The United States and China agreed to reduce tariffs they've placed on each other for 90 days following weekend talks in Switzerland.

Effective Wednesday, the United States will reduce the tariff rate it has put on China-made imports so far in 2025 from 145% to 30%.

The 30% rate includes a 10% reciprocal tariff and 20% tariff related to what the White House has alleged is China’s role in allowing illicit fentanyl to flow into the United States. The 30% is in addition to import duties President Donald Trump imposed on China during his first term. While reduced for a time, the tariffs on China remain higher than what they were at the start of the president's second term.

China, meanwhile, has agreed to reduce tariffs it put on many U.S.-made imports in 2025 from 125% to 10% for the three-month pause. Beijing also agreed to suspend or cancel retaliatory, nontariff measures. “That could potentially include export restrictions on critical minerals used in batteries and other high-tech applications,” The Wall Street Journal reported.

The U.S. and China are continuing discussions on trade and economic policy.

“Both countries represented their national interest very well,” U.S. Treasury Secretary Scott Bessent, who along with U.S. Trade Representative Jamieson Greer represented the U.S. in the talks held in Geneva. “We both have an interest in balanced trade. The U.S. will continue moving towards that.”

“We expect a surge in orders. Starting this morning, we are going to start mobilizing our teams and client outreach based on this shift.” Michael Scott Cohen, Harper+Scott (asi/220052), on how the temporary tariff reduction could impact promo sales.

According to Bessent, the agreement on a temporary tariff reduction did not include sector-specific tariffs. He said the U.S. would “continue strategic rebalancing in areas including medicines, semiconductors and steel where it had identified supply chain vulnerabilities,” Reuters reported.

Trump’s outlawing of the de minimis exemption for imports from China and Hong Kong also appears to remain on the books. The exception had allowed imports valued at $800 or less per person per day to enter the United States free of tariffs, something some promo importers used to advantage. However, other promo importers decried it as an unfair loophole. Such imports are now subject to applicable duties and taxes.

Positive Development But Still Uncertainty, Promo Pros Say

Some promotional products professionals welcomed word of a 90-day substantial reduction on tariffs on imports from China, the nation from which the U.S. branded merchandise industry sources the majority of goods sold domestically.

“For us, it’s a clear signal to immediately re-engage with any clients who were holding off due to the 145% tariff,” said Michael Scott Cohen, CEO of Harper+Scott (asi/220052), a Counselor Best Place to Work. “We expect a surge in orders, particularly from brands looking to catch this window. Starting this morning (Monday, May 12), we are going to start mobilizing our teams and client outreach based on this shift.”

“One of the biggest issues is the concern around stability. The agreement is for 90 days, so we’ll really be looking to see the structure of a ‘permanent’ agreement.” Mike Wolfe, Zorch (asi/366078)

Still, Cohen anticipated there could be issues, too, as importers across industries race to get goods they’d been holding off on importing due to the high tariff rate, now brought stateside while the lower levy remains in effect.

“This kind of shift will almost certainly cause short-term pressure on ocean freight pricing and availability,” said Cohen, a member of Counselor’s Power 50 list of promo’s most influential people. “Container costs could climb quickly as volume surges.”

Cohen also felt that securing factory space for manufacturing products in China could be a challenge for some as demand skyrockets. “Production space will tighten significantly,” he said. “Brands with pre-established partners will have a major advantage in getting priority and hitting delivery timelines.”

Mike Wolfe, CEO of Counselor Top 40 distributor Zorch (asi/366078), called the tariff reduction a “good sign.” Even so, ample challenges remain, he said.

“One of the biggest issues is the concern around stability,” Wolfe said. “The agreement is for 90 days, so we’ll really be looking to see the structure of a ‘permanent’ agreement. Given the investment that suppliers need to make in inventory, and the time it takes to produce/ship the items from China, the industry relies on price stability to operate effectively. This is tough if tariff amounts fluctuate in large amounts or frequently.”

“What we have with the Chinese is a mechanism to avoid upward tariff pressure.” Scott Bessent, U.S. Trade Secretary

Tariffs on imports that President Trump’s administration has placed on China and nations around the world have been a top issue for the promotional products industry in 2025. Those include a 10% baseline import tariff, currently paused nation-specific reciprocal tariffs and levies of 25% on steel and aluminum, as well as 25% on Canadian and Mexican products that are not covered by the United States-Mexico-Canada Agreement.

In Q1 2025, levies both threatened and implemented created marketplace disruption that contributed to promotional products distributors’ sales falling 3.6% year over year, and suppliers' sales dropping 4.8%, marking the worst quarterly retreat since Q1 2021, according to the Quarterly Sales Survey from ASI Research.

The 145% tariff rate on China in particular prompted importers in promo and other industries to temporarily halt bringing products from that nation to the United States as it was too cost prohibitive to do so. That’s prompted inventory shortage fears.

Those concerns have not been allayed by the 90-day tariff reduction. One promo supplier executive said the importing pause that’s occurred to date will lead to some inventory shortages, a phenomenon that they said is already in its beginning stages. How severe things may be for a supplier depends on their particular inventory position heading into the importing pause. That said, given the at least temporary reduction on China tariffs, some supplier executives do expect a ramp up in importing, which could help prevent wider-spread and/or longer-lasting stock gaps.

“I think this opens up a time window where some suppliers will start importing again,” said Power 50 member Yuhling Lu, CEO of Counselor Top 40 supplier Ariel Premium Supply (asi/36730). “They will be strategic in what items to get on their way. This will involve both new products and replenishment items needed to fill inventory gaps."

ASI Research shows that 60% of promo product suppliers reported that they had raised prices this year as of April due to tariff pressures/trade war concerns. Distributors were already wondering if the 90-day rate reduction on China-made imports would lead to suppliers lowering their prices. Suppliers were still digesting the latest tariff update Monday morning but some didn’t think prices would fall back at this point, given ongoing uncertainty and the fact that the 30% rate still drives an importing cost hike.

“As for prices,” said Lu, “I do not think they will be coming down.”

Tim Behling, vice president of supply chain and sustainability at Counselor Top 40 supplier Gemline (asi/56070), said the pricing situation remains “fluid and loaded with uncertainty.”

“Even with the reduction, the 30% rate on China is still significant,” Behling said. “Industry suppliers sourcing goods from China will need to take price increases between 15%-20% just to recover the incremental tariff impacts.”

What’s Next?

While the tariff reduction represents a significant breakthrough in what’s been tumultuous U.S./China trade relations in 2025, the lower rates are only, as of now, a temporary reprieve. Substantive progress will be needed to establish a more permanent arrangement.

Bessent indicated he will meet with Chinese authorities in the weeks ahead for discussions, but a time, location and agenda hadn’t been established as of this writing. He said that talks over U.S. fentanyl concerns in Geneva suggested China was “now serious about assisting the U.S. in stopping the flow of precursor drugs” from within its borders to the United States – a positive for potential progress on trade talks.

“What we have with the Chinese is a mechanism to avoid upward tariff pressure,” Bessent told CNBC.

The stock market surged following the tariff reduction announcement and economists said the news could bode well for the global economy. Still, they urged caution.

“The U.S. still has much higher tariffs on China than on other countries and still appears to be trying to rally other countries to introduce restrictions of their own on trade with China,” Mark Williams, chief Asia economist at Capital Economics, said in a research note. “In these circumstances, there is no guarantee that the 90-day truce will give way to a lasting ceasefire.”

Tariffs are taxes imposed by a government on imported goods and services. Companies importing products into the country are responsible for paying the levies, not foreign companies or foreign governments.