Modifying Reciprocal Tariff Rates to Reflect Discussions with the People’s Republic of China
President Trump issued an order modifying reciprocal tariff rates on goods imported from China.
This action, following preceding executive orders imposing tariffs, reflects ongoing discussions with the PRC aimed at addressing trade imbalances and national security concerns.
The order suspends certain tariffs for 90 days, while imposing a 10% ad valorem rate on other goods.
Simultaneously, it makes adjustments to other tariff rates, aiming to improve trade reciprocity.
Arguments For
Intended Benefits: The adjustments to tariffs aim to address the national emergency declared in Executive Order 14257, stemming from trade imbalances and national security concerns. The suspension of some duties reflects progress in discussions with China to improve trade reciprocity.
Evidence Cited: The order cites several previous executive orders (14257, 14259, 14266) establishing the initial tariffs and the rationale for their adjustments. The ongoing discussions with the PRC are cited as evidence of progress toward greater trade reciprocity.
Implementation Methods: The order directs the Secretary of Commerce, Homeland Security, and the US Trade Representative to implement the changes, including amending regulations and notices in the Federal Register.
Legal/Historical Basis: The order cites the International Emergency Economic Powers Act (IEEPA), the National Emergencies Act, and sections of the Trade Act of 1974 and title 3, United States Code, as legal authorization for the actions taken.
Arguments Against
Potential Impacts: The changes to tariffs could negatively impact certain US businesses that rely on imports from China, increasing costs. Some might argue the 90-day suspension doesn't provide a long-term solution to trade imbalances.
Implementation Challenges: Implementing the changes to the HTSUS and related regulations requires coordination across multiple government agencies. Unforeseen consequences from tariff changes are always possible.
Alternative Approaches: Alternative strategies to address trade imbalances might include negotiating comprehensive trade agreements, pursuing bilateral negotiations or focusing on targeted sanctions rather than broad tariff changes.
Unintended Effects: The modified tariffs could lead to retaliatory actions from China or other countries, potentially creating further economic instability. Businesses might adjust pricing strategies in unexpected ways.
Section 1. Background.
In Executive Order 14257 of April 2, 2025 (Regulating Imports With a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits), I declared a national emergency arising from conditions reflected in large and persistent annual U.S. goods trade deficits, and imposed additional ad valorem duties that I deemed necessary and appropriate to deal with that unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security and economy of the United States. Section 4(b) of Executive Order 14257 provided that “[s]hould any trading partner retaliate against the United States in response to this action through import duties on U.S. exports or other measures, I may further modify the [Harmonized Tariff Schedule of the United States] to increase or expand in scope the duties imposed under this order to ensure the efficacy of this action.” In Executive Order 14259 of April 8, 2025 (Amendment to Reciprocal Tariffs and Updated Duties as Applied to Low-Value Imports From the People’s Republic of China), and Executive Order 14266 of April 9, 2025 (Modifying Reciprocal Tariff Rates To Reflect Trading Partner Retaliation and Alignment), pursuant to section 4(b) of Executive Order 14257, I ordered modifications of the Harmonized Tariff Schedule of the United States (HTSUS) to raise the applicable ad valorem duty rate for imports from the People’s Republic of China (PRC) established in Executive Order 14257, in recognition of the fact that the State Council Tariff Commission of the PRC announced that it would retaliate against the United States in response to Executive Order 14257 and Executive Order 14259. Section 4(c) of Executive Order 14257 provided that, “[s]hould any trading partner take significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters, I may further modify the HTSUS to decrease or limit in scope the duties imposed under this order.” Since I signed Executive Order 14266, the United States has entered into discussions with the PRC to address the lack of trade reciprocity in our economic relationship and our resulting national and economic security concerns. Conducting these discussions is a significant step by the PRC toward remedying non-reciprocal trade arrangements and addressing the concerns of the United States relating to economic and national security matters.
This section provides background information.
It explains that prior executive orders imposed tariffs on Chinese goods due to trade deficits and national security concerns.
These tariffs were increased in response to Chinese retaliation.
However, subsequent discussions between the US and China led to this order, which modifies the tariff approach in response to steps taken by China to improve trade reciprocity.
Section 2. Suspension of Country-Specific Ad Valorem Rate of Duty.
Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 14, 2025, all articles imported into the customs territory of the United States from the PRC, including Hong Kong and Macau, shall be, consistent with law, subject to an additional ad valorem rate of duty of 10 percent subject to all applicable exceptions set forth in Executive Order 14257 and the Presidential Memorandum of April 11, 2025. This ad valorem rate of duty of 10 percent reflects (i) the modification of the application of the additional ad valorem rate of duty on articles of China (including articles of Hong Kong and Macau) set forth in Executive Order 14257, by suspending 24 percentage points of that rate for an initial period of 90 days, and the retention of the remaining ad valorem rate of 10 percent on those articles pursuant to the terms of said order; and (ii) the removal of the modified additional ad valorem rates of duty on those articles imposed by Executive Order 14259 and Executive Order 14266.
This section announces a change to the import tariff on goods from China, Hong Kong, and Macau.
Starting May 14, 2025, a 10% ad valorem duty will apply.
This represents a 24 percentage point reduction for 90 days, taking into account previously imposed tariffs and reflects progress in trade relations.
Sec. 3. Tariff Modifications.
In recognition of the intentions of the PRC to facilitate addressing the national emergency declared in Executive Order 14257, the HTSUS shall be modified as follows: Effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 14, 2025: (a) heading 9903.01.25 of the HTSUS shall be amended by deleting the article description and by inserting “Articles the product of any country, except for products described in headings 9903.01.26–9903.01.33, and except as provided for in heading 9903.01.34, as provided for in subdivision (v) of U.S. note 2 to this subchapter . . . . . . ” in lieu thereof; (b) heading 9903.01.63 of the HTSUS shall be amended by deleting “125%” each place that it appears and by inserting “34%” in lieu thereof; (c) subdivision (v)(xiii)(10) of U.S. note 2 to subchapter III of chapter 99 of the HTSUS shall be amended by deleting “125%”, and by inserting “34%” in lieu thereof; and (d) heading 9903.01.63 and subdivision (v)(xiii)(10) of U.S. note 2 to subchapter III of chapter 99 of the HTSUS are hereby suspended for a period of 90 days beginning at 12:01 a.m. eastern daylight time on May 14, 2025.
This section details specific modifications to the Harmonized Tariff Schedule of the United States (HTSUS).
Several headings and subdivisions are amended, primarily involving changes to tariff rates (e.g., replacing 125% with 34%).
Some HTSUS sections are suspended for a 90-day period, effective May 14, 2025.
These changes reflect the ongoing effort to address trade issues with China.
Sec. 4. De Minimis Tariff Decrease.
To ensure that the reduction in duties pursuant to section 2 of this order is made fully effective and the purpose of Executive Order 14257, as amended, is not undermined, I also deem it necessary and appropriate to: (a) decrease the ad valorem rate of duty set forth in section 2(c)(i) of Executive Order 14256 of April 2, 2025 (Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China as Applied to Low-Value Imports), as modified by Executive Order 14259 and Executive Order 14266, from 120 percent to 54 percent; (b) retain in effect the per postal item containing goods duty of 100 dollars in section 2(c)(ii) of Executive Order 14256, as modified by Executive Order 14259 and Executive Order 14266, that has been in effect since 12:01 a.m. eastern daylight time on May 2, 2025, unless and until otherwise modified by a subsequent executive action, notwithstanding the increase contemplated effective June 1, 2025, pursuant to Executive Order 14256, as modified by Executive Order 14259 and Executive Order 14266; and (c) modify the HTSUS, effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern daylight time on May 14, 2025, as follows: (i) subdivision (w) of U.S. note 2 to subchapter III of chapter 99 of the HTSUS shall be amended by deleting “120 percent”, and by inserting “54 percent” in lieu thereof; and (ii) subdivision (w) of U.S. note 2 to subchapter III of chapter 99 of the HTSUS shall be amended by deleting “ , and before 12:01 a.m. eastern daylight time on June 1, 2025. For merchandise entered for consumption on or after 12:01 a.m. eastern daylight time on June 1, 2025, the applicable specific duty rate is $200 per postal item containing such goods.”
This section further modifies tariffs, specifically reducing an ad valorem rate from 120% to 54% and retaining a $100 per postal item duty on certain goods.
The related HTSUS entries are also modified to reflect these changes.
The modifications ensure the overall effectiveness of the tariff reductions outlined earlier while preventing the undermining of the intentions of prior executive orders.
Section 5. Implementation.
The Secretary of Commerce, the Secretary of Homeland Security, and the United States Trade Representative, as applicable, in consultation with the Secretary of State, the Secretary of the Treasury, the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, the Senior Counselor to the President for Trade and Manufacturing, and the Chair of the United States International Trade Commission, are directed to take all necessary actions to implement and effectuate this order, consistent with applicable law, including through temporary suspension or amendment of regulations or notices in the Federal Register and adopting rules and regulations, and are authorized to take such actions, and to employ all powers granted to the President by IEEPA, as may be necessary to implement this order. Each executive department and agency shall take all appropriate measures within its authority to implement this order.
This section outlines the implementation responsibilities.
Several key government agencies are tasked with putting the ordered tariff modifications into effect.
They are authorized to use existing legal tools, including amending regulations and notices, to enforce these changes.
Section 6. General Provisions.
(a) Nothing in this order shall be construed to impair or otherwise affect: (i) the authority granted by law to an executive department, agency, or the head thereof; or (ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals. (b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations. (c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. (d) The costs for publication of this order shall be borne by the Department of Commerce.
This section contains standard legal provisions.
It clarifies that the order doesn't supersede existing legal authorities; implementation depends on budget approval; it creates no legal rights; and publication costs are allocated to the Commerce Department.