Spice Market Adjusts to U.S.–China Tariff Truce

The United States and China have agreed to sharply reduce tariffs that brought bilateral trade to a near standstill in April. After an intense escalation that pushed tariffs to 145% on Chinese imports and 125% on U.S. goods, both sides met in Geneva and signed a temporary rollback.

The Agreement: Key Terms and Duration

The deal, effective May 14, reduces U.S. tariffs on Chinese goods from 145% to 30% and China’s tariffs on U.S. products from 125% to 10%. It will last for 90 days, set to expire in August unless both sides agree to extend or renegotiate. Existing tariffs imposed before April remain in place, mainly the Section 301 tariffs averaging 20–25% on many Chinese goods.

The purpose of this short-term deal is to stabilize markets and resume trade flows while giving space for further negotiations. If no follow-up agreement is reached, tariffs could snap back to the prior extreme levels.

Why It Matters for the Spice Industry

The spice industry faced one of the most disruptive tariff threats since the 2018 trade war. The April measures applied heavy tariffs on almost all imported spices, regardless of origin, raising costs across the supply chain.

Chinese spices—especially garlic, ginger, star anise, and cassia cinnamon—had faced a total 145% tariff, essentially stopping trade. These products are critical as China accounts for a significant share of U.S. spice imports. Garlic alone represents around $100 million in annual U.S. imports from China.

The May deal slashed that to about 30% total (10% from the new agreement plus prior Section 301 tariffs). This makes imports from China financially viable again, avoiding what would have been unsustainable price hikes for U.S. food producers and consumers.

A separate but important change is the U.S. introduction of a new 10% baseline tariff on all imported goods under the “reciprocal tariffs” rule, including spices from countries like India, Vietnam, and Mexico. These countries previously enjoyed duty-free access. U.S. importers now face a 10% tariff on spices like black pepper, cumin, and turmeric even when sourced outside China.

For exporters, especially U.S. ginseng growers who were hit with China’s 66% tariff by April, this deal lowers the rate to 10–15%, making exports to China feasible again after a near-complete halt.

Outlook for the Next 90 Days

The truce avoids immediate supply chain chaos but does not solve the underlying trade tensions. U.S. spice importers and food companies face a complex market: slightly reduced costs from China, new tariffs on alternatives, and no guarantee the current rates will last.

If talks stall, tariffs could revert to the previous extreme levels. U.S. spice buyers will likely continue to diversify supply chains and increase inventory as a hedge against future shocks.

Sources
Reuters. (2025, May 12). US, China reach deal to temporarily slash tariffs, easing slump fears. Reuters.
BBC News. (2025, May 12). Markets rise as US and China agree to slash tariffs. BBC.
Farm Policy News. (2025, May 12). US & China agree to lower tariffs for 90 days. University of Illinois.
Majestic Spice. (2025, March 31). New tariffs are coming – what US spice buyers need to know. Majestic Spice Blog.
WSAW News. (2025, April 8). How the trade war affects Wisconsin’s ginseng industry.