US cuts tariffs on small parcels from Chinese firms like Shein and Temu
President Donald Trump announced a significant reduction in tariffs on small parcels from Chinese firms, such as Shein and Temu, from 120% to 54%, with a flat fee per item remaining at $100, effective after May 2. This move follows a temporary agreement between the US and China to reduce tariffs on each other’s goods for 90 days, easing tensions in the ongoing trade war. The agreement includes a reduction of US tariffs from 145% to 30% and China's from 125% to 10%, though some levies are suspended rather than canceled, potentially rising again if no further progress is made. Trump emphasized that the US is not aiming to harm China, despite the ongoing economic impacts, and plans to discuss the issue further with Chinese President Xi Jinping. Share markets responded positively to the news, viewing it as a major de-escalation in the trade conflict, though experts caution against overoptimism regarding immediate price changes.
Context:
President Donald Trump announced a significant reduction in tariffs on small parcels from Chinese firms, such as Shein and Temu, from 120% to 54%, with a flat fee per item remaining at $100, effective after May 2. This move follows a temporary agreement between the US and China to reduce tariffs on each other’s goods for 90 days, easing tensions in the ongoing trade war. The agreement includes a reduction of US tariffs from 145% to 30% and China's from 125% to 10%, though some levies are suspended rather than canceled, potentially rising again if no further progress is made. Trump emphasized that the US is not aiming to harm China, despite the ongoing economic impacts, and plans to discuss the issue further with Chinese President Xi Jinping. Share markets responded positively to the news, viewing it as a major de-escalation in the trade conflict, though experts caution against overoptimism regarding immediate price changes.
Dive Deeper:
President Trump has cut tariffs on small parcels from Chinese companies like Shein and Temu, reducing the rate from 120% to 54%, with a $100 flat fee per item still in place, while canceling a planned $200 charge that was set to begin on June 1.
This tariff reduction follows a joint US-China agreement to temporarily lower tariffs on each other’s goods for 90 days, marking a truce in the trade war and signaling a new round of trade negotiations between the two countries.
Under the agreement, the US will decrease tariffs from 145% to 30%, while China will reduce its retaliatory tariffs on US goods from 125% to 10%, although the suspension of some levies leaves room for them to potentially rise again in the future.
Despite the tariff reductions, President Trump has assured that the US is not looking to harm China, acknowledging the economic strain on China and expressing optimism about future discussions with Chinese President Xi Jinping.
The market has reacted positively to the announcement, with share prices jumping as investors welcome the de-escalation in trade tensions, though experts advise caution against relying on immediate price cuts and predict ongoing volatility.