US Delays the Hardest-Hitting Tariffs but Raises Duties on Chinese Tea to 152.5% | Japan Adapts to a Matcha Shortfall | China Enjoys a Fine Qing Ming Tea Harvest Holiday

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US Delays Hardest-Hitting Tariffs

President Trump delayed imposing his harshest tariffs for 90 days, then singled out China for retaliation Thursday by increasing levies on Chinese goods to 145%.

The new levies triggered China to increase duties to 125% on US goods. In four salvos, the US has cumulatively raised the cost of importing tea from 7.5% in January to 152.5%.

The delay buoyed markets that had seen at least $19 trillion in equity vanish since Feb. 19, when the S&P 500 Index closed at a record high. The next day, stocks worldwide collapsed.

Tariffs are at a historic high during the pause. The US tariffs now average 24%, up 22% since January. Americans are facing the most significant tax (tariff) increase since 1982. Taxes are anti-growth, leading many economists to predict a mid-year recession.

The Trump Administration said the pause would enable more than 75 countries to lower tariffs on US goods and make concessions that the US hopes will ultimately lead to re-shoring manufacturing, creating jobs, and balancing trade goods.

Canada and Mexico must pay a 10% tariff on goods that do not qualify under the USMCA free-trade agreement. Tea qualifies.

On Wednesday, China vowed to “fight to the end” as it imposed retaliatory tariffs matching the 34% plus 50% “reciprocal” tariffs President Trump initiated above the 10% baseline imposed on every country worldwide. Annual trade between the two intertwined countries amounts to $600 billion. The trade war underway makes it very likely that decoupling will follow.

Bloomberg News reported that Trump expects Chinese officials to “want to make a deal,” but that appears unlikely in the short term. The two countries agreed to establish a “strategic channel” to ensure communication, but no mechanism was established.

What does a full-blown trade war hold for tea?

Fewer choices at much higher prices. Reciprocal tariffs imposed on Cambodia, India, Vietnam, Thailand, Japan, and South Korea will increase the cost of tea by at least 10% for US consumers.

Imposing 150% duties on Chinese goods will virtually eliminate tea imports from China. In 2024, US importers paid an average of $5.20 per kilo for Chinese tea. Will they pay $13 per kilo for the same quality tea in 2025?

Tea arriving from the tea lands for the past century was deemed “non-competitive” and entered the US duty-free. Some flavored teas incurred a 10% duty, but 46% duties imposed on tea from Vietnam, and 44% on Sri Lankan tea, 49% on tea from Cambodia, 36% on tea from Thailand, and 26% on tea from India, and 24% tariffs on Japanese tea, are unprecedented.

Tea is a low-cost item in the grocery cart. Importers purchase tea for blending at $5 to $10 per kilogram. Their cost of goods for commodity teas will now range from $5.50 to $11 per kilogram, sourced from countries such as Malawi or Kenya, for example. The same quality of Vietnamese tea will increase from $10 to $14.60 per kilo. Japanese tea exports average $27.50 per kilogram, rising to $34.10 per kilogram after applying a 24% tariff and before factoring in the additional expenses of logistics and markup.

Even colossal tariffs are manageable when applied to a 5-penny private-label tea bag… but a 250-gram pouch that sells for $15 will now cost $38. Consider a $100 Sheng (raw) Pu’er cake. Will US tea enthusiasts pay $250? Is it fair when their peers in other countries pay $100? Can specialty tea shops and eCommerce retailers absorb these costs?

More ominous for online tea buyers purchasing from China and Hong Kong is the May 2 elimination of the “de minimis” tariff exemption, which had accelerated online sales valued at billions, including large volumes of small tea shipments.

The CBP estimates that from FY2018-2021, 67.4% ($228.3 billion) of de minimis imports were from China ($149 billion from the mainland and $79.3 billion from Hong Kong). In 2023, the People’s Republic of China (PRC) reported $18.4 billion in de minimis exports to the US, about one-third of the value of de minimis shipments that year.

Previously, purchases of Chinese tea valued at less than $800 were exempt from tariffs. The exemption was revoked on February 4, then temporarily reinstated on March 10, allowing the Commerce Department to develop systems for processing and collecting tariffs on these low-value shipments.

Effective May 2, 2025, the US will eliminate the de minimis exemption for packages arriving from China and Hong Kong. This means tariffs apply to all shipments, regardless of value. Packages sent via the postal network will incur a duty of either 120% of the package’s value or a flat fee of $100, increasing to $200 after June 1. The US Postal Service warns that delays are likely as packages from China and Hong Kong must be sorted and inspected.

Shipments through private carriers, including UPS, FedEx, and DHL, will be subject to standard tariffs set at 145% for most goods and 152.5% for tea.

According to the US International Trade Commission in FY 2022, 83% of all US eCommerce imports used the de minimis exemption. De minimis parcels totaled 1 billion in 2023. As of April 25, Customs and Border Protection reports processing more than four million de minimis shipments daily, totaling 1.4 billion packages annually. The annual total has increased by 600% over the past decade, from approximately 140 million packages (equivalent to 380,000 daily shipments).

The Trump Administration stated that plans are in place to phase out the de minimis exemption for other countries once the necessary administrative systems are established.

Five countries account for the majority of de minimis shipments: China (60%), Hong Kong, Canada, Germany, the UK, and Mexico, followed by Singapore, Vietnam, and Thailand.

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