US Trade Policy Continued: Tariffs, Delays, and Retaliation Unfold 🥊

TRADE NEWS

US Trade Policy Updates: Tariffs, Delays, and Retaliation Unfold

Recap: At the start of the week, the US announced sweeping tariffs on Canada, Mexico, and China, marking a major escalation in trade policy. A 25% tariff was placed on all imports from Canada and Mexico, with a lower 10% tariff on Canadian energy exports. Meanwhile, China faced an additional 10% tariff on its exports to the US, adding to existing Section 301 tariffs. Another major policy shift came with the suspension of the $800 de minimis exemption, which previously allowed low-value shipments to enter the U.S. duty-free.

While these tariffs were supposed to take effect immediately, negotiations and retaliation quickly reshaped the situation. Here’s how it unfolded for each country:

🇨🇦 Canada: Retaliated but Secured a 30-Day Delay

Canada responded swiftly, imposing counter-tariffs on key US exports to show its discontent with the abrupt policy shift. However, after negotiations, Canada secured a 30-day delay on US tariffs by agreeing to strengthen border security measures, including deploying more personnel and resources to combat fentanyl smuggling.

🇲🇽 Mexico: 30-Day Delay in Exchange for Border Security Commitments

After diplomatic talks, Mexico also secured a 30-day delay on the new US tariffs. In exchange, Mexico pledged to deploy 10,000 National Guard troops along its northern border to combat illegal immigration and fentanyl trafficking. While Mexico has not yet announced formal countermeasures, it is reviewing its trade policies and considering possible responses if tariffs go into effect after the delay.

🇨🇳 China: Immediate Retaliation with Tariffs and Export Restrictions

Unlike Canada and Mexico, China wasted no time in retaliating. Beijing swiftly imposed:

• A 15% tariff on U.S. coal and liquefied natural gas (LNG)

• A 10% tariff on U.S. crude oil, agricultural machinery, and large vehicles

Beyond tariffs, China also introduced export restrictions on 25 strategic metals and technologies, including materials essential for renewable energy, semiconductor production, and defense applications. China further escalated the dispute by launching an antitrust investigation into Google, a move widely seen as economic retaliation against US tech firms.

Adding to China's challenges, the de minimis exemption suspension has already begun disrupting its booming e-commerce sector. Retail giants Shein and Temu, which relied on this exemption to ship low-cost goods duty-free, now face significant cost increases and logistical hurdles. Chinese retailers are scrambling to adjust supply chains and explore alternative ways to maintain their competitive pricing in the US market.

What’s Next? With Canada and Mexico temporarily shielded by a 30-day delay and China escalating its retaliation, the trade war is far from over. The next few weeks will determine whether diplomatic efforts can prevent further escalation or if these tariffs will solidify into long-term trade barriers.

While this article provides a high-level overview, it is essential for stakeholders to seek the most accurate and up-to-date information directly from the US Customs and Border Protection (CBP). Regulations and enforcement measures can evolve, and CBP remains the authoritative source for compliance details. For official guidance, visit the CBP website.

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TRADE NEWS

Temu’s Future at Risk as US Closes Key Import Loophole

Shares of PDD Holdings, the parent company of Temu and Pinduoduo, tumbled 5.9% after the US government eliminated the “de minimis” trade exemption. This rule had allowed packages under $800 to enter the U.S. duty-free, a crucial advantage for Temu and Shein, which ship low-cost goods directly from China to American consumers.

The removal of de minimis could disrupt Temu’s business model, as its success has relied on keeping prices ultra-low by avoiding import duties. Lawmakers have long argued that the loophole unfairly benefits Chinese retailers, undermining American businesses and enabling imports with minimal inspection or oversight. Critics have also linked the exemption to the influx of illicit products, including counterfeits and fentanyl shipments.

Temu and Shein have invested in US warehouses to work around potential trade restrictions, but analysts estimate that only 20% of Temu’s US sales currently come from domestic stock. The majority still relies on direct shipping from China, making the loss of de minimis a major obstacle.

Meanwhile, the US Postal Service (USPS) temporarily suspended, then resumed accepting packages from China, citing compliance adjustments. These disruptions, along with higher import costs, could force Temu and Shein to slash their aggressive digital ad spending, impacting their ability to attract new American shoppers.

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