Tariffs and Trade Impacts

Tariffs and Trade Impacts

_{Updated: May 14, 2025}

U.S. and China Agree to Reduce Tariffs for 90 days; U.S. and U.K. Reach Informal Trade Agreement

China Tariffs

On May 12, 2025 the U.S. announced that it had reached an agreement with China to mutually reduce tariffs against each country for 90 days. The reduced rates will take effect for items imported 5/14/25 and forward.

The U.S. will reduce the additional ad valorum rate for all imports from China and Hong Kong from 125% to 34%.

The U.S. will further suspend 24% of that 34% rate for 90 days, retaining a 10% duty rate on imports from China for entries made on or after 5/14. After the 90 days, this 10% duty rate will revert to 34% unless the administration indicates otherwise.

All additional tariffs imposed prior to April 2 remain in place. So, for the next 90 days the University’s total tariffs on imports from China will consist of:

• The commodity-based ordinary duty rate.
• The reduced 10% tariff referenced above, imposed as a baseline “reciprocal” tariff.
• The 20% tariff effective March 3^rd related to fentanyl.
• And any other applicable commodity-based tariffs imposed under Section 301 of the Trade Act of 1974 and/or Section 232 of the Trade Expansion Act of 1962.

U.K. Tariffs

Last Thursday, May 8, 2025, the U.S. and U.K. announced a rough framework for a trade agreement. Details are still being worked on and any true trade agreement requires both legislation and Congressional approval.

The main changes announced are an exemption for U.K. automobiles from the 25% automobile duties. Steel and aluminum imports from the U.K. will also avoid Section 232 duties if covered under quota. All other products will continue to be assessed the current 10% “reciprocal” duty rate. In working with the University’s customs broker, Baker Logistics, we anticipate that any final agreement with the U.K. will have minimal impact on the University.

Updated: May 9, 2025

Since January, the U.S. has implemented or announced tariff changes that increase University costs and impact purchase planning.

The main changes are:

1. IEEPA Fentanyl duties

Origin China:  10% of the value on 2/4, increased to 20% on 3/4

Origin Canada and Mexico: Duty free for USMCA qualifying goods, 25% for non-qualifying goods

2. IEEPA Reciprocal duties

Origin China: 35% of the value, increased to 125% on 4/10

Rest of World: 10% of the value – this rate will be reevaluated and may change after 7/9

3. Section 232 duties

All origins: 25% of the value of steel and aluminum items and derivatives, autos and auto parts

4. Low value shipments; De Minimis

Origin China: Provision is disallowed. All items from China are dutiable regardless of value

The above provisions are in addition to any commodity-based tariff rates. The provisions are stackable, and many items are assessed multiple tariff rates.

Assuming that the University’s imports are the same in Q2 as they were in Q1, and that today’s rates remain in effect, the impact will be:

Country	Q1 Imported Value	Q1 Duty and Import Fees Paid	Q2 Projected Duty and Import Fees
China	$ 28,750	$ 6,483	$ 48,300
Canada (USMCA items)	$ 203,037	$ 335	$ 335
All Other Origins	$1,529,863	$ 9,984	$162,970
Total	$1,761,650	$16,804	$211,305

The projected cost increase is driven by the 10% IEEPA duties levied on valuable products imported from Europe.

Please note: departments should not be adding a line item to requisitions for tariff charges. PCMO will be returning the requisition to remove the tariff line item.

Published: April 9, 2025

As you may be aware, additional “reciprocal” tariffs were scheduled to go into place April 9, 2025, which would have put significant burden on products coming from overseas.  President Trump has announced a 90-day pause on those reciprocal tariffs,  along with an increase to tariffs on Chinese exports to 125%.  As we navigate the fluidity of our current state, we have put together, in partnership with our Customs Broker, things to consider for the following:

Options to Reduce Duties:

For orders ready to ship:

1. Renegotiate purchase price to cost share the tariff impact.

• Common with retail items; suppliers may qualify for subsidies in home country (e.g. Japan, so appropriate for them to take on a share of the tariff)

2. Explore whether U.S. seller can be the Importer of Record, or potentially leverage the 1^st Sale Provision.

• Qualify for a duty exemption if no equivalent instrument is manufactured in the USA and if that exemption type is valid for IEEPA (still to be confirmed for Annex I, found here, origin items). The following steps are necessary to complete this process. Please contact the PCMO and/or Baker Logistics Consulting Services to start the process.
  • Submit an application to Customs and Border Protection (CBP). Provide justification for buying a foreign made product. For example, no US instrument of equivalent scientific value is available.
  • Provide backup documentation of the effort made to search for a domestic product.
    • If approved, receive sign off by CBP and International Trade Administration Form/Dept. of Commerce with publication in Federal Register.

****This process can take a minimum of 90 days to complete.****

Additional Actions to Consider:

Short-Term –

1. For all new purchases, expressly confirm with the vendor where the item will be shipping from, and consider tariff impacts accordingly.
2. Assess the cost impact of the changes to the department.
   • Review reports of open purchase orders and identify items ready to ship within the next 90 days.
   • Department should run an analysis of all open purchase orders by dollar value, origin, commodity, department, and ready date.

Medium & Long Term –

1. Consider freezing “non-essential” purchases.
2. Look for domestic sources and ensure that they are not shipping from abroad or reliant upon international supply chain.
3. Consider developing formal process and standing team to assess and navigate tariff impacts
4. Consult with the PCMO prior to purchasing more expensive orders that won’t qualify for duty free admission.
   • Consider cost sharing negotiations with potential vendors for large ticket procurements.
5. Ensure duty costs are factored into price evaluations.

Top 4 Categories Most Impacted:

1. Laboratory Supplies
2. IT Hardware
3. Medical Equipment
4. Construction

Risk Mitigation:

1. Supply Chain Diversification:
   • Conduct supplier surveys to identify country of origin for products and components.
   • Develop alternative sources and establish relationships with domestic vendors/manufacturers if available.
2. Contract Protections:
   • Negotiate price protection periods with vendors.
   • Utilize existing contracted vendors (IPHEC & Master Contracts).
   • Include provisions for sharing tariff costs between university and suppliers.
3. Inventory Management:
   • Identify critical items with high tariff exposure.
   • Establish strategic inventory for high-risk items (I.e., buy in bulk).
     • Create buffer stock levels based on criticality and lead time.
   • Develop alternative product specifications where possible.

De Minimis Changes:

On the same day, President Trump signed another executive order that eliminates de minimis treatment for shipments from China and Hong Kong, effective May 2. After that date, goods valued at less than $800 from China and Hong Kong will be assessed a tariff of 30% of the goods value plus a $25 fee. The fee will double to $50 on June 1^st.

The Reciprocal Tariffs Executive Order provides that de minimis treatment for goods from other countries will be eliminated once the Secretary of Commerce notifies the President that “adequate systems are in place” to process and collect duties from such shipments. 

Contact
If you have any questions or need assistance, please feel free to contact your Purchasing and Contract Management Office at:

UIUC: UIUC Purchasing and Contract Management Office at urbanapurchasing@uillinois.edu or 217-333-3505

UIC: UIC Purchasing and Contract Management at uicpurchasing@uillinois.edu or (312) 996-2850

UIS: UIS Purchasing and Contract Management Office at uispurchasing@uillinois.edu or (217) 206-6651

System: System Purchasing & Support Services at procurement@uillinois.edu or (217) 333-9BUY (9289)