Trump Signs Order Reducing Duties for Cheap Parcels From China

President Donald Trump signed an executive order on May 12 to reduce the tariff on low-value parcels from China and Hong Kong, following an agreement reached between the United States and China to cut reciprocal tariffs for 90 days.

The order states that “de minimis” shipments—or parcels valued below $800—from China and Hong Kong will see their duty rate reduced from 120 percent to 54 percent, starting May 14. The United States will retain a flat fee of $100 per postal item, according to the order.

Trump had previously moved to close the “de minimis loophole”—which allowed entry of low-value shipments into the United States without duties—in February as part of an effort to curb the flow of fentanyl and its chemical precursor into the country. The president subsequently raised the duty rate for those shipments from China to 120 percent, which took effect on May 2.

The latest change to those taxes came after the United States and China agreed to temporarily pause their trade measures against one another and reduce tariffs on each other’s imports as negotiations over trade issues continue.

Trade Representative Jamieson Greer said on May 12 that the U.S. reciprocal tariff rate will fall by 115 percentage points to 30 percent, and, in turn, China’s rate will be cut by 115 percentage points to 10 percent, and that Beijing will lift its countermeasures.

In a joint statement on May 12, the two nations agreed to reduce certain components of their tariffs and set up a mechanism to continue discussions on economic and trade relations.

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“These discussions may be conducted alternately in China and the United States, or a third country upon agreement of the Parties,” the statement reads.

Trump had previously imposed a 145 percent tariff on Chinese imports to pressure the Chinese Communist Party (CCP) into addressing the trade deficit with the United States. The CCP hiked levies to 125 percent on U.S. imports in a retaliatory move.

China’s Ministry of Commerce said in a statement that the high tariffs have “severely damaged normal bilateral trade and disrupted the international economic and trade order.”

In a fact sheet released following the deal, the White House stated that the U.S. goods trade deficit with China was $295.4 billion last year, marking “the largest with any trading partner.” The agreement is expected to address this trade imbalance, it stated.

Treasury Secretary Scott Bessent told CNBC’s “Squawk Box” following the deal that he expects representatives from both countries to meet “in the next weeks” to work toward “a more fulsome agreement” to address trade issues.

The stock market rose sharply following the suspension of those tariffs. The Dow Jones Industrial Average rose 2.81 percent on May 12, while the S&P 500 gained 3.26 percent, its highest close since March 3.

Owen Evans and Reuters contributed to this report.