China Tariffs - US China Trade Agreement May Not Be Enough!
Did the US Trade Deal come just in time? What impact will it have on import tariff rates? And what will be your current rate of duties if we agree with China as proposed by the Trump administration?
Although the general sentiment is that the China-US Trade Deal is a positive advancement, it still may not be enough to ease the burden of U.S.-China tariffs. In this article, we explore why even with the proposed easements, the rates of duty are still quite high.
US China Tariffs Today - What would you pay to import an article from China today? 5/12/25
First, let’s understand what your duties would be if you imported something from China today. We’ll use a cotton t-shirt as an example.
The rate of duty for a cotton t-shirt currently is 16.5%.
The next thing you would have to add are the additional subheadings for the additional tariffs put in place. These are tariffs under:
Section 301, 20%
IEEPA 25%
Reciprocal tariffs 125%
So the total would be 16.5%, plus 20% (Section 301), plus 25% (IEEPA), plus 125% (Reciprocal Tariffs) for a total of 186.5%.
Section 301 for China 25% - Subheading 9903.01.24
IEEPA duties for China 25% - Subheading 9903.88.03
Reciprocal Duties for China 125% - Subheading 9903.01.63
If the cost of your t-shirt was $10 from your supplier, you would pay an additional $18.65 in duties (Cost of $10 x 186.5% duties), making the total cost of your shirt (before any other costs) $28.65. (Cost of the shirt $10 + the duties $18.65).
As you can see, IEEPA tariffs are in addition to Section 301 Tariffs. One does not exempt the other. Nor do they exempt articles from reciprocal duties.
What if you imported something that was duty-free? Will the new US-China Trade Agreement exempt duty-free articles?
Duty-free simply means the US does not charge any duties/tariffs on a particular commodity.
However, duty-free items are not all exempt from the additional duties imposed by these subheadings. Although there are some exceptions, most items are still subject to the additional tariffs.
So, a duty-free item would still be subject to 20% plus 25% plus 125% for a total of 170%. If an item is $10 in cost and duty-free, an importer would still currently have to pay an additional 170% duties or $17 for a total of $27. Yup, that’s right, 170% for a “duty-free” item!
What Tariff News is NOT covering.
We bring up this example to do a couple of things. Firstly, we don’t think many people are aware of how tariffs are currently being calculated. Particularly the point on how each set of tariffs is added cumulatively to create a total on top of your current rate of duties. We have not seen much of this covered in current tariff news. It's very important to keep expectation levels reasonable.
As you can see, IEEPA tariffs are still subject to reciprocal tariffs.
The second point is that this current US-China Trade agreement, as per current reports, is only addressing the reciprocal tariffs. The current anticipated reduction levels are bringing the current rate of 125% to 30% for China and down to 10% for all other countries.
This would still leave an additional 75% for Chinese imports (Section 301 25%, IEEPA 20%, newly modified reciprocal tariff of 30%). This is still an enormous number for importers and manufacturers, and above all, for US consumers to absorb.
Is the current China-US Trade Deal Enough? Will it lower China Tariffs significantly?
So, while there is some progress being made in trade negotiations between the US and China, will it be enough to bring down the concerns for US businesses and consumers?
Our determination is: no. However, it is a big step in the right direction. Also, too much of the market's anticipation is based on speculation. We need to see what the final decisions are by the current administration, and what customs lists as its official updated rates.
It’s going to be an interesting year for sure. If you want to learn more and stay on top of topics like these, follow our Maximum Freight account and contact us for a free logistics consultation.
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