U.S. Tariff Updates: Impact on Chinese Businesses

Author: Mike Chiang of Han Kun LLP

The U.S. government has introduced significant trade policy adjustments that will have a direct impact on Chinese exporters, manufacturers, and businesses with operations in Mexico.  The key changes include:

1.   Termination of the de minimis exemption for goods from China, Mexico, and Canada – Shipments from these countries, regardless of value, will now be subject to duties.  The exemption remains available for other countries, but further modifications to this policy may be introduced in the future (Note: the termination of the de minimis exemption from goods from Mexico and Canada are temporarily postponed until March 2025).

2.   Increased tariffs on imports from China, Mexico, and Canada – A 10% tariff now applies to Chinese-origin goods, while Canadian and Mexican imports are subject to a 25% tariff (10% for Canadian energy products) (although the Canada and Mexican tariffs are temporarily postponed until March 2025).

3.  Enhanced customs procedures – The U.S. government will increase oversight of import documentation, tariff classification, and trade routes to ensure compliance with the updated regulations.

These developments bring new considerations for Chinese businesses trading with or investing in the U.S. market.  Below, we outline these policy updates, their potential effects, and recommended strategies for businesses to remain competitive.

Termination of the De Minimis Exemption for China, Mexico, and Canada

Effective Date: February 4, 2025

I.   Key Changes

1.   Shipments from China, Mexico, and Canada no longer qualify for duty-free entry under the de minimis exemption

• Previously, goods valued at $800 or less could enter the U.S. without duties under the de minimis rule.

• With this exemption no longer in place for these three countries, all shipments, regardless of value, are now subject to tariffs and customs processing requirements (Note: the termination of the de minimis exemption from goods from Mexico and Canada are temporarily postponed until March 2025).

2.   De minimis exemption remains in effect for other countries

• Imports valued under $800 from other regions (e.g., ASEAN, EU, South Korea) continue to qualify for duty-free entry.

• However, U.S. authorities may review this policy further, and additional restrictions could be introduced in the future.

3.   Enhanced customs review of e-commerce and small-parcel shipments

• E-commerce shipments originating from China (such as those from Shein, Temu and AliExpress) will receive greater scrutiny from U.S. Customs and Border Protection (CBP).

• Any inconsistencies in product classification, valuation, or documentation may result in shipment delays or penalties.

II.   Impact on Chinese Businesses

1.   Increased costs for online retailers and logistics providers

• Businesses exporting low-value goods to the U.S. can no longer rely on the de minimis exemption to reduce import duties.

• Additional tariffs may impact the pricing strategies of e-commerce platforms and small-parcel shippers.

2.   Longer customs clearance times

• CBP's stricter import processing procedures may extend shipment clearance times, affecting delivery commitments for online retailers.

• Fulfillment centers and logistics providers may need to adjust operations to comply with the revised import policies.

3.   Greater emphasis on accurate documentation

• Businesses must ensure that all shipments are properly classified under the Harmonized Tariff Schedule (HTSUS) to prevent unnecessary delays.

III.   Recommended Actions for Chinese Exporters

• Review and adjust pricing strategies to account for new tariff obligations.

• Ensure accurate customs classification and documentation to minimize risks of delays.

• Consider alternative logistics models, such as bulk shipping or U.S. fulfillment centers, to improve efficiency.

• Stay updated on potential expansion of de minimis restrictions to other countries.

Adjustments to Tariffs on Imports from China, Mexico, and Canada

Effective Date: February 4, 2025 (Mexico tariff delayed until March 2025)

I.   Updated Tariff Rates

II.   Key Changes

1.   A 10% tariff now applies to all Chinese exports to the U.S.

• The new tariff applies across all industries, requiring exporters to assess cost implications for their U.S. market operations.

2.   A 25% tariff on imports from Canada and Mexico (10% for Canadian energy products) – enforcement postponed until March 2025

• While the tariff has been announced, enforcement has been delayed, leaving open the possibility of policy adjustments in the coming months.

• Businesses with manufacturing operations in Mexico should closely monitor negotiations between the U.S. and Mexican governments.

3.   Closer examination of supply chain movements

• Shipments that involve third-country processing (such as goods made in China and assembled in Mexico before U.S. importation) may face additional customs scrutiny.

III.   Impact on Chinese Exporters and Nearshoring Operations in Mexico

1.   Additional costs for Chinese suppliers exporting to the U.S.

• The new 10% tariff structure raises expenses for businesses shipping products directly to U.S. buyers.

2.   Uncertainty for companies manufacturing in Mexico

• Many Chinese manufacturers established operations in Mexico to benefit from tariff-free access under USMCA.

• If the 25% tariff is enforced in March, nearshoring operations may become less cost-effective for certain industries.

3.   Increased compliance monitoring

• U.S. customs agencies are intensifying their focus on trade route optimization strategies, requiring greater diligence in supply chain planning.

IV.   Recommended Actions for Chinese Exporters & Nearshoring Companies

• Monitor developments in U.S.-Mexico trade relations to anticipate tariff risks before March 2025.

• Reassess supply chain strategies, including alternative sourcing and shipping models.

• Explore warehousing or bonded storage solutions to optimize trade flows.

The adjustments to the de minimis exemption and tariff increase on imports from China, Mexico, and Canada represent a significant change in U.S. trade policy.  Businesses must act swiftly to address these changes, mitigate risks, and explore alternative trade and supply chain solutions.