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US suspends President Trump's Reciprocal Tariff Policy for 90 days, except for China
- On 9 April 2025, President Trump announced a 90-day pause on much of his Reciprocal Tariff Policy, originally announced on 2 April 2025.
- President Trump reacted to Chinese countermeasures by increasing US tariffs on China from 34% to 84% and then to 125% in a subsequent announcement
- The President further increased the formerly duty-free de minimis treatment for certain goods from mainland China and Hong Kong to either a 120% ad valorem duty rate or US$100 or US$200 specific duties.
- Excluding China, the country-specific tariffs announced on 8 April 2025 will be suspended for 90 days. The 10% global base tariffs are still in effect.
In the late afternoon on 9 April 2025, President Donald Trump made further modifications1 to his Reciprocal Tariff Policy initially announced on 2 April 20252 and modified on 8 April 2025.3
On 8 April 2025, President Trump had responded to measures from the People's Republic of China (PRC) by invoking authorities from International Emergency Economic Powers Act (IEEPA) and the Trade Act of 1974 to address the threat to the national security and economy of the United States.
The changes made on 9 April and 8 April include:
- Increased tariff on China from 34% to 125%
- Increased the de minimis duties on parcels valued at less than US$800 arriving from the Chinese mainland and Hong Kong as follows:
- Ad valorem duty rate to 120%
- Specific duty of US$100 per item on 2 May 2025
- Specific duty of US$50 to US$200 per item on 1 June 2025
- Retained additional 10% ad valorem duty rate on all imports to the US
- Suspended for 90 days, beginning on 10 April 2025, country-specific ad valorem duty rates
Background
President Trump signed Executive Order 14256 on 2 April 2025 to impose a 10% baseline tariff on all US trading partners, to take effect on 5 April 2025. The 2 April Executive Order also announced tariffs against specific countries, effective 9 April 2025. A total of 86 countries were assigned higher tariffs that range from 11% to 50%. The tariff assigned to China was originally 34% in Annex I of the 2 April Executive Order. (For details, see EY Global Tax Alert, US imposes President's Reciprocal Tariff Policy against trading partners and ends duty-free treatment for low-value shipments from China, dated 3 April 2025.)
Based on the Administration's latest measures, Chinese origin goods, under the IEEPA, will be subject to 125% additional tariffs, not including the 20% under IEEPA previously in place. The total additional tariffs could be even higher if the Chinese-origin good is subject to additional tariffs under Section 301 of Trade Act of 1974.
Response from China and EU
China announced 84% additional tariffs on US goods to go into effect 10 April 2025, which was increased to 125% on 11 April 2025.
On 8 April 2025, the European Union (EU) also announced4 25% duties on a wide range of US goods, effective 15 April 2025. On 9 April, after President Trump suspended his country-specific tariffs affecting Europe, the EU announced5 that its tariffs will also be paused for 90 days.
As these tariff developments remain fluid, EY will continuously monitor for the latest updates to help companies stay informed and agile for trade disruptions.
Actions for businesses to consider
Companies that import into the United States should immediately identify the potential impact of these measures and may want to consider some of the following items, provided they align with their business objectives:
- Review the Federal Register notice that will follow the 9 April Executive Order to understand the operational details, including Chapter 98 exemptions and drawback considerations.
- Consider valuation planning, such as first sale for export, warranty push down and bifurcating product and non-product costs (e.g., exclusive distribution rights).
- Consider aligning customs valuation with transfer pricing policies.
- Review contracts with suppliers and customers to clarify contractual liability for duties and taxes.
- Consider renegotiating supplier and customer pricing agreements and/or cost-splitting arrangements.
- Assess the operational impact of eliminating de minimis duty-free treatment for mainland China- and Hong Kong-origin products.
- Consider using the Foreign Trade-Zone (FTZ) program for duty deferral on long-lead-time inventory items to provide cash-flow benefits.
- Consider duty drawback for the qualified imports (e.g., those affected by the tariffs)
- Review US-continuous-import-bond sufficiency to help ease the import of goods.
- Keep up with the latest news and developments in trade policies and stay adaptable to quickly respond to changes in trade regulations and tariff rates.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), Global Trade
- Sergio Fontenelle, New York
- Lynlee Brown, San Diego
- Michael Leightman, Houston
- Michael Heldebrand, San Jose
- Nathan Gollaher, Chicago
- Bryan Schillinger, Houston
- Jay Bezek, Charlotte
- Prentice Wells, San Jose
- Shane Williams, Houston
- Renata Natalino, San Francisco
- Nesia Warner, Austin
- Celine Petersen, Chicago
- Cody Davis, Charlotte
- Tanna Johnson, Denver
- Christopher Bourdganis, Detroit
- Ilona van den Eijnde, New York
- Helen Xiao, Chicago
- Parag Agarwal, New York
- James Lessard-Templin, Portland
- Sundar Markandan, Irvine
- Mary Cheng, McLean
Ernst & Young LLP (United States), WCEY
- Evan Giesemann, Washington
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor