US-China deal to slash tariffs also eases burden on cheap packages
The Trump administration has reached an agreement with China to significantly reduce tariffs on goods, resulting in lowered tariffs on online purchases valued under $800 shipped from China to the U.S. The tariffs on low-value parcels via the U.S. Postal Service will be cut from 120% to 54%, and a flat rate per package will remain at $100 instead of increasing to $200. These changes are part of a broader agreement to reduce import taxes on all Chinese goods from 145% to 30%, following discussions in Switzerland. China has reciprocated by temporarily lowering its tariffs on U.S. goods from 125% to 10% as both countries work towards a lasting agreement over the next 90 days. The changes are expected to increase the volume of low-value packages entering the U.S., although not to the levels seen before the exemption termination on May 2.
Context:
The Trump administration has reached an agreement with China to significantly reduce tariffs on goods, resulting in lowered tariffs on online purchases valued under $800 shipped from China to the U.S. The tariffs on low-value parcels via the U.S. Postal Service will be cut from 120% to 54%, and a flat rate per package will remain at $100 instead of increasing to $200. These changes are part of a broader agreement to reduce import taxes on all Chinese goods from 145% to 30%, following discussions in Switzerland. China has reciprocated by temporarily lowering its tariffs on U.S. goods from 125% to 10% as both countries work towards a lasting agreement over the next 90 days. The changes are expected to increase the volume of low-value packages entering the U.S., although not to the levels seen before the exemption termination on May 2.
Dive Deeper:
Online shoppers in the U.S. will benefit from reduced tariffs on purchases under $800 from China due to a new agreement between the U.S. and China, lowering the tariffs from 120% to 54%.
A per-package flat rate will remain at $100, preventing the planned increase to $200, which would have gone into effect on June 1. This decision is part of the U.S.'s broader strategy to reduce tariffs on Chinese goods.
The agreement follows weekend talks in Switzerland, leading to a drastic cut in import taxes on all Chinese goods from 145% to 30%, aiming to ease trade tensions between the two nations.
China has responded by lowering its tariffs on U.S. goods from 125% to 10%, though these reductions are temporary, with a 90-day window set for negotiating a more permanent trade deal.
Prior to these changes, low-value shipments had been entering the U.S. duty-free under the de minimis rule, but this exemption was ended on May 2, leading to increased prices and halted shipments from companies like Shein and Temu.
The new tariff structure is anticipated to increase the volume of low-value packages entering the U.S., although not to the levels seen when the duty-free exemption was in place.
U.S. brands and logistics companies are optimistic about the tariff cuts, as the previous 145% rate was seen as a trade embargo, and the reduction to 30% makes trade more feasible.