.S. customs law.

MPF (Merchandise Processing Fee) – 0.3464%
A fixed rate fee on the value of merchandise, with a minimum charge of $31.67 and a maximum of $614.35.

HMF (Harbor Maintenance Fee) – 0.125%
Applies to ocean freight imports, based on the cargo’s entered value when arriving at a U.S. port.

Fentanyl-Linked Tariff – 20%
A new additional tariff targeting goods linked to fentanyl manufacturing or transport. Applies on top of other duties.

Reciprocal Tariff – 10%
Another additional duty, likely sector-specific or retaliatory. Calculated on the customs value of the goods.

Sample Calculation

Let’s assume you are importing $10,000 worth of goods from China with a 5% HTS duty. Here’s how the cost could look (under new May 2025 conditions):

Note: In practice, not all tariffs stack. This example assumes all listed tariffs apply for illustrative purposes. Check HTS codes and CBP guidance to confirm specific applicability.

Under the current 90-day tariff reduction, some of these duties (such as Section 301 and reciprocal tariffs) may be temporarily waived or lowered, resulting in substantial savings.

However, it is important to work with a qualified customs broker to assess your product-specific duty liability under current law.

Looking Ahead

This 90-day period is not a resolution—it’s a negotiation window. Businesses should treat this as a chance to reassess, prepare, and build resilience in their supply chains. For many SMBs, this is the time to not only reduce costs but also invest in smarter sourcing, cash flow planning, and compliance strategies.

How Express Trade Capital Can Help

At Express Trade Capital, we support SMB importers with:

• Customs Brokerage & Compliance Support
• Trade Finance Solutions: including factoring and PO funding
• End-to-End Shipping and Logistics Management
• Strategic Tariff Planning and Supplier Diversification

If you’re unsure how these tariff changes affect your business or want help seizing the opportunity reach out to our team for a free consultation.