Massive Tariff Cuts: What Does It Mean for Shoppers and Trade Between the US and China?

In a surprising move, President Donald Trump has dramatically reduced tariffs on small parcels shipped from China and Hong Kong to the United States. This change comes only hours after the US and China announced a temporary reduction of tariffs on each other’s goods for a period of 90 days. The new tariffs for parcels valued up to $800 have dropped from an exorbitant 120% to a much more manageable 54% according to a White House statement, with the flat fee per parcel staying at $100. Notably, a previously scheduled $200 fee set to kick in on June 1 has been canceled.

Online retail giants like Shein and Temu, which have heavily relied on the de minimis exemption to ship affordable items directly to US consumers, face a significant shift following the Trump administration’s closure of this duty-free rule earlier in the month. Many shoppers reportedly rushed to make purchases before the deadline, fearing increased costs.

This latest tariff adjustment follows a joint announcement from the US and China signaling a willingness to engage in new trade negotiations. Share markets reacted positively to this news, with stocks rising as Trump declared that weekend discussions had led to a ”total reset” in trade terms. Under the newly forged agreement, American tariffs are set to decrease from 145% to 30%, while China’s retaliatory tariffs on US imports will decline from 125% to 10%.

Trump indicated that while certain levies are merely suspended and not eliminated, a rise in tariffs might be possible again in three months if progress stalls. However, he expressed confidence that it wouldn’t return to previous peaks, assuring that the intention is not to harm China, as he believes it is already bearing significant brunt from current trade strife. He also mentioned the possibility of conversing with Chinese President Xi Jinping soon, perhaps later in the week, indicating continued dialogue between these two economic powerhouses.