The current level of tariffs is seen as a baseline, with measures to prevent further escalation now established. The United States imposes a 10% base tariff on China, supplemented by a 20% tariff related to the fentanyl issue, making a total of 30%.

There is no restoration of the de minimis exemption despite the tariff adjustments. On the other side, China continues with a 10% base tariff on the US, and there has been no relaxation on its previous restrictions on rare earth exports. The ceiling for China tariffs is set at the 2 April level, which is 54%.

Current Tariff Structures

With tariff ceilings identified and stabilised – the United States maintaining an effective 30% and China at 54% – we are now operating within firm upper boundaries. Washington’s dual structure, comprising a 10% baseline and an additional 20% linked to narcotics regulation, is unlikely to change near term. Meanwhile, Beijing has held its own response steady, preserving a 10% baseline while avoiding any backpedal on raw material controls.

The lack of a de minimis exemption reinstatement from the American side continues to weigh on cost efficiency. That disadvantages smaller consignments, pushing some firms to rely more heavily on consolidated shipping channels, which could reshape logistical decisions over the longer timeline.

From a macro-structural view, the fact that no new retaliatory measures have emerged signals a pause in the trade conflict escalation rather than resolution. Given that tariff caps have been declared by both capitals, near-term positioning shifts are more likely to be technical than thematic. So far, neither side appears prepared to gamble on further trade weaponisation, which leaves a static parameter base for pricing assumptions.

Liu’s silence on adjusting export license thresholds for critical minerals implies additional forms of tightness beyond tariffs. That should not be dismissed lightly, especially if other producers like Australia or Myanmar struggle to plug supply gaps. In that case, scarcity premiums may not take long to materialise again.

Enforcement and Market Dynamics

Yellen has instead refocused messaging onto compliance siphons headed through Mexico. That redirection of attention may drive policy-to-market lags but also signals where future enforcement bottlenecks could emerge. For us, that brings compliance costs and shipping origin strategies back under scrutiny. Watching the rerouting indicators – port volumes, warehousing demand and inland freight shifts – will be telling.

Volatility suppression in rate-sensitive derivatives tied to East Asian exporters has begun to fade. This is a direct outcome of the perceived tariff ceiling being firm. With protectionist tools temporarily hedged in, downside protection has become less thematic and more event-driven. Any levered exposure to product-channel-linked issuers warrants a review of rollover windows, particularly for semiannual hedges set earlier in Q1.

With headline triggers seemingly capped for now, the impetus shifts to secondary pressure points – freight rates, energy feedstock costs, and niche reagent imports. It may be worth also modelling in a flat rate around current tariff levels, and using scenario branches around shipment route diversity or component pricing velocity.

Derivatives tied to transport carriers on Pacific cross-trade routes should be approached cautiously as hedging convexities are increasingly being driven by tariff-induced bottlenecks rather than endogenous shipping trends. Closely watching effective volume-throughput metrics from Los Angeles and Shenzhen ports could offer early signals, especially if queue durations diverge beyond seasonal norms.

The rate of retracing in industrial equities remains too tightly correlated with sentiment on Sino-US friction reduction. An overly optimistic trading thesis on reduced trade tension could miss pricing complexity where actual bottom-line impact from tariffs remains unresolved. Instead, we prefer taking a structural view on term volatility rather than betting on near-month simplification narratives.

Contract exposure to aluminium, lithium derivatives and semiconductor-linked firms should be handled with attention to control jurisdictions. Given that Chinese export restrictions on rare earths remain in place, time spreads and inventory decay assumptions may become relevant again, especially if scrap supply in Western markets tightens under new compliance guidelines post-summer.

We are choosing to revisit expression mechanics across synthetic baskets with exposure greater than 30% to verticals affected by freight harmonisation, such as consumer electronics and low-margin manufacturing. When leverage clusters gather around flatlined policy zones, small shifts in interpretation become outsized in execution. Expect longer tails. Keep strike selection wary. Use time. Better to be long optionality than to presume policy roots will be quiet too long.

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