On April 9, United States President Donald Trump postponed the implementation of a reciprocal tariff plan for 90 days, setting the new deadline for negotiations with the country’s trade partners to July 8. During this period, recently enacted 10% baseline tariffs will remain in place, while countries are expected to negotiate with the U.S. to bring down tariff rates before the deadline. However, tensions escalated on April 10 when President Trump imposed an additional 125% tariff on Chinese goods, increasing the total tariff rate to 145% for most goods and even higher rates for items already subject to existing Section 301 tariffs, which target specific sectors and range from 7% to 100%. In response, China raised its tariffs on U.S. goods to 84%, and then to 125% to match the U.S. These measures indicate a tense environment that could make a trade deal between the two countries increasingly unlikely in the short-term.
Escalation of U.S.-China trade conflict heightens uncertainty for businesses globally
Following the recent rapid increase of tariff rates, President Trump has indicated that the he expected China to initiate trade talks. The Chinese government has signaled a willingness to negotiate and has stated it will not increase tariffs beyond the current 125% rate, asserting that further hikes would not significantly impact the volume of U.S. goods sold in China. However, as of April 22, no official statements have been made that would indicate when trade negotiations between the two countries are expected to begin.
In the U.S., the tariffs are most likely to affect imports of Chinese consumer goods such as toys, furniture, apparel, and sports equipment. On April 11, the U.S. announced exemptions for tariffs on consumer electronics and semiconductor equipment, preventing immediate consequences for another major Chinese export to the U.S. However, President Trump’s administration has since stated that additional tariffs are forthcoming, with specifics on rates and timelines yet to be announced. On the Chinese side, U.S. exports of energy products, agricultural goods, pharmaceuticals, and medical products, are among the American imports most at risk. Imports of key U.S. commodities including oil, liquified natural gas, cotton, and soybeans are likely to be affected.
These rapid changes in tariff rates have contributed to unpredictable costs and increased customs processing times for businesses. Many companies are relying on bonded storage in the U.S. to delay customs clearance for imports until tariff rates stabilize. With the suspension of reciprocal tariffs, transshipment of Chinese goods through countries with lower tariff rates is also expected to grow, and likely targets include Taiwan and countries in Southeast Asia. In response to mounting customs delays, DHL has announced a temporary suspension of e-commerce parcel shipments to the U.S. exceeding $800 (€695), citing multi-day delays due to additional documentation requirements. Additionally, Hongkong Post has ceased collecting U.S.-bound goods, with surface mail suspended immediately and airmail ending on April 27, citing tariff uncertainty as the key complicating factor.
In addition to the new tariffs, the United States Trade Representative has unveiled a finalized plan to levy reduced fees on Chinese-built vessels calling at U.S. ports. The rates have been reduced significantly from the original proposal following industry feedback but still represent a push from the U.S. administration to reduce Chinese influence on the global shipbuilding industry. Starting October 8, ships owned or operated by Chinese entities will face a fee of $50 (€44) per ton of cargo per voyage. The fees will then increase by $30 (€26) annually for three years. Chinese-built vessels not owned by Chinese operators will incur a $18 (€16) fee per ton per voyage, with a $5 (€4) annual increase over the same period. Vessels operating between U.S. domestic ports, in the Great Lakes region, and in the Caribbean will be excluded from all fees. Each vessel will be charged these fees for every voyage to the U.S. for a maximum of six voyages per year.
Delay of U.S. reciprocal tariff program prompts rapid trade negotiations
While the U.S. reciprocal tariffs were implemented as scheduled at 00:01 EST on April 9, President Trump announced several hours later that while the 10% baseline tariff would remain in place, all reciprocal tariffs would be suspended for 90 days until July 8 for negotiations, except for those imposed on China. The announcement led to favorable reactions from U.S. trade partners, many of whom temporarily rolled back countermeasures or vowed to engage in negotiations. On April 10, the European Union paused its first tariff package until July 8 to allow room for negotiations. Additionally, Canada has conditionally lifted tariffs on U.S. auto imports from companies that commit to maintaining current production levels and expansion plans in Canada. Currently, Toyota Motor Corporation and Honda Motor Co., Ltd. comply with this order, while Stellantis N.V., General Motors Company, and Ford Motor Company have scaled back production or paused expansion plans due to U.S. tariffs.
Trade negotiations have already begun, with U.S. Treasury Secretary Scott Bessent stating that talks with Japan, the U.K., Australia, South Korea, and India are progressing well. President Trump attended a meeting with Japanese officials on April 16, with U.S. trade goals including market access, LNG purchases, and alignment on foreign investment screening. Negotiations with the Mexican government are also ongoing, where tariffs on automobiles, steel, and aluminum have been key focuses. Throughout ongoing talks, the U.S. has reportedly urged its trade partners to economically isolate China as a negotiation concession and has suggested measures such as blocking Chinese investments and cracking down on the transshipment of goods. However, China has threatened retaliatory trade action against countries that take such actions.
Additional U.S. sector-specific tariffs remain on the table
Although the U.S. has temporarily rescinded the reciprocal tariff order, President Trump has signaled that additional sector-specific tariffs are on the way. The previously announced U.S. 25% tariffs on automotive part imports remain scheduled for May 3. Additionally, at an event on April 8, President Trump announced that pharmaceutical import tariffs would be introduced “very shortly,” while a senior administration official signaled that tariffs on semiconductors are expected within the next one to two months, potentially affecting recently exempted electronic materials. President Trump also plans to close the de minimis tariff loophole, which exempts Chinese shipments under $800 (€773), on May 2 after a prior delay due to confusion at customs. Some carriers, such as UPS and FedEx, have already announced plans to charge a “surge fee” of $0.29 (€0.25) and $0.45 (€0.39) per pound respectively, with FedEx imposing a $1 (€0.88) minimum per package.
Other sectors could be targeted by new tariffs in the coming weeks as well. President Trump recently ordered a tariff investigation into critical minerals with findings due within 180 days and a focus on minerals such as lithium, cobalt, nickel, uranium, and the 17 rare earths. The Trump administration is also considering new tariffs of up to 100% on Chinese port equipment, including ship-to-shore cranes and chassis, with a public hearing scheduled for May 19, though the date this tariff could go into effect remains uncertain.
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