US-China Truce Lands for One Year: Tariffs Are Down 10 Points, but Hold Off on Frontloading US-Bound Cargo
On October 30, the presidents of China and the United States met in Busan, South Korea, and China's Ministry of Commerce published the outcomes of the Kuala Lumpur trade talks that same afternoon. Four items matter directly to shippers: the US will cancel the 10% so-called fentanyl tariff on Chinese goods (including those from Hong Kong and Macao); the 24% reciprocal tariff will remain suspended for another year; the US will pause its Section 301 measures on China's maritime, logistics and shipbuilding industries for one year, with China pausing its countermeasures in step; and the US will suspend the 50% penetration rule in export controls for a year, while China pauses the rare earth and related export controls announced on October 9. Industry estimates put the overall US tariff level on Chinese goods down from roughly 41% to about 31%. It is the most substantial mutual de-escalation since this round of friction began.
The first instinct for many shippers will be to move: rates are down, so should we book now? Not yet. This truce runs for one year, and several measures still need to clear their own implementation procedures. The priority right now is getting the numbers straight, not buying into the sentiment spike.
First account: duty applicability follows the date of entry, not the date of contract. The fentanyl tariff cancellation applies only once the US side completes its implementation procedures; cargo already entered before that point pays the old rate and generally gets no automatic refund. Whether goods in transit qualify depends on the entry filing date, not the bill of lading date. Shipments arriving in the next week or two should still be costed at the old rate — do not pass the reduction on to customers before it actually applies.
Second account: re-read the tariff clauses in your contracts. Many US-bound contracts state that duties are borne by the buyer and settled at the prevailing rate. A ten-point cut directly reduces the buyer's cost on orders not yet shipped; for orders already shipped but not yet settled, the two sides may disagree over which rate applies. Align the settlement basis with your customers now, and build in a renegotiation trigger for the renewal risk a year out — the 24% reciprocal tariff is suspended, not cancelled.
Third account: do not restart frontloading just because of the truce. Earlier tariff and port-fee measures already pulled forward a wave of shipments, US retail inventories are not low, and end demand has not changed. Analysts broadly read this truce as arresting a decline rather than creating new cargo volume. If carriers push rate increases on the back of the headline, that is sentiment pricing: book on your own production and sales rhythm, neither chasing the rise nor panic-locking space.
Fourth account: a one-year mutual pause on vessel port fees will not sink freight rates. To sidestep the fees, carriers already redeployed fleets and restructured networks, and that cost does not come back with the pause. Rate support and pressure still come down to the real balance of capacity and demand. Treating the truce as a signal that rates must rise or must fall is a good way to lose money either way.
For businesses handling goods subject to export controls — rare earths, lithium batteries, graphite anodes — China's one-year pause reopens the order-taking window, but the deadline belongs in your lead times and inventory plans: how far a customer dares to commit depends on how far you dare to promise. For long-cycle orders, state in the contract that performance is premised on the renewal status of the control measures, so you are not left holding a default a year from now.
One last reminder: a truce is a window, not an endpoint. Both the Section 301 pause and the reciprocal tariff suspension run for one year, expiring around the fourth quarter of next year. US-bound shippers can use this year as a buffer: repair margins, tidy up compliance, renegotiate contracts. But diversifying supply chains and internalizing tariff costs should not stop just because the mood has improved.
