Today, March 4, 2025, the previously announced tariffs on goods from Canada and Mexico are officially effective. As noted in our previous update, U.S. President Donald Trump announced significant additional tariffs on imports of goods from Canada, Mexico, and China through the issuance of three Executive Orders on February 1, 2025 (collectively, the "Executive Orders"). President Trump stated that he was taking this action because of the alleged involvement, complicity, and/or inaction by the three countries with respect to drug trafficking and illegal immigration across the northern and southern borders of the United States.
In February, President Trump spoke with Prime Minister Justin Trudeau and President Claudia Sheinbaum, respectively, on the day before the tariffs were set to go into effect, and each of the leaders agreed to pause the tariffs for one month. Pursuant to two subsequent executive orders (collectively, the "Subsequent Executive Orders"), President Trump implemented a pause on the tariffs against Canada and Mexico until 12:01 a.m. eastern time on March 4, 2025, absent any further agreements between the leaders.
Because no such agreements were made, as of 12:01 a.m. eastern time today, the tariffs on imports of goods from Canada and Mexico are effective.
Furthermore, on March 3, 2025, the President amended the Executive Order that imposed tariffs on Chinese imports to increase the rate from 10 percent ad valorem tariffs to 20 percent.
The key details of the tariffs are as follows:
Legal Authority:
International Emergency Economic Powers Act ("IEEPA"). In each of the Executive Orders, President Trump expanded the national emergency declared in Proclamation 10886 of January 20, 2025 relating to the "influx of illegal aliens and illicit drugs into the United States." This expanded declaration is the prerequisite for the President taking action under IEEPA (in this case, through the imposition of tariffs) to address the declared national emergency.
The Executive Orders mark the first instance that a U.S. president has imposed tariffs under IEEPA, which is the statutory authority typically used for the imposition of economic sanctions.
Tariff Rates:
Canada: 10 percent ad valorem duty on energy or energy resources from Canada, as defined in section 8 of Executive Order 14156 of January 20, 2025. For purposes of this Executive Order, "energy" or "energy resources" means crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals, as defined by 30 U.S.C. 1606 (a)(3).
25 percent ad valorem duty on all other "articles that are products of Canada," which generally refers to goods (i) that qualify as being of Canadian origin pursuant to Customs and Border Protection's rules of origin (found at 19 C.F.R. Part 102), including goods that are wholly obtained or produced in Canada or produced exclusively from Canadian materials, or (ii) for which Canada was the last country of substantial transformation prior to importation into the United States.
Mexico: 25 percent ad valorem duty on "all articles that are products of Mexico" which generally refers to goods (i) that qualify as being of Mexican origin pursuant to Customs and Border Protection's rules of origin (found at 19 C.F.R. Part 102), including goods that are wholly obtained or produced in Mexico, produced exclusively from Mexican materials, or (ii) for which Mexico was the last country of substantial transformation prior to importation into the United States.
China: 20 percent ad valorem duty on "all articles that are products of China," which generally refers to goods that are that qualify as being of Chinese origin pursuant to Customs and Border Protection's rules of origin (found at 19 C.F.R. Part 102), including goods wholly obtained or produced in China or produced exclusively from Chinese materials.
Special Rules for Tariffs on Articles Exported from and
Returned to the United States
The following special rules govern imports that contain U.S. goods that were exported to the respective countries, improved, or advanced in value and then re-imported into the United States:
- Articles exported for repairs or alterations: the tariffs will apply only to the value of the repairs or alterations performed abroad.
- Articles of metal manufactured in the United States exported for further processing and returned to the United States for further processing: the tariffs will apply only to the value of the further processing performed abroad.
- Articles exported in a condition ready for assembly without further fabrication and having not been advanced in value or improved in condition abroad except by being assembled: the tariffs will apply to the value of the article assembled abroad minus the value of the products of the United States assembled into the imported article.
Duration of Tariff Rates:
The President must review and, if necessary, may extend national emergencies declared under IEEPA on an annual basis. The tariffs issued in the Executive Orders will remain effective until specifically revised or revoked by the President, or until the President terminates the declared national emergency that is the basis for these tariffs.
Additional Customs Notes:
The tariff rates imposed under the Executive Orders are in addition to any other duties, fees, or charges applicable to the imported goods. This includes antidumping/countervailing duties and tariffs imposed under other trade relief statutes (e.g., Section 232/Section 301 tariffs).
Duty drawback will not be available for the duties imposed under the Executive Orders.
Duty-free de minimis treatment will be available for imports of goods under $800 in value until the Secretary of Commerce notifies the President that adequate systems are in place that fully and expediently process and collect tariff revenue for such goods.
Goods subject to these tariff rates will not be eligible for duty inversion treatment when entering merchandise into the United States from foreign trade zones. In other words, such goods must be admitted into the foreign trade zone in privileged foreign status.
The Subsequent Executive Orders also withdrew the potential exception for goods 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 the tariffs became effective. Therefore, goods in transit to the United States from Canada and Mexico will be subject to the new tariffs if they are entered for consumption on or after March 4, 2025, regardless of when they were shipped. This exception remains available for eligible products from China that are entered for consumption before 12:01 a.m. eastern time on March 7, 2025.
Exclusions:
There are only limited exclusions from the tariffs for goods exempted from coverage under IEEPA. These exempted goods include:
- postal, telegraphic, telephonic, or other personal communications;
- donations by U.S. persons of articles intended to relieve human suffering;
- information or informational materials; and
- travel-related transactions.
There are no other exclusions for goods subject to the Executive Orders, such as any exclusions related to the U.S. – Mexico – Canada Agreement ("USMCA") for Mexico or Canada. In addition, there is no process noted for requesting an exemption from these duties for goods subject to the Executive Orders.
Retaliation:
The President may increase or expand the scope of the tariffs imposed under the Executive Orders in response to retaliatory measures imposed by Canada, Mexico, and China. As of today, March 4, 2025, the leaders of each of these countries have announced retaliatory measures against imports of U.S. goods.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
