In May 2025, the United States and China reached a significant trade agreement that could have lasting effects on global procurement strategies and inflation control. The agreement focuses on reducing tariffs, offering relief to businesses that rely on international supply chains. As both nations continue to adjust their economic policies, the cuts in tariffs represent a turning point, especially in the context of procurement processes and cost management. 

Key Points:
• US-China tariff reductions provide a unique opportunity for procurement teams to reduce costs.
• Inflation control through tariff cuts could stabilize prices and help manage procurement expenses.
• Procurement strategies must evolve with changing tariff policies to maximize savings and minimize risks.

In this post, we'll break down the key points of these tariff reductions and discuss their implications for procurement professionals.

US-China Tariff Cuts: What You Need to Know

The most notable development in the ongoing US-China trade war is the decision to temporarily slash tariffs by up to 50%. In May 2025, the U.S. government and Chinese officials agreed to reduce tariffs on key imports for a 90-day period. This reduction includes lowering tariffs from 145% to 30% on Chinese goods and cutting tariffs on U.S. exports to China by 10%. The changes were made to ease trade tensions and foster a more balanced economic relationship between the two superpowers.

These tariff reductions are expected to provide immediate relief to businesses on both sides, especially in industries dependent on the importation and exportation of goods. For procurement teams, this is a golden opportunity to renegotiate purchasing and MRO contracts, adjust supplier relationships, and explore more cost-effective options in the face of previous tariff increases.

Tariff Reductions and Inflation: A Positive Shift

One of the key motivations behind the tariff cuts is to combat rising inflation. According to the U.S. Department of Commerce, the higher tariffs previously imposed on Chinese imports had a direct impact on consumer prices. With the reduction of these tariffs, it is anticipated that the prices of goods, especially electronics, machinery, and consumer products, will become more stable, helping to lower inflationary pressure.

For procurement professionals, this is an important development. The decrease in prices for imported goods means that the cost of raw materials, components, and finished products could see a significant drop. Lower tariffs contribute to reducing procurement costs, which can be passed down to consumers or reinvested into the business. The reduction also allows procurement managers to reconsider their international sourcing strategies, making it more feasible to rely on Chinese suppliers once again.

The Procurement Impact: Adjusting Strategies Amid Tariff Cuts

For procurement teams, the shift in U.S.-China tariff policy signals the need for strategic adjustments. Lower tariffs could mean that sourcing from China, which had been cost-prohibitive due to high tariffs, becomes a more attractive option. Procurement professionals may want to revisit their vendor contracts, conduct a thorough cost-benefit analysis, and explore opportunities for increased purchasing savings.

Moreover, this reduction creates an environment for closer collaboration with suppliers. With more affordable goods entering the U.S. market, companies can negotiate more favorable terms, reduce the impact of inflation, and ensure they maintain competitive pricing for their customers.

Procurement teams should also consider diversifying their supplier base to mitigate risk, as tariff policies can shift rapidly. By staying informed on future tariff changes and building flexibility into their contracts, companies can better navigate global trade complexities.

For businesses relying on cross-border supply chains, this is the perfect moment to reassess long-term purchasing and MRO procurement strategies. Emphasizing collaboration with suppliers and staying ahead of potential tariff changes could lead to significant savings in the future.

How Procurement Can Leverage US-China Tariff Cuts

Procurement teams can take the following steps to benefit from the US-China tariff reductions:

1. Revisit Supplier Contracts: Lower tariffs provide an opportunity to renegotiate terms with existing suppliers. This may lead to reduced costs, especially for goods that have been heavily impacted by tariffs in the past.
   
   

2. Strategic Sourcing Decisions: With tariffs lowering, sourcing from China may now become more cost-effective. Procurement managers should consider evaluating their suppliers and exploring new ones in China.
   
   

3. Procurement Cost Control Measures: Purchasing professionals can adjust their budgets to account for reduced costs on key imports. This could help offset the impacts of inflation and improve overall financial stability.
   
   

4. Supply Chain Diversification: While the tariff reductions offer a window of opportunity, it's important to maintain diversified supplier relationships to protect against future tariff changes and other disruptions.
   
   

5. Monitor Ongoing Trade Agreements: The U.S. government regularly updates trade policies, and procurement teams must stay informed about any new tariff adjustments or agreements that could affect their supply chains. Keep an eye on the U.S. Trade Representative’s office and other relevant government websites to ensure compliance and preparedness.

Tariff Reductions and Future Procurement

The recent U.S.-China tariff reductions present a promising development for businesses in procurement. By capitalizing on these changes, companies can reduce procurement costs, mitigate inflationary pressure, and enhance their sourcing strategies. As the global economy continues to evolve, staying informed about tariff changes and adjusting procurement practices accordingly will be key to maintaining a competitive edge.