U.S.-China Trade: What You Need to Know about Tariffs

Congratulations on taking your business global! In the world of global e-commerce, the flow of goods between the United States and China is a primary artery. But over the last few years, this vital trade route has been reshaped by a complex web of tariffs and regulations. For small and medium-sized businesses (SMBs) that rely on Chinese suppliers for everything from electronics to apparel, understanding these changes isn’t just about saving money—it’s about survival. 

This guide will demystify the U.S.-China trade landscape, explaining what tariffs are, how they impact your business, and, most importantly, how you can build a resilient supply chain to thrive in this new environment. 

What Exactly Is a Tariff?

At its core, a tariff is a tax imposed by a government on imported goods. Think of it as a toll you pay at the border. The purpose of tariffs can be to generate revenue, protect domestic industries from foreign competition, or as a negotiating tool in international trade disputes. 

For a long time, the U.S. and China enjoyed a relatively low-tariff relationship. However, in 2018, the U.S. began to impose tariffs on a wide range of Chinese goods in a series of actions. These new tariffs, often referred to as Section 301 tariffs, have fluctuated in recent years, affecting billions of dollars’ worth of products and dramatically increasing the cost of goods for many businesses. 

How Tariffs Impact Your Business

Tariffs don’t just affect large corporations; they hit small businesses particularly hard. Here’s how: 

Increased Costs and Squeezed Margins: The most direct impact is the higher price you pay for your inventory. When a 25% tariff is placed on the goods you import, that cost is often passed directly from your supplier to you. This forces a difficult choice: absorb the cost and shrink your profit margins, or raise prices for your customers and risk losing sales. 

Supply Chain Disruption: The unpredictability of trade policy makes long-term planning difficult. A tariff can be announced with little warning, forcing you to scramble for new suppliers or re-evaluate your entire product line. 

Reduced Competitiveness: Tariffs on your products can make them more expensive than those of competitors who source their goods from other countries or who have more capital to absorb the costs. 

The Evolving History of U.S.-China Tariffs

To truly understand the current situation, it’s helpful to see how we got here. The current trade dynamic didn’t happen overnight; it was built on a series of escalating actions. 

• 2018–2020: The U.S. initiated a series of tariffs under Section 301 of the Trade Act of 1974. These came in waves, with rates reaching 25% on billions of dollars’ worth of Chinese goods. While a “Phase One” trade deal was signed in 2020, the majority of these tariffs remained in place, establishing a high-tariff baseline. 
   

• 2020–2024: During this period, the tariffs largely stayed in place. The Biden administration conducted a formal review of the existing Section 301 tariffs but opted to maintain them, signaling that the high-tariff environment was here to stay. In 2024, the administration even announced new, targeted tariff increases on specific sectors like electric vehicles (from 25% to 100%), solar cells (from 25% to 50%), and semiconductors (from 25% to 50%). 
   

• 2025: In April, the U.S. adopted a new reciprocal-tariff framework. This introduced a 10% baseline duty on most imports overall and set country-specific higher rates for certain partners—including China. 
   
  Later that spring, tariffs between the U.S. and China escalated to unprecedented levels before a temporary truce was reached. 
   
  Another key change: the de minimis exemption (which allowed shipments under $800 to enter duty-free) was ended for China and Hong Kong on May 2, 2025, and then suspended for all countries effective Aug 29, 2025. 

The Current State of U.S.-China Tariffs (September 2025)

• U.S. duties on PRC goods: The U.S. is applying a 30% reciprocal/IEEPA tariff layer to China-origin imports under a tariff truce announced May 12, 2025 and extended to Nov 10, 2025. This stacks on top of existing Section 301 rates (often 25% or 7.5%) and any MFN duty, so many products face a total rate higher than 30%. 
   

• China’s duties on U.S. goods: China reduced its reciprocal tariff to 10% for the same period (also extended to Nov 10, 2025). 
   

• De minimis: De minimis was ended for China/Hong Kong on May 2, 2025 and suspended for all countries on Aug 29, 2025. CBP is actively enforcing the change. This means low-value parcels now clear formal customs with applicable duties. 

Building a Resilient Supply Chain in a High-Tariff Era

Adapting to the new trade landscape requires a proactive and strategic approach. Here are some key strategies to help your business navigate tariffs and build a more resilient supply chain: 

• Diversify Your Sourcing: Don’t put all your eggs in one basket. Many businesses are exploring alternative manufacturing hubs in countries like Vietnam, Thailand, Malaysia, or Mexico. This “China Plus One” strategy reduces your exposure to U.S.-China trade policy risks and can open up new opportunities.

• Re-evaluate Your Product Pricing: Conduct a thorough analysis of your product costs, including any new tariffs. Adjust your pricing strategy to reflect the new reality. Some businesses find that a small price increase is necessary, while others focus on creating higher-value offerings that justify the cost. 

• Utilize a Modern Fulfillment Network: The old model of a single warehouse in the U.S. receiving all your inventory from overseas is no longer the most efficient. Instead, consider a fulfillment network with strategically located warehouses around the world. This allows you to store inventory closer to your global customer base and manage your supply chain with greater flexibility. 

• Automate and Simplify Your Logistics: Manual logistics processes are prone to errors and delays, which become even more costly in a high-tariff environment. By leveraging technology, you can get real-time visibility into your inventory, orders, and shipments, allowing you to react quickly to any disruptions.

The Bottom Line for Your Business

While the U.S.-China trade relationship is complex and constantly evolving, one thing is clear: adaptability is key. Small businesses that thrive in this environment are those that build resilient, diversified supply chains and leverage technology to gain a competitive edge. 

This is where a logistics partner like Zhenhub can help. Our tech-driven platform and global network of eCommerce fulfillment centers are designed to give you full visibility and control over your inventory, orders, and shipments. By offering strategically-located warehouses and multichannel integrations, we help you overcome the challenges of a global supply chain so you can focus on what you do best: growing your business. 

Ready to take your business global? Explore our solutions today and see how simplified logistics can make your international e-commerce a reality.