U.S.–China Trade War Intensifies, but Electronics Catch a Temporary Break

Trends to Watch: Tariffs and Trade Impacts

U.S.-China Trade War Intensifies, Electronics Get Temporary ReliefThe U.S.-China trade dispute saw significant developments in the past two weeks, with tariffs soaring to record levels on both sides. However, U.S. Customs and Border Protection (CBP) has temporarily exempted electronics, offering brief relief for technology products.

Presidential Memorandum Exempts 20 Products from TariffsOn April 11, President Trump issued a Presidential Memorandum clarifying exemptions for semiconductors under Executive Orders (EO 14257, EO 14259, and EO 14266), which imposed 10% reciprocal tariffs on goods from most countries and 125% reciprocal tariffs on Chinese products. A list of 20 product categories, including smartphones, computers, semiconductors, and solar cells, will be excluded from tariffs. These exemptions apply retroactively from April 5, 2025.

Importers must reference HTS code 9903.01.32 when declaring these goods. Corrections to entries filed before this date must be submitted within 10 days of cargo release. However, these exemptions could be revoked depending on the outcome of the national security investigation into semiconductors. Products from China will still face 20% IEEPA fentanyl tariffs.

China Escalates Retaliation: 125% Tariffs on U.S. GoodsIn response to U.S. tariff increases, China has raised tariffs on U.S. goods from 84% to 125% as of April 12. The Chinese Ministry of Finance declared that U.S. products are no longer viable under the current tariffs and indicated no plans for further retaliatory actions unless the U.S. escalates tariffs further.

U.S. Tariffs on Chinese Goods Reach 145%The White House confirmed that total IEEPA tariffs on Chinese goods now total 145%, combining the 125% reciprocal tariffs with the existing 20% IEEPA fentanyl levy.

Ocean Freight Updates

Trans-Pacific Eastbound (TPEB)

• Capacity & Demand: Tariffs on Chinese goods have led to a drop in booking volumes, which has caused cancellations. Southeast Asia volumes have returned to normal, but they are not enough to offset the drop from China. Capacity reductions are expected, with carriers planning blank sailings and vessel downsizing, targeting 60-70% capacity in May.

• Equipment: Shipping container availability remains stable at most ports, with some minor shortages in Southeast Asia.

• Freight Rates: Floating rates have been extended through April, indicating a lack of strong demand from Southeast Asia that would typically drive rate hikes. Fixed rates are steady but will be finalized by the end of April, aligning with the conclusion of the contract season.

Far East Westbound (FEWB)

• Capacity & Demand: No significant increase in demand for late April, with expectations of weaker activity due to the Labor Day holiday. Carriers are shifting capacity from the Transpacific route to North Europe, contributing to an oversupply in the FEWB trade, which may extend into May.

• Freight Rates: The Shanghai Containerized Freight Index (SCFI) has seen slight increases for six consecutive weeks, suggesting stable rates in the near term. Given market uncertainties, early bookings are advised to mitigate risks from potential surges or capacity constraints.