The ongoing trade war between the US and China has not yet dissipated, but the two countries have recently announced that they will temporarily suspend punitive tariffs exceeding 100% on each other’s goods starting from May 14 for a period of 90 days. This move provides a brief respite for affected businesses, but the business community’s reaction remains mixed, with risks and uncertainties still looming.
According to the agreement, the US will reduce tariffs from the original 145% to 30%, and China will simultaneously lower retaliatory tariffs. Both sides have pledged to continue negotiations to strive for a long-term trade agreement.
For retailers, this temporary “ceasefire” comes at a critical period for stocking up during the year-end shopping season. According to data from the National Retail Federation (NRF), the Christmas shopping season in 2024 accounted for nearly one-fifth of the total retail sales for the year, totaling a staggering $994.1 billion.
Since the escalation of trade tensions in April this year, both sides have been imposing tariffs of over 100% on each other’s products, leading to mass production cuts and order losses in Chinese factories, causing disruptions in the supply chain. The current temporary reprieve allows some manufacturers to resume shipments, but it has also sparked concerns about supply chain congestion and rising freight costs.
Cameron Johnson, senior partner at Tidalwave Solutions, a consulting company based in Shanghai, admitted in an interview with CNBC that the 90-day grace period allows retailers to temporarily avoid a Christmas stock outage. However, he pointed out that sales for Father’s Day and back-to-school season cannot be reinstated, and logistics and cost pressures continue to rise.
Zhao Ruian, director of the export-oriented company Green Willow Textile in Jiangsu, revealed that the company has halted orders from the US for a month, and although they are preparing to resume some production lines, they do not expect orders to fully return as some American buyers have switched to other suppliers.
Jonathan Silva, founder of the Massachusetts-based board game company WS Game Company, disclosed to the Associated Press that nine containers are still stranded in Chinese factories, eager to ship when the tariffs drop to 30%. He admitted, “The timing is very bad, and production schedules will inevitably be delayed. We are working hard to coordinate with factories and customers.”
Despite some companies resuming orders, Silva stated that they will adopt a cautious strategy: “We will stock up on basic quantities, but without a long-term agreement, the risk is too high to expand rapidly.”
The temporary tariff concessions have not fundamentally changed the issue of excessively high tariffs imposed by the US on Chinese goods. According to UBS estimates, the current average US tariff on Chinese goods is 43.5%. Tony Post, founder of the US running shoe brand Topo Athletic, revealed that the total tariff on their products manufactured in China is currently 47%, significantly higher than the 17% at the beginning of the year. Even with Chinese suppliers absorbing some costs through price cuts, they still have to raise retail prices.
Marc Rosenberg, founder of the Illinois-based office chair manufacturer The Edge Desk, stated that high-end ergonomically designed chairs planned for mass production in China in May have been halted due to excessively high tariffs. He criticized the 90-day grace period as “extremely risky,” asserting that “businesses need at least one to two years of stable expectations to truly plan ahead.”
Jeremy Rice, who owns a home decor store in Kentucky, pointed out that 90% of artificial flowers in his store come from China, and imports have been stopped since April, leading to increasingly urgent inventory shortages. “Suppliers are not ready, and we cannot establish a stable pricing strategy.”
According to Chinese customs data, China’s exports to the US decreased by over 20% year-on-year in April this year. Goldman Sachs estimates that approximately 16 million Chinese employment positions are directly related to exports to the US, further highlighting China’s high dependence on the US market.
While the agreement helps alleviate supply pressures during the Christmas season, the overall supply chain remains in turmoil. The 90-day suspension is only a stopgap measure, as fundamental disagreements persist between the two sides on structural issues such as market access, industrial subsidies, and intellectual property rights. Without concrete reforms and institutional safeguards, the negotiation outcomes may not be long-lasting, and the market still faces a high level of volatile risk.