On November 10th, the U.S. significantly reduced a key tariff imposed under the International Emergency Economic Powers Act (IEEPA): the additional 20% duty on fentanyl-related goods from China was cut to 10%. The move came shortly after President Trump’s meeting in South Korea with China’s president, Xi Jinping.
Background: Origin of the IEEPA and its initial goals
- The IEEPA allowed the President Trump broad authority to regulate imports and impose certain sanctions during a declared national emergency.
- During April 2025, the U.S. imposed a 20% “fentanyl-related” tariff on all China based goods.
- The tariff was part of the U.S. government’s efforts to combat and prevent the export of fentanyl-based products from China.
What Changed on November 10, 2025
- The U.S. cut the fentanyl-related IEEPA tariff from 20% to 10%, effective at 12:01 a.m. EST on November 10th.
- The modified tariff applies to goods specifically “entered for consumption or withdrawn from warehouse for consumption” on or after that timestamp.
- At the same time, the U.S. suspended further increases in its reciprocal tariff on Chinese goods, maintaining a general 10% IEEPA reciprocal duty for the foreseeable future until November 10, 2026.
Economic Implications for the U.S.
1. Fentanyl Commitments from China
- The IEEPA tariff was reduced to 10% after China promised to diligently crack down on exports containing any trace of fentanyl.
- The U.S. will very closely monitor China’s implementation, with the U.S. government providing frequent updates to President Trump directly on China’s compliance.
- The agreement allows the U.S. the rights to reinstate or even increase the IEEPA tariff if China fails to uphold their end of the deal.
2. De-escalating the tension between the U.S. and China
- By suggesting a 10% reciprocal tariff reduction, the U.S. is agreeing to a temporary economic truce on some of its more aggressive tariff measures against China.
- However, this does not mean the U.S. intended to fully back down. Section 301 tariffs that were placed under President Trump’s first term were extended to at least November 2026.
3. Legal and Political ethics
- The use of IEEPA along with other tariffs introduced this year has drawn a plethora of criticism from the public, including questions about whether such use of emergency powers is an abuse of the President’s power.
- The U.S. being the ones to control whether they want to implement or rollback the IEEPA tariff shows that they are in more control of the situation. This leads to questions if China has any choice or power to stop the U.S.’s rulings.
Risks and foreseeable problems
- Monitoring & Enforcement: Ensuring that China will be able to uphold their end of the bargain will require robust monitoring and manpower.
- Risk of relapse: Because of the volatile nature of the tariffs, any failure or backsliding by the U.S. could spark even higher duties, creating uncertainty for businesses and U.S. importers.
- Global Trade Impact: Other countries may react to this agreement and begin to implement different regulations to prepare for the U.S. applying higher tariffs onto them.
Conclusion
Though the reduction of the IEEPA fentanyl-related tariff from 20% to 10% marks a significant step in U.S.-China trade diplomacy. It is still not a guarantee or a sign of stability for importers. While the reduction alleviates some tariff burdens for importers, it also serves to highlight how volatile and spontaneous the tariffs are, especially in 2025.
