U.S. Announces New Tariffs on Canada, Mexico, and China

UPDATE: As per the developing news, tariffs were postponed by 30 days.

On February 1, 2025, President Donald Trump issued three executive orders imposing new tariffs on imports from Canada, Mexico, and China. These tariffs, which take effect on February 4, 2025, will impose an additional 25% ad valorem duty on Canadian and Mexican imports and a 10% tariff on Chinese imports.

While the tariffs apply to nearly all imported goods, Canadian energy resource exports will face a lower 10% tariff instead of 25%. The new tariffs will be levied on products entered for consumption or withdrawn from warehouses beginning at 12:01 a.m. Eastern Standard Time (EST) on February 4, 2025. However, goods already in transit to the U.S. before February 1, 2025, are exempt.

In addition, the executive orders suspend the Section 321 customs de minimis entry process, which previously allowed duty-free treatment for shipments under $800, often used for e-commerce transactions.

The tariffs are indefinite and will remain in effect until lifted by the president. Further increases may be implemented, particularly if Canada, Mexico, or China retaliate, as all three nations have signaled their intent to do so.

BREAKDOWN OF TARIFF MEASURES BY COUNTRY

Canada Tariffs

• Tariff Rate: A 25% ad valorem tariff applies to all imports from Canada, in addition to any existing duties or charges. However, energy and energy resource exports from Canada will be subject to a lower 10% tariff.

• Scope of Covered Products:

• While the full list of affected products is not yet available, the order indicates that all imports, except energy products, will be subject to the 25% tariff.

• Definition of “Energy and Energy Resources”: Based on Trump’s January 20 National Energy Emergency Executive Order, the term includes crude oil, natural gas, refined petroleum products, uranium, coal, biofuels, geothermal energy, hydroelectricity, and critical minerals.

• The Secretary of the Interior has designated specific critical minerals in a comprehensive list, which will also be affected.

• Full details, including the Harmonized Tariff Schedule of the United States (HTSUS) codes, will be published in the Federal Register or a follow-up Department of Homeland Security (DHS) notice.

Mexico Tariffs

• Tariff Rate: A 25% ad valorem tariff will be imposed on all imports from Mexico.

• Scope of Covered Products:

• Unlike Canada, no exemptions exist for energy or energy resources imported from Mexico.

• The full product list and HTSUS codes will be published in the Federal Register or DHS notices.

UPDATE: Mexico and U.S. Reach Last Minute Deal on Tariffs 

China Tariffs

• Tariff Rate: A 10% ad valorem tariff applies to all imports from China, in addition to any existing duties.

• Scope of Covered Products:

• The executive order suggests that all merchandise imported for consumption will be affected, but the final product list will be confirmed in future Federal Register notices.

• Application to Hong Kong and Macau: The tariffs only apply to products originating from mainland China (ISO Country Code CN). Goods from Hong Kong (HK) and Macau (MO) are not affected.

CONSISTENT PROVISIONS ACROSS ALL THREE TARIFF ORDERS

1. Implementation Date and Exemptions

• The tariffs apply to all imports entered for consumption or withdrawn from warehouses on or after 12:01 a.m. EST on February 4, 2025.

• Goods that were already in transit before 12:01 a.m. on February 1, 2025, are exempt from the tariffs.

2. Suspension of Section 321 Customs De Minimis Entry

• The orders suspend duty-free treatment for shipments under $800, which are frequently used for e-commerce purchases. These goods will now be subject to the new tariffs and additional entry filing requirements.

3. Exclusions for Certain Goods

• The executive orders exclude specific product categories under 50 U.S.C. § 1702(b), including:

• Personal communications

• Donated articles

• Informational materials

• Travel-related items

4. Prohibition of Duty Drawback

• The orders specify that no duty drawback will be available for goods subject to these tariffs.

5. Impact on U.S. Foreign Trade Zones (FTZs)

• Goods subject to the new tariffs that enter U.S. Foreign Trade Zones (FTZs) on or after February 4, 2025, may only be admitted in “privileged foreign status.”

• When these products exit the FTZ for consumption, they will be subject to the duty rate applicable at the time of admission into the FTZ.

6. Temporary Importation Under Bond (TIB)

• No specific changes to temporary importation under bond (TIB) programs have been announced. However, a technical annex may clarify this issue.

7. Further Guidance from U.S. Customs and Border Protection (CBP)

• CBP will provide additional technical guidance in the coming days, including:

• The certification process for goods exempt due to transit timing.

• Importer compliance procedures for new tariff classifications.

POTENTIAL FOR FURTHER TARIFF ACTIONS

The situation remains fluid, and additional tariff escalations are highly likely as:

• Canada, Mexico, and China have all indicated plans for retaliatory measures.

• The U.S. may further increase tariffs in response to retaliation.

• Trump has recently threatened new tariffs on:

• European Union (EU) imports

• BRICS economies (Brazil, Russia, India, China, South Africa, and others)

• Global sectors such as semiconductors, pharmaceuticals, oil, steel, aluminum, and copper

LEGAL BASIS: THE INTERNATIONAL EMERGENCY ECONOMIC POWERS ACT (IEEPA)

Trump’s executive orders invoke the International Emergency Economic Powers Act (IEEPA), a statute that allows the president to impose broad economic restrictions during national emergencies.

• IEEPA does not require prior investigations or reports, unlike traditional trade laws such as Section 301, Section 232, or Section 201.

• Trump declared a national emergency citing concerns over fentanyl smuggling and irregular migration as justification for the tariffs.

• IEEPA’s broad scope allows for rapid escalation, meaning further tariff increases could be imposed without additional investigations or congressional approval.

SOURCES/ RECOMMENDED READ:

• Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border | White House Pool | Forth

• List of products from the United States subject to 25 per cent tariffs effective February 4, 2025 - Canada.ca

• Fact Sheet: President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico and China – The White House

• Orders In Council - Search

• President Trump Imposes 25% Tariffs on Canada and Mexico, and 10% Tariffs on China | White & Case LLP