Do April Tariff Showers Bring May Trade Deal Flowers?

Diminished Duties on China, a Fresh Framework for U.S.-UK Trade Relations, and Other Recent Tariff Updates

Following the introduction and partial rescission of the “Liberation Day” tariffs last month, the latest U.S. government actions have largely—though not universally—continued down the path of an easing tariff burden. Of particular note, the U.S. and Chinese governments recently concluded their first direct trade negotiations since the imposition of reciprocal tariffs, resulting in a mutual agreement to reduce tariff rates for the first time in the second Trump administration.

In addition, the U.S. and UK governments announced principles of the first negotiated trade framework under the new U.S. tariff regime, possibly setting a precedent for negotiations with other U.S. trading partners in the coming weeks. However, recent social media posts from President Trump calling for significant tariffs on movies produced outside of the U.S. indicate a potential new front to keep an eye on, which may be of particular concern to companies dealing in intangible goods. We explore each of these topics in further detail below.

Tearing Down the Great Wall of China

The most notable recent development involves a significant reduction of applicable tariffs on products from China: the latest trade-related Executive Order, “Modifying Reciprocal Tariff Rates to Reflect Discussions with the People’s Republic of China,” decreases the reciprocal tariff on Chinese-origin goods from 125 percent back down to the 34 percent rate originally specified in Annex I to the “Liberation Day” executive order. In addition, 24 percentage points of the now-34 percent reciprocal tariff have been suspended for a 90-day period while the U.S. and China continue to negotiate their bilateral trade policies. As a result, goods from China will now be subject to a 10 percent baseline tariff, similar to that which has been recently assessed for almost all goods imported to the U.S. from most of its trading partners.¹ In return, China has also pulled back its retaliatory tariff on U.S. products from 125 percent down to 10 percent, providing welcome relief to U.S. exporters to China. The terms of the deal were further publicized in a White House fact sheet released earlier this week.

The 90-day temporary suspension applies to goods that entered the U.S. for consumption, or are withdrawn from the warehouse for consumption, on or after 12:01 a.m. EDT on May 14, 2025. As with the previous reciprocal tariff rollback, the Trump Administration has emphasized that this pause is temporary and subject to ongoing evaluations and negotiations with China regarding the U.S.-China trade relationship.

Note that the temporary 90-day pause does not apply to the additional, China-specific ad valorem 20 percent tariff imposed by President Trump in March 2025, which continues to be assessed in its current form, unchanged by the most recent negotiations.

Therefore, except for items exempted from the reciprocal or baseline tariffs (such as items enumerated in Annex II of the President’s April 2 executive order (“Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices that Contribute to Large and Persistent Annual United States Goods Trade Deficits”), items included on the April 11 Clarification Memorandum, items subject to a Section 232 tariff, and items qualifying for certain Chapter 98 special entry provisions), U.S. tariffs on most Chinese-origin goods will now be assessed at 30 percent (down from 145 percent), plus any applicable standard “most favored nation” tariffs (as determined by Harmonized Tariff Schedule of the United States (HTSUS) classification) and any applicable Section 301, antidumping, and countervailing duties.

In addition, rates for de minimis postal shipments from China were updated as follows:

• Ad valorem duty: reduced from 120 percent to 54 percent of the value of the postal item, or
• Specific duty: remaining at $100 per postal item, but with the previously scheduled increase to $200 per postal item on June 1, 2025, now eliminated.

These rates are effective May 14, 2025, and the applicable duty will continue to be determined by the carrier. Carriers will continue to determine monthly whether they will implement the ad valorem or specific duty, and that selection will apply to all shipments brought in by that carrier.

The U.S.-UK Economic Prosperity Deal (the EPD)

On May 8, 2025, the U.S. and UK governments released the general terms of a bilateral EPD, explaining non-legally binding points of agreement reached between the two governments, the first trade deal since President Trump implemented the new baseline 10 percent tariffs last month. The EPD terms provide important insights about what the terms of future trade agreements with other U.S. trading partners might look like as governments continue to negotiate better trade outcomes before the current pause on U.S. reciprocal tariffs expires in July 2025.

Specifically, the EPD addresses the following matters that are expected to be implemented through additional formal laws and agreements between and by both countries:

• agreement to reduce the impact of the automotive Section 232 tariff from 25 percent to 10 percent for a quota of up to 100,000 UK vehicle exports to the U.S.;
• increased market access for American exports of energy and agricultural products to the UK;
• agreement to implement high-standard commitments related to intellectual property protection, labor practices, the environment, and other matters;
• alignment on supply chain security policies that will ensure preferential treatment for the U.S. and UK for steel, aluminum, pharmaceuticals, and other industries that are or may become subject to Section 232 measures;
• agreement to seek alignment on investment security, economic security, export control, government procurement, digital trade, financial services, and other matters; and
• commitment to encourage and identify opportunities for economic cooperation, investment, and integration between the U.S. and UK economies.

Importantly, the White House’s statements on the deal specify that the 10 percent baseline tariff originally assessed since last month will continue to apply to most UK-origin products despite the new agreement—and despite the relative balance in trade between the U.S. and UK—suggesting a possible tariff floor that may be sustained irrespective of negotiated bilateral agreements with other countries.

Red Tape for the Red Carpet

Early last week, President Trump also unexpectedly announced a possible new frontier for tariffs: Hollywood. A May 4 social media post from the President instructed the Commerce Secretary and U.S. Trade Representative to implement a 100 percent tariff on foreign-produced movies, citing foreign government film incentives as undermining U.S. film production and constituting a “concerted effort” and “national security threat.”

Details about how the U.S. government might implement the proposal—including what productions might be in scope, how movie foreignness will be evaluated, and how the U.S. government might assess tariffs on intangible, digitally imported films—are not yet available. We will continue to monitor available guidance from the U.S. Commerce Department, the Office of the U.S. Trade Representative, and Customs and Border Protection for updates.

What’s Next

As conveyed in our previous update, these recent actions continue to indicate that the Trump Administration will continue to develop and refine its trade policies in response to pressure from the market and certain key stakeholders. Though it remains perpetually difficult to predict what may come next, we’ve updated some of our prior predictions based on the latest developments:

1. Industry-specific tariffs imposed on pharmaceuticals, semiconductors, and certain electronics. The Commerce Department is currently conducting Section 232 national security investigations of imports of: i) pharmaceuticals and pharmaceutical ingredients; ii) semiconductors and semiconductor manufacturing equipment; iii) commercial aircraft and jet engines; iv) medium- and heavy-duty trucks; v) processed critical minerals and derivative products (e.g., semiconductor wafers, electric vehicles, batteries, smartphones, and microprocessors); vi) timber and lumber; and vii) copper. We also could see additional industries come under scrutiny over time depending on U.S. domestic and foreign policy goals.
2. Continued negotiations and new agreements with U.S. trading partners. In April, Treasury Secretary Scott Bessent indicated that the U.S. would prioritize trade deal negotiations with Australia, India, Japan, South Korea, and the UK. With the initial contours of the U.S.-UK trade framework now complete, and U.S.-China trade negotiations formally underway, we anticipate additional deals may be announced with these and additional U.S. trading partners in the coming weeks and months leading up to the expiration of the 90-day reciprocal tariff pause in July.
3. Perpetuation of the baseline 10 percent tariffs on all currently impacted countries. Given that this 10 percent baseline tariff has survived the U.S.-UK trade framework agreement and the opening negotiations in the U.S.-China trade discussions, we anticipate that the baseline tariffs will likely remain in place indefinitely on affected U.S. trading partners. By meaningfully raising the average U.S. tariff, we anticipate sustained increases in U.S. government tariff collections and a potentially significant lever in favor of domestic U.S. production for products in scope of the reciprocal tariff actions.
4. A possible break on longstanding U.S. tariff policy towards intangible goods. We noted in a previous alert that we did not anticipate the imposition of U.S. tariffs on intangible goods. Historically, the U.S. has only applied tariffs to physical goods moving across borders and has not applied tariffs to purely electronic transfers such as software downloads or imposed any federal “digital services tax.” We continue to believe a reversal of this longstanding U.S. policy is unlikely, given both i) the difficulty of implementing new tariff collection systems and ii) the U.S.’s significant trade surpluses in digital services. However, the White House’s recent announcement of new tariffs on foreign-produced movies suggests that the administration may be looking for ways to change this policy. As noted above, details regarding the new movie tariff have not yet been released but may provide insight into how the U.S. government could expand tariff burdens onto other intangible goods, including digital services and intellectual property.

Six Recommended Action Steps

As we’ve noted in our earlier alerts, even given the uncertainty of the current environment, affected parties can take the following next steps to evaluate their exposure to these tariffs and consider additional actions to mitigate their effects:

1. Review your U.S. imports for country of origin (whether imported directly, transshipped from another destination, or withdrawn from a Foreign-Trade Zone) to ensure you are accurately identifying the correct country of origin.
2. Review your valuation methods to ensure that value is being identified correctly. Tariffs are generally assessed as a percentage of the declared value, which means that accurately presenting customs valuation has become even more important.
3. Check with your suppliers to determine how products you source are expected to be impacted by these tariffs and what duty rates apply to the affected items. Even if you are sourcing domestically, your suppliers may be sourcing inputs from these countries that are subject to tariffs that drive up their costs and your prices.
4. Review your supplier and sales agreements for any terms that implicate responsibility for payment of tariffs (e.g., Incoterms).
5. Consider whether any changes to your supply chain may be advantageous in the long term, recognizing that uncertainty exists about which countries and/or products may be targeted by tariffs in the future.
6. Monitor rapidly arriving developments in this area, as the scope and timing of the tariffs are likely to change from the current proposals.

Please reach out to Josephine Aiello LeBeau, Anne Seymour, Jahna Hartwig, Navpreet Moonga, Bryan Poellot, or another member of Wilson Sonsini’s Tariffs, Customs, and Import Compliance practice or National Security practice with questions regarding any of the matters discussed above.

Overview of Tariff-Related Executive Orders Since January 20, 2025

[1] Imports from Canada and Mexico continue to be excluded from the baseline tariff, as the existing executive orders for tariffs on Canadian and Mexican imports from February 2025 and March 2025 remain in effect. This means that USMCA-compliant imports from Canada and Mexico will continue to enter the U.S. free of duty, while most other goods imported from either Canada or Mexico will continue to be subject to 25 percent tariffs. In addition, trading partners with which the U.S. does not have “normal trade relations” (i.e., imports from Belarus, Cuba, North Korea, and Russia) remain subject to special (typically higher) duties under applicable U.S. law and are not subject to the 10 percent baseline tariff.