Reciprocal tariffs ranging from 10% to 70% will be enforced Aug. 1, extending a July 9 deadline and uncertainty that has disrupted trade flow since U.S. President Donald Trump took office.
Only two of the world’s leading tea-trading nations have secured U.S. tariff relief. China and the U.S. continue to seek a broad agreement after having lowered multiple, overlapping rates totaling a punishing 152.5% rate on tea to a range of between 30% and 34%.
On July 4, the administration began notifying trading partners of new U.S. tariffs on their exports, effective August 1. The first letters would be sent out on Friday, with additional letters to follow “over the next few days,” Trump told reporters. He did not provide a country-by-country list.
“They’ll range in value from maybe 60 or 70% tariffs to 10 and 20% tariffs,” he said. Deals with 10 other countries are imminent, including a “very big” one with India, said Trump. Meanwhile, the EU may prove a harder nut to crack, writes Bloomberg.
Exporters face disrupted supply chains and shifting sourcing strategies. U.S. importers scramble to re-price and reclassify imports—the broader consequence: strained diplomatic ties, unpredictable customs enforcement, and mounting compliance burdens.
The Tea Smith retail-wholesale owner, Tim Smith, in Omaha, Neb., writes that “many suppliers are struggling with how to absorb or pass along tariffs. Several have informed us that the prices of items we have on order may change as a result of policy and tariff adjustments. This makes it quite difficult for us to let our customers, especially wholesale customers, know what they will be paying.”
“As a result, we have elected to absorb some of the tariffs to maintain stability for our customers and to help minimize the impact on their pocketbooks. Consequently, this has a negative impact on our profitability. In the long run, that approach is not viable for most companies,” writes Smith.
The risk is particularly difficult for items with long lead times, he explains.
Looming Deadline
Enforcing “reciprocal” tariffs ranging from 20% to 49% was suspended for 90 days shortly after they were announced on April 2. A 10% “baseline” tariff has so far cost importers $96.9 billion through June — 109.3% more than at the same time last year, according to Politico’s tariff income tracker.
Investment bank Goldman Sachs estimates that companies will pass along 60% of their tariff costs onto consumers. There is strong evidence that high levies caused a significant surge in revenue, which will later level off as trade patterns shift and businesses seek to lower costs along their supply chains.
Ongoing Trade Negotiations
On May 8, the White House announced that Trump and UK Prime Minister Keir Starmer had unveiled a historic trade deal, providing American companies with unprecedented access to the UK market while strengthening U.S. national security.
“This is a great deal for America,” said Trump, who predicted 90 similar bilateral agreements would be negotiated in 90 days.
See the complete list of reciprocal tariff rates by country effective July 9, 2025.
Facing 46% duties, Vietnam agreed to a trade deal that sets tariffs at 20%. Trans-shipments from third countries would face a 40% levy, which would discourage Chinese tea growers from transporting their tea to Vietnam before shipping it to the U.S.
India is reportedly on the verge of announcing a trade framework. India faces 26% reciprocal duties on tea.
Talks with Japan have stalled over the imposition of 24% US duties on goods, including tea. Half of the tea exported by Japan, by value, is shipped to the U.S. On June 30, Trump threatened to increase tariffs to 35% on Japanese goods. And on July 8, Trump raised tariffs on Japan and South Korea to 25% to force them to negotiate.
When asked how trade talks are faring on July 1, Trump said: “Everything’s going well.”
Inventories Are Thinning
U.S. companies imported a lot more goods earlier this year compared to 2024 in a rush to stockpile products before Trump raised tariffs. Tea retailers in particular stocked up on tea from regions facing the highest tariffs, notably China, but have since halted orders that could not be landed by early July.
“We are already seeing product shortages in the market as importers have cut back or eliminated shipments until more clarity is provided. The longer this goes on, the more impact will be noted in the supply chain. Extended effects may deeply impact holiday sales if there are lags in shipments arriving,” writes Smith.
CEO Manjiv Jayakumar, who runs QTrade Teas & Botanicals in Houston, Tex., describes “lots of anxiety around July 9 when the suspension expires.” [That deadline has now been extended to August 1.]
The Trump Administration asserts that higher tariffs will assist U.S.-based manufacturers.
“We are a U.S.-based blender and packer with U.S.-based infrastructure. There is interest from Europe. They want to work with us to do more packing locally. Everybody is thinking about it seriously for the first time, but no decisions have been made yet due to uncertainty,” said Jayakumar.
“We are advising clients to remain open-minded about alternative origins and blend standards to make them more resilient from a supply stability perspective,” says Jayakumar.
Shifting Trade Flows
Since the 1950s, U.S. tariffs have declined in favor of free-trade agreements. In 2016, the average applied tariff across all products was 1.61% according to the Pew Research Center.
Globally, the trade-weighted average tariff was 2.98% according to Macrotrends.
The average tariff rate on goods imported into the U.S. varies, but the combination of rates first imposed in 2018 and the additional 10% baseline rate in 2025 is the highest U.S. average since 1934. The Budget Lab at Yale indicated an overall average effective tariff rate of 17.8%. China, Mexico, and Canada face higher rates, and there are separate 50% tariffs on steel and aluminum.
China Tea
China is the world’s largest tea producer, with a domestic tea market valued at over $115 billion in 2025, according to Statista market research. Tea exports were valued at $1.4 billion in 2024, representing only 1.2% of total revenue. Black tea exports were only $171 million. Tea export volume has increased over the past three years, accompanied by a rise in the average unit value.
In April 2025, tea volume decreased by 5.1%, but year-to-date totals surpassed those of 2024. The volume of green tea exports in the month the tariffs were announced was up 15.1% compared to the same period last year. Average prices increased 3.2% to $3.58 per kilo, according to China Customs.
Zhejiang Tea Group’s US subsidiary, Firsd Tea, reported a steep increase in Chinese imports to the US, up 30.1% compared to April 2024. The average price for imported tea was $5.27 per kilogram. Green tea volume increased by 38.5% in April due to front-loading to avoid a 37.5% tariff on tea.
Year-to-date (Jan through April) imports of Chinese green tea are up 53.6% compared to 2024. The increase is attributed to a trade war between the US and China, which drove tariffs to 152.5% at one point before the U.S. and China agreed to a 30% base rate while negotiating a long-term agreement to balance trade.
The on-off-on-again US-China trade deal was signed two days ago, Commerce Secretary Howard Lutnick said. Beijing confirmed some aspects of a framework accord, which includes a pledge to deliver rare earths but doesn’t address thorny issues like fentanyl trafficking. There was no detailed readout.
Logistics Impaired
Tariffs compound ongoing logistics challenges. Shipping lines are rerouting vessels to avoid U.S. West Coast ports affected by tariffs, straining capacity on the East Coast. Container shortages and higher freight costs persist. The Drewry World Container Index was $2,983 per 40ft container in the last week of June, below pandemic highs but 57% higher than the average in 2019. The early July rate for shipping a container of tea from Shanghai to Los Angeles was $4,500.
The Israeli-Iranian war caused local disruptions, delaying shipments and adding $600 to the cost of a 40ft container for transit from India to Iran and from India to Iraq, one of the largest buyers of Indian tea.
Customs clearance uncertainty has destabilized planning. Customs and Border Patrol (CBP) is more aggressively inspecting (and rejecting) blended Documentation burdens, and warehousing congestion raises costs. Traders split shipments and suspend contracts. Multi-week delays are now common.
Jie Shi, an Associate at Huth Reynolds LLP in New York, identified several tariff-related logistical costs, as well as the legal ramifications of rerouting and terminating contracts.
“As we observed during the pandemic years, in today’s world, supply and transport chains form a complex global network. A dysfunction in any single part of this system puts downward pressure on adequate supply levels in the market, and the ripple effects significantly amplify the direct adverse impacts. When cargo cannot be loaded at the origin, no volume arrives at U.S. ports (it usually takes four to six weeks for container ships leaving Chinese ports to clear U.S. customs), and the result is likely job losses at ports and higher prices for consumers. The announcement of tariffs has already led to the cancellation of scheduled container shipments from China to the US. For example, according to Sea Intelligence, 42% of planned shipping capacity was canceled for the week from May 5 to 12.
“Although no one can fully assess the long-term ramifications of the tariffs, the United States Trade Representative (USTR) issued an updated notice of action on April 17, stating that starting October 14, 2025, high port fees will be imposed on vessels owned or operated by Chinese entities and Chinese-built vessels, thereby adding further to logistics costs.
Rates start at $50 per ton and increase to $140 per ton by April 2028. Chinese-owned and operated container ships will initially pay $120 per container, a fee that rises to $250 per container by 2028 for some vessels, according to Gard.
Legal and Grey-Area Workarounds
Importers use free-trade zones (FTZs) and bonded U.S. warehouses to defer or avoid tariffs. Some are blending in Canada or Mexico to qualify under USMCA. Transshipments via Switzerland, the UAE, or Malaysia are on the rise.
Grey-area tactics, such as mislabeling origins or undervaluing shipments, attract enforcement. Legal compliance is costly but critical as customs scrutiny rises.
“What happens if suppliers attempt to reroute cargo, including tea, through third countries before sending it to the U.S.?” asks Shi.
“U.S. customs officials are likely to check such shipments to see if they have been transshipped from China via third countries to bypass the higher Chinese tariffs. Shipments misdeclared as being of Chinese origin, even if just one item is non-compliant, can result in a full container load being turned away. This process also means that there will be additional time and costs related to customs clearance,” writes Shi.
Tea suppliers are heavily utilizing Canadian warehouses. The country of origin determines tariffs, but warehousing goods outside the US offers a strategic advantage, allowing tea businesses to delay tariff payments and optimize their cash flow. Landing goods offshore appeals to U.S.-based wholesalers who fulfill customer orders outside the U.S.
Restoring Balance
Tariffs are a blunt tool with unpredictable results. De-globalization into opposing trade blocs, trade wars, escalating tariffs, and non-tariff barriers, while weakening the World Trade Organization, has increased tensions among trading nations, which bodes poorly for the tea industry.
McKinsey Global Institute argues in its report, "In a moment of tariffs, can the world find balance and trust to thrive?", “The world needs a new base of balance and trust to create a thriving economy.”
The report goes on to say, "How does balance affect the ability of an economy to thrive? External balance reflects healthy domestic production and trade. Internal balance signals sustainable fiscal policies. Household balance indicates sound saving, debt management, and human capital investment. Corporate balance reflects a long-term orientation to the effective allocation of wages, distributed profits, and retained earnings needed for investment. Balance also entails resilience and security. Resilience requires domestic production or reliable access to essential goods, such as pharmaceuticals. Security relies on the capacity to procure or produce the critical goods and services needed to deter external threats and support allies. Lack of balance risks financial instability and degrades the capacity to invest in the human and physical capital required to drive innovation, productivity, and growth.”
“In the weeks since the [tariff] announcements, share prices and the US Treasury market have gyrated. Expectations of US inflation have spiked. Consumer confidence has plummeted back to lows last seen in 2022. In the first quarter, the US economy shrank by 0.3 percent, as companies pulled forward imports and inventories grew. Many analysts have raised their estimates of the probability of a global recession,” writes McKinsey & Company.
Now seems a good time for the world’s economic leaders to pour a calming cup of tea.
As the newly extended August 1 tariff deadline approaches, the global tea industry finds itself caught in a crosscurrent of geopolitics, economic uncertainty, and fragile supply chains. Exporters face escalating compliance costs, importers wrestle with pricing volatility, and consumers may soon confront steeper prices or empty shelves. What began as a tactical effort to rebalance trade has become a protracted, unpredictable test of endurance for businesses across the value chain—from small tea rooms in the Midwest to multinational packers operating on multiple continents. While some may adapt through reshoring, re-blending, or rerouting, the cumulative cost of uncertainty is becoming harder to absorb.
The tea trade, historically a model of cross-border collaboration and cultural exchange, now risks being remapped by tariff walls and national interests. In the absence of a coordinated, rules-based resolution, the industry must brace for prolonged instability. In such times, the need for strategic foresight, resilient logistics, and transparent policymaking is greater than ever.
Until clarity returns, uncertainty—like tea in the pot—will continue to steep.
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