Insights
U.S. Imposes Tariffs on Imports from Canada and China Beginning February 4; Mexican President Announces One Month Implementation Delay
On February 1, 2025, President Trump announced significant new tariffs on imports from Mexico, Canada, and China, set to take effect on February 4, 2025. The tariffs were announced via three separate Executive Orders (EOs) and are imposed on Canada to “Address the Flow of Illicit Drugs Across [the] Norther Border,” on Mexico to “Address the Situation at [the] Southern Border,” and on China to “Address the Synthetic Opioid Supply Chain in . . . China.” Importantly, unlike tariffs on China implemented under Section 301 of the Trade Act of 1974 (Section 301) in the first Trump administration, the new tariffs are imposed under the International Emergency Economic Powers Act (IEEPA) and are pursuant to a national emergency declared by President Trump.
Specifically, the tariffs are as follows:
- 25% tariff on most imports from Canada
- 10% tariff on "energy resources" from Canada
- 25% tariff on imports of “all articles that are products of Mexico”
- 10% tariff on imports of “all articles that are products” of China
The tariffs will be cumulative, stacking on top of existing duty rates, meaning, for example, Chinese imports subject to existing Section 301 25% tariffs will now be subject to 35% cumulative tariffs.
The measures will apply to goods entered for consumption or withdrawn from warehouses for consumption after 12:01 a.m. Eastern Standard Time on Tuesday, February 4, 2025. Goods entered for consumption, or withdrawn from warehouse for consumption, after 12:01 a.m. on February 4 that were loaded onto a vessel at the port of loading or in transit on the final mode of transport prior to entry into the United States before 12:01 a.m. on February 1 shall not be subject to such additional duty, if the importer certifies to U.S. Customs and Border Protection (CBP) as specified in a forthcoming Federal Register notice.
The measures are set to remain in effect indefinitely, with the possibility of further increases if the targeted countries retaliate. More details are expected upon formal publication of a forthcoming Federal Register notice.
Exemptions and Restrictions
Few exemptions are available, except for a narrow category of items explicitly exempted under the IEEPA. These limited exemptions include (1) personal communications, (2) donated articles, (3) informational materials, and (4) transactions ordinarily incident to travel.
For the Canadian and Mexican goods subject to the new tariffs, there is no exception for items eligible for duty-free treatment under the U.S.-Mexico-Canada Agreement (USMCA). Additionally, duty-free de minimis treatment under Section 321 of the Tariff Act of 1930 is not available for imports subject to the new tariffs. Therefore, shipments valued under $800 will also be subject to the new duties.
Retaliation
The imposition of these tariffs has already triggered retaliatory actions, with varying levels of specificity, from the target countries:
- Canada announced 25% counter-tariffs on $30 billion worth of U.S. goods, effective February 4, 2025. The U.S. goods affected by this first phase include “orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper.” An additional $125 billion worth of U.S. goods will also be subject to a 25% tariff following a 21-day consultation period.
- Mexico has also declared its intention to impose counter-tariffs, although specific details are not yet available. (Today is a federal holiday in Mexico, but Mexico’s President Sheinbaum announced in a post on social media that US tariffs on Mexico would be delayed for one month after a conversation with President Trump on Monday.)
- China has stated it will take the matter to the World Trade Organization. Additional retaliatory measures will likely be forthcoming.
This is a developing situation, and the U.S. government will be publishing more specific information regarding implementation in the coming days. If you have any questions about the new tariffs on Canadian, Mexican, and Chinese goods, and how these developments impact your imports, please do not hesitate to reach out to the Team at Torres Trade Law.