On 12 May 2025, the United States (US) and China released a Joint Statement outlining the outcomes of their recent trade negotiations and their commitment to take several actions by 14 May 2025 to enhance their trade relationship.

"Joint Statement on U.S.-China Economic and Trade Meeting in Geneva"

According to the Joint Statement, the US has agreed to revise the application of the additional ad valorem duty on goods imported from China, including those from Hong Kong and Macau, as specified in Executive Order (EO) 14257, dated 2 April 2025. This revision involves suspending 24 percentage points of the duty rate for an initial period of 90 days while maintaining a 10% ad valorem rate on those goods per the terms of the 2 April EO. (For background, see Global EY Tax Alerts: US imposes President's Reciprocal Tariff Policy against trading partners and ends duty-free treatment for low-value shipments from China, dated 3 April 2025; and US suspends President Trump's Reciprocal Tariff Policy for 90 days, except for China, dated 11 April 2025.)

Additionally, the US will eliminate the modified additional ad valorem duties imposed by EO 14259 (8 April 2025) and EO 14266 (9 April 2025), which had increased the US tariff rate on Chinese imports to 125%. The US has indicated that it will retain all duties imposed on China before 2 April 2025, including Section 301 tariffs, Section 232 tariffs, and the 20% tariffs imposed on China under the International Emergency Economic Powers Act (IEEPA) in response to the fentanyl crisis. These changes effectively bring the US tariff on goods imported from China down to a baseline of 30% for 90 days.

In turn, China will adjust the additional ad valorem duty on US goods as outlined in China's Announcement No. 4 from the Customs Tariff Commission of the State Council of 2025. This adjustment will involve suspending 24 percentage points of the duty for an initial period of 90 days, while retaining a 10% additional ad valorem rate on those imports. Furthermore, China will remove the modified additional ad valorem duties imposed under its Announcements No. 5 and No. 6 of 2025 and implement necessary administrative measures to suspend or eliminate non-tariff countermeasures that China has enacted against the US since 2 April 2025.

US Customs and Border Protection (CBP) is expected to provide clarifying information and guidance soon through its Cargo Systems Messaging Service (CSMS) on the temporary adjustments to applicable tariffs on Chinese imports. The US and China will also formally establish a mechanism to facilitate ongoing discussions regarding their economic and trade relationships.

Commercial aircraft and jet engines, and parts for commercial aircraft and jet engines

In a Federal Register Notice scheduled for publication on 13 May 2025, the US Department of Commerce requests public comments on an investigation initiated on 1 May 2025 to determine the effect that importing commercial aircraft and jet engines, and parts for commercial aircraft and jet engines, could have on US national security. The investigation was initiated under Section 232 of the Trade Expansion Act of 1962.

Actions for businesses to consider

The following actions could help businesses prepare for and adapt to these regulatory changes:

• Review import data to understand potential impact and liabilities surrounding the changes
• Prepare contingency plans to address potential disruptions due to possible changes in trade policies and market conditions
• Keep up with the latest news and developments in trade policies and stay adaptable to quickly respond to changes in trade regulations and tariff rates
• Provide comments on the federal rulemaking portal regarding the investigations on aircraft engines and parts