US Tariffs
On February 1, 2025, the US government imposed a 25% additional tariff on all imports of goods from Mexico. The tariffs were imposed by the US President through an executive order based on the International Emergency Economic Powers Act (IEEPA).
The IEEPA allows the US President to "regulate" the importation and exportation of goods during a time of emergency presenting an "unusual and extraordinary threat... to the national security, foreign policy, or economy of the United States." Pursuant to the IEEPA, the US President shall consult with the Congress before exercising any of the authorities under the IEEPA and shall immediately transmit to the Congress a report whenever the President exercises such authorities.
Under this order, the US Harmonized Tariff Schedule shall be modified to adjust the rates by tariff codes, no drawback will be available with respect to the duties imposed, and duty -free de minimis treatment shall not be available for articles that are products of Mexico.
President Trump's order also includes a retaliation clause providing that the US may impose additional tariffs should Mexico retaliate with its own tariffs or other measures against US exports to Mexico.
Tariffs were set to apply to all products of Mexico effective on February 4, 2025; however, today the presidents of the US and Mexico reached an agreement to immediately pause the application of the US tariffs for one month under certain conditions as further described below.
Mexican response
On February 1, 2025, the President of Mexico issued a statement rejecting the imposition of the US tariffs, pointing out the violation of the USMCA that prohibits the imposition of tariffs on originating goods. President Scheinbaum made clear that Mexico would impose retaliatory measures that would include tariffs and non-tariff measures on US exports to Mexico.
Mexico's retaliatory measures were to be officially announced on February 4, 2025, but instead, this morning the President of Mexico announced an agreement that will pause the application of the US tariffs for one month, based on the following:
- Mexico will immediately reinforce the security at the Mexican-US border with 10,000 members of the National Guard to stop the flow of drugs (particularly, fentanyl) and undocumented immigrants from Mexico into the United Sates.
- The US agreed to take measures to prevent the traffic of high-capacity weapons into Mexico.
- The United States and Mexico will immediately start high level negotiations to agree on coordinated measures in the areas of border security and trade.
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