The United States and China have agreed to a temporary, 90-day reduction in the additional tariffs each nation imposed in early April 2025. This significant de-escalation, reached during economic and trade talks in Geneva, aims to ease pressure on businesses and consumers while establishing a mechanism for ongoing dialogue between the world’s two largest economies. The move offers a crucial reprieve for various sectors impacted by the recent high duties.
Effective by May 14, the U.S. will suspend 24 percentage points of the additional ad valorem duty set forth on April 2nd, retaining a 10 percent rate from that initial order. Other modified additional duties imposed by the U.S. on April 8th and 9th will be removed.
China will reciprocate, suspending 24 percentage points of its additional duties from its April 2nd announcement and removing modified additional rates from later announcements. Beijing also committed to suspending or removing non-tariff countermeasures taken against the U.S. since April 2nd, as detailed in a Joint Statement on U.S.-China Economic and Trade Meeting in Geneva.
Businesses Navigate Tariff Turbulence
The agreement follows weeks of escalating trade tensions. The U.S. had applied reciprocal tariffs as high as 145% on many Chinese goods, a response to a new tariff structure announced April 2nd that some linked to AI chatbot output. China retaliated with its own duties and export controls. These punitive measures quickly damaged trade, with U.S. Treasury Secretary Scott Bessent acknowledging the situation was unsustainable and amounted to an effective trade “embargo”.
The high tariffs and related policy shifts, including the end of the $800 de minimis import exception for goods from China and Hong Kong on May 2nd, created significant challenges for businesses. Small online sellers, many sourcing materials or products from China, faced substantial cost increases and operational changes. Goods previously entering the U.S. duty-free now require formal customs entry, incurring duties and fees, according to a U.S. Customs and Border Protection notice.
Items shipped via express carriers faced potential tariffs up to 145%, while USPS shipments were subject to rapidly escalating fees.
Independent sellers voiced concerns. Kelly Kendall, whose Chicago-area business uses supplies from China, anticipated needing to raise prices significantly, noting that many factories won’t deal with her small order volumes. “A lot of factories, if I try to go directly to them, won’t deal with me because I don’t have a large amount of business for them,” as she told the New York Times.
A Canadian boutique owner described chaos during a brief, similar suspension in February, with customers facing unpredictable import fees ranging erratically from $38 to $159 for the same item. “My heart sank when I realized that a number of our customers would be impacted by this,” he said. An April survey from Passport Shipping found that 81% of e-commerce operators believed shifting tariff regulations put their global strategy at risk.
The policy volatility also strained logistics. U.S. Customs began requiring formal entry processing for all imports over $800 in early April, contributing to backlogs that led companies like DHL to temporarily pause high-value B2C shipments to the U.S. DHL temporarily stopped accepting shipments Canadian shippers also reported disruptions and returned packages during the February de minimis pause, according to company blog posts.
Major e-commerce platforms reacted differently. Amazon denied reports it planned to display tariff costs on its main product pages, clarifying the consideration was only for its budget-focused Amazon Haul store.
In contrast, China-based Temu began adding explicit “import charges” reflecting the new tariffs, sometimes drastically increasing item costs, while Shein also raised prices, attributing it to included tariffs. Some Shein items reportedly saw increases over 300%.
Shein is also reportedly considering restructuring its U.S. supply chain by shifting production away from China. Amazon CEO Andy Jassy had anticipated that third-party sellers on the platform would likely attempt to pass tariff costs onto consumers.
Corporate Strategies and Political Currents
Large corporations also took measures to navigate the high tariff environment. Apple, for instance, undertook an emergency airlift of iPhones from China and India in late March and is expanding iPhone assembly in Brazil to bypass new U.S. duties that could have led to price hikes of up to 40% for American consumers on some iPhone models.
This move is part of Apple’s broader strategy to diversify its supply chain beyond Asia, with aims to manufacture up to 25% of its iPhones in India by 2027.
The Trump administration has advocated for increased U.S.-based tech manufacturing. White House Press Secretary Karoline Leavitt cited Apple’s $500 billion U.S. investment plan as a sign of confidence in domestic capabilities. Commerce Secretary Howard Lutnick also pointed to highly automated U.S. factories in a CBS News appearance and Apple’s prior $430 billion U.S. investment plan from 2021.
However, Apple executives, including Steve Jobs have long expressed skepticism about replicating their vast Asian manufacturing ecosystem in the U.S., citing a shortage of specialized engineering talent.
Path Forward for Trade Relations
The tariff landscape before the agreement was marked by considerable uncertainty, which Wedbush analyst Dan Ives described as creating “massive uncertainty and chaos for companies trying to plan their supply chain, inventory, and demand.”
The temporary pause is a “breath of fresh air for companies struggling with supply chain uncertainty,” a spokesperson for the National Retail Federation told the Associated Press. The American Chamber of Commerce in Shanghai also welcomed the move, stating it provides needed predictability for businesses.
The U.S. and China also agreed to work constructively on the issue of fentanyl flows. “Both the Chinese and United States agreed to work constructively together on fentanyl and there’s a positive path forward there as well,” U.S. Trade Representative Jamieson Greer said.
Following the agreement, the parties will establish a mechanism for continued discussions on economic and trade relations. Representatives include Vice Premier He Lifeng for China and Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer for the U.S. Discussions may occur alternately in China, the U.S., or a third country.
Scott Bessent stated in Geneva that “We want more balanced trade, and I think both sides are committed to achieving that,” and that “Neither side wants a decoupling.”
China’s ministry of commerce echoed this sentiment, stating the move “meets the expectations of producers and consumers . . . aligning with the interests of both nations and the common global interest.” and aligns with the interests of both nations, and expressed hope “that the United States will continue to work with China . . . and jointly inject more certainty and stability into the world economy.” The temporary tariff reduction is seen as a first step towards a more permanent deal.
