Key Takeaways
- President Donald Trump announced a 90-day pause on all the “reciprocal” tariffs, with the exception of China, which will see tariffs increased to 125%. The president said he also expects Beijing to reach an agreement. “China wants to make a deal,”
he said. “They just don’t know how quite to go about it.”
- Effective May 2, 2025, every parcel from Mainland China or Hong Kong that once qualified for the US $800 de minimis threshold incurs a 30 % ad valorem tariff and a specific duty of US $25 per item — rising to US $50 on June 1, 2025.
- Section 232 investigation probes signal potential tariff escalations: potential shifts include autos and parts increasing to 35% within 60 days, copper to 25% by early 2026, timber to 15-20% next summer, and semiconductors to 100% — collectively driving a 10‑ to 25‑point cost surge across metals, autos, electronics, and forest products.
- Prudent companies can defend margins by diversifying supply chains, maximizing foreign‑trade zone benefits, and embedding price‑adjustment clauses before the next determinations take effect.
Scope of the New Duties
On Wednesday, April 9, 2025, President Trump paused every “reciprocal” tariff for 90 days, except those on China. The announcement reversed months of discussions framing elevated duties as a permanent fixture of U.S. trade policy. Effective immediately, importers from most affected countries now face a flat 10% rate instead of the higher, country‑specific surcharges that took effect at midnight.
China stands alone outside the pause. Citing Beijing’s new retaliatory measures, the administration increased duties on nearly all Chinese‑origin goods from 104 % to 125 %, also with immediate effect. The president framed the move as a response to China’s “lack of respect for the world’s markets” and signaled that Washington will maintain pressure until Beijing offers substantive concessions.
For every other jurisdiction caught in the reciprocal program, the universal 10% rate applies during the three‑month hiatus. The White House retains the option to reinstate higher duties on day 91, so importers should treat the reprieve as temporary relief rather than a permanent rollback.
Mexico and Canada occupy a special tier. Most goods that meet United‑States‑Mexico‑Canada Agreement rules continue to enter duty‑free, while non‑qualifying merchandise remains subject to the existing 25% tariff. Sector‑specific surcharges — such as those on autos, electronics, and critical minerals — also continue unchanged, regardless of country.
Companies that rely on Chinese inputs must now absorb or pass through a quadruple‑digit percentage‑point cost increase. Many will accelerate efforts to diversify sourcing, shift final assembly outside China, or position inventory in foreign‑trade zones to defer duty liability. Firms that source heavily from Europe, Latin America, or Asia‑Pacific gain a narrow planning window to renegotiate contracts, validate USMCA certificates, and model landed‑cost scenarios before the pause expires.
Anticipated Chinese Countermeasures
Beijing has still signaled an aggressive, multi‑front response that extends far beyond the already announced 34% surcharge on U.S. exports. Officials stand ready to ratchet tariffs on high‑visibility sectors — raising duties on soybeans, corn, pork, dairy, and wine into the 60-80% range, lifting levies on U.S. aircraft and parts well above the current 15%, and hiking automotive tariffs to roughly 50% while tightening safety and emissions testing. They will likely pair those headline duties with non‑tariff barriers: ports can require full‑scale customs and quarantine inspections, regulators can slow or deny import permits for food, medical devices, and high‑tech components, and agencies can launch antitrust, anti‑dumping, or cybersecurity probes that drain corporate resources.
China also retains powerful leverage through strategic export controls, including potential quotas or new licensing regimes on rare‑earth elements, battery metals, and specialty chemicals that feed U.S. defense and clean‑energy supply chains. Administrative pressure adds another layer — state‑owned enterprises may quietly pivot to domestic or third‑country suppliers, state media can fuel consumer boycotts, and visa processing for U.S. executives can slow to a crawl. Finally, Beijing could wield financial tools: the central bank might allow wider renminbi swings, inflating hedging costs, while authorities weigh curbing Treasury purchases or tightening outbound dividend channels. Companies that depend on China for sales or sourcing must treat these measures as imminent and craft contingency plans accordingly.
Recommended Action Plan for Importers and Manufacturers
Companies that act methodically can position themselves for long-term resilience after the initial impact of these tariffs. Begin with a forensic look at your supply chain, tracing every finished product, component, and raw material back to its origin and flagging any Chinese content — even if an intermediary in a third country currently supplies the item. Move directly to a rigorous verification stage: audit each bill of material, confirm every tariff classification, and conduct substantial‑transformation analyses to determine whether a manufacturing shift or re‑engineering step could support a non‑Chinese origin claim.
Armed with accurate data, pivot to duty‑mitigation. Evaluate first‑sale valuation, bonded warehouses, foreign‑trade zones, and duty‑drawback programs, and tighten transfer‑pricing policies to prevent double taxation and inflated duty bases. As you fine‑tune these levers, renegotiate supplier contracts. Push for cost‑sharing mechanisms, embed alternative‑sourcing clauses, and install automatic price‑adjustment triggers that respond to future tariff swings.
With contractual safeguards in place, quantify the financial impact that remains. Model landed‑cost increases under multiple tariff scenarios and recalibrate budgets, inventory strategies, and customer pricing to protect margins. Then engage policymakers. Draft comments for the next USTR exclusion docket, coordinate with industry coalitions, and press officials for targeted relief.
Finally, anticipate Beijing’s counterpunch. Identify product lines vulnerable to higher Chinese duties, licensing delays, or regulatory scrutiny, and diversify sales channels wherever possible. By following this continuous loop — map, verify, mitigate, renegotiate, model, engage, and prepare — you will preserve operational flexibility and maintain a competitive edge as trade tensions intensify.
Looking Forward
The administration continues to wield tariffs as a strategic bargaining chip, tying each new duty to larger national‑security and foreign‑policy aims. Officials have ruled out any implementation pause and intend to keep ratcheting pressure until counterpart governments present concrete concessions. Traders should therefore expect another cycle of headline swings and sharp equity sell‑offs until Washington publishes a formal exemption framework.
In looking to the future, Section 232 investigations can assist in foreshadowing the next wave. The president already imposed a 25% duty on imported automobiles and selected parts, effective April 3, 2025, after reviving a 2019 Commerce report that found auto imports threaten national security. The proclamation authorizes Commerce to expand coverage to additional parts with only 60 days’ notice, so the rate on high‑value electronics, power‑train systems, and battery packs could rise to 35% if foreign producers refuse local‑content commitments.
Copper sits in the cross‑hairs as well. An executive order on February 25, 2025, directed Commerce to examine whether copper — raw ore through finished alloys — imperils defense readiness. Commerce must deliver its report by late November; if it confirms a threat, the White House can impose tariffs as high as 25% in early 2026. Analysts also expect a parallel probe into timber and engineered lumber, hinted at in Commerce’s public docket, which could bring duties in the 15-20% range on Canadian and Scandinavian supplies by next summer.
Semiconductors remain another likely target. The president’s trade team has floated a 100% tariff on advanced chips sourced from Taiwanese foundries unless Taipei agrees to accelerated U.S. fab construction and sensitive‑technology safeguards. Industry observers view a mid‑2025 launch of that investigation as the administration’s most potent bargaining lever over the global electronics supply chain.
Given this trajectory, tariff exposure will probably climb in discrete 10‑ to 25‑percentage‑point increments across metals, autos, electronics, and forest products throughout the next 18 months. Companies that lock in alternative sourcing, expand foreign‑trade‑zone use, and embed price‑adjustment clauses now will cushion the immediate shock and preserve long‑term competitiveness when the next Section 232 determinations land.
