Tariff Teaser

Tariff Teaser
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Synopsys (SNPS), Siemens (SIE.XE), and Cadence (CDNS) are breathing a sigh of relief as the US Commerce Department has notified same that they no longer are required to procure a government license in order to conduct business in China.(see https://scmr-llc.com/blog/turning-up-the-heat - 5/20/25 for more info.), a result of the deal that was struck between the US and China in recent days.  The problem is (not for those three), there is very little detail about any real agreement, other than the 90 day suspension of the ‘anger tariffs’ (our words) that both parties imposed.
The White House statement gives little information about the details of the agreement other than those relating to the tariff suspension, summing up the agreement as follows: “…Agreed to establish a mechanism to continue important discussions about trade and economics”.  Other than that and what shows below, little has been said about any real agreements, guidelines, guardrails, or trade metrics.  What remains, at least for 90 days, follows:
China

• Removes the retaliatory tariffs (34% on all US goods that it imposed on 4/4/25 for 90 days
• Suspends or removes non-tariff countermeasures (Adding 11 US companies to the Chinese “Unreliable entities’ list, adding 16 companies to the export control list, and imposing new rare earth controls)
• Retains 10% tariff that existed prior to 4/4/
• Nothing specific was said about the Chinese Section 232 and 301 retaliatory tariffs (15% to 25%) on US metals, Soy, LNG, Autos, Electronics, etc.)
• Nor the ‘fentanyl’ retaliatory  (10% - 15%) tariff on Coal, crude oil, and vehicles
• Or the ‘Most favored nation’ ~7% tariff on all US imports

US

• Removes tariffs from 4/8/25 and 4/9/25 (which increased tariffs from 34% to 84% and then again to 125% for 90 days
• Retains 10% tariff that existed prior to 4/8
• Remaining tariff sits on top of 20% fentanyl tariff, 10% ‘basic’ tariff and existing Section 301 and 232 tariffs.

So what it really comes down to is we went back to where we were before the beginning of April for 90 days and discussions continue.  There is no real trade deal, only a removal of the ‘My tariff is bigger than your tariff’ bluster.  Most CE companies that are affected seem to be doing the ‘shift’ dance, moving production or assembly from facilities in China to those in less potentially tariff burdened countries, but with no real deal and only a few days to go before the tariff suspension expires, those we have spoken to have little new information on which to base decisions and expect another 90 day clock reset on July 9.  It is hard to know where to shift production if you have no idea how country-by-country tariffs will play out.