On March 6, 2025, the White House announced new executive orders changing the national emergency tariffs on Mexico and Canada that came into force earlier this week. The announced tariff exemption covers all products of Canada and Mexico that comply with the United States-Mexico-Canada Agreement (the “USMCA”) and are imported into the United States on or after 12:01 a.m. eastern standard time on March 7, 2025. The national emergency tariffs charged to Canadian and Mexican products imported over the last few days cannot be refunded.
The USMCA allows for materials produced in Mexico, Canada or the United States to be “originating” and therefore qualify for duty-free treatment across North America. Importers or manufacturers must prepare a Certificate of Origin attesting to the product's USMCA status. There are four different tests available for goods to qualify under the USMCA:
- Materials from North America, such as American lumber, Mexican avocados, or Canadian mineral ores.
- Products wholly manufactured from originating materials in North America.
- Products manufactured from non-originating materials that undergo “substantial transformation” in North America.
- Products assembled in North America without substantial transformation but meeting a product-specific regional content/costs requirement. Automotive manufacturers and suppliers face additional regional content requirements for passenger vehicles, light trucks, and heavy trucks. As of 2024, under the USMCA, a vehicle must contain at least 75% regional content to qualify as originating, with additional workforce wage requirements.
No changes have been made to the national emergency tariffs ordered on products of China. Additional reciprocal tariff announcements and tariffs on targeted products are expected to be announced later this month.
In the United States, tariffs are collected by U.S. Customs and Border Protection from the importer of record, which is the party that owns or has purchased the products being imported. The importer of record is responsible for properly declaring the value, classification, and country of origin of entered products, as well as paying duties, taxes and other fees. Importers must maintain documentation supporting customs declarations, including USMCA originating status, for five years. Under U.S. customs laws, any false statements about the country of origin or legal compliance with trade agreements can trigger enforcement under the federal False Claims Act, leading to severe civil and criminal penalties, including treble damages.
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