Trump Signs Executive Order to Implement the 'Tariff Reduction Commitment' towards China

On May 12, 2025, Eastern Time in the United States, the President of the United States signed an executive order to implement the commitments made by the US side in the Joint Statement of the China-US Economic and Trade Talks in Geneva. The "reciprocal tariffs" on Chinese goods will be reduced to 10%, and the tax rates for "small-value imports" will be lowered.

The US side promised in the Joint Statement to take measures before May 14 to reduce the so-called ad valorem "reciprocal tariffs" on Chinese goods (including goods from Hong Kong and Macao), which include:

(1) For the initial 34% tariffs (levied according to Executive Order No. 14257 dated April 2, 2025), the 24% tariffs will be suspended for an initial period of 90 days, and the remaining 10% tariffs will continue to be imposed;

(2) For the subsequently increased 91% tariffs (that is, according to Executive Order No. 14259 dated April 8, 2025 and Executive Order No. 14266 dated April 9, 2025, the "reciprocal tariffs" on China will be increased from 34% to 125%), all of these tariffs will be cancelled.

In other words, within 90 days, the "reciprocal tariffs" on Chinese goods will be reduced by 115% and lowered to the baseline of 10% of the "reciprocal tariffs" uniformly imposed by the US on all trading partners. After 90 days, the tariffs may be restored to 34%.

The executive order consists of 6 articles, and the main contents are as follows:

Article 1 reviews the process of imposing "reciprocal tariffs" and decides to "suspend for a period of 90 days" the additional tariffs on Chinese goods imposed by Executive Order No. 14257, which have been modified by Executive Order No. 14259 and Executive Order No. 14266 and clarified in the memorandum dated May 11, 2025. Instead, the additional tariffs specified in Article 2 of this executive order will be imposed on Chinese goods.

Article 2 stipulates that starting from 00:01 on May 14, 2025, Eastern Time in the United States, an additional 10% tariff will be imposed on all Chinese goods (including goods from Hong Kong and Macao), but the additional tariffs will not be imposed on the goods exempted from additional tariffs according to Executive Order No. 14257 and the memorandum dated May 11, 2025. Determining this 10% additional tariff rate aims to reflect the above-mentioned commitment of the US side.

Article 3 is to implement Article 2 and make specific modifications to the US tariff schedule.

Article 4 stipulates that the additional tariffs for "small-value imports" (that is, goods not exceeding $800) from the Chinese mainland and Hong Kong, China, will be lowered. Specifically, the ad valorem tax rate will be reduced from 120% to 54%, and the per-item tariff will be maintained at $100 per item (the clause stating that it will be increased to $200 per item starting from June 1, 2025 is deleted).

Article 5 instructs the Department of Commerce, the Department of Homeland Security (the superior department of the US Customs), the USTR, the Department of the Treasury and other departments to take all necessary measures, including formulating rules and issuing notices, to implement this executive order.

Article 6 is a general clause applicable to almost all executive orders.

Neither the Joint Statement nor the executive order on May 12 mentions the Section 301 tariffs and the "fentanyl tariffs" previously imposed by the US on Chinese goods. However, it is worth noting that in the briefing released by the US side on the Joint Statement on May 12, the US stated that the two sides will cooperate to address the "fentanyl crisis" and will take "aggressive actions".

Therefore, without considering the Section 201 tariffs (photovoltaic cells and components), Section 232 tariffs (steel and aluminum products, automobiles and parts) and "anti-dumping and countervailing tariffs" imposed by the US on some goods of various countries, within 90 days starting from May 14, the US import tariffs on Chinese goods are divided into three tiers:

20% (fentanyl tariffs, because some goods are exempt from reciprocal tariffs; the Most-Favored-Nation (MFN) tariffs are not included),

30% (fentanyl tariffs + reciprocal tariffs, the MFN tariffs are not included),

55% (fentanyl tariffs + reciprocal tariffs + Section 301 tariffs, the MFN tariffs are not included).

The rapid agreement reached between China and the US has temporarily alleviated the "tariff war", which is better than what the outside world expected. Whether the fentanyl tariffs can be cancelled or reduced, whether the reciprocal tariffs will be restored to 34%, and whether the Section 301 tariffs are likely to be (partially) cancelled or reduced depends on the follow-up cooperation between the two sides on the fentanyl issue and the subsequent economic and trade consultations. However, the US has frequently launched Section 232 investigations recently, and for the relevant goods, the effects of the reduction or exemption of reciprocal tariffs may be offset in the future. 

Source: Export Controls and Sanctions