In another week of unprecedented tariff announcements and activity, President Trump issued two Executive Orders (EOs) (on Canada and Mexico) on March 6, 2025 that suspended implementation of the 25% tariffs on goods imported into the U.S. from Canada and Mexico, two days after the tariffs went into effect on March 4 pursuant to the International Emergency Economic Powers Act (IEEPA). A Fact Sheet accompanied the EOs.
However, the suspension only applies to merchandise that qualifies as "North American-originating" under USMCA (the free trade agreement between the U.S., Canada, and Mexico). Officials said roughly 62% of imports from Canada are not covered by USMCA and would still be subject to tariffs, while 50% of imports from Mexico are not USMCA-compliant.
No action was taken with respect to the additional 10% duties imposed on goods of Chinese origin that became effective on March 4 and remain in place (as well as the first round of 10% duties that went into effect on February 4). In response, China's finance ministry announced that duties of 15% would be imposed on U.S. imports of chicken, corn, cotton, and wheat, and that a 10% tariff would apply to imports of aquatic products, beef, dairy products, fruits, sorghum, soybeans, and vegetables—all produced mostly in "farm states" represented in Congress mainly by Republican Senators.
This announcement was preceded by the announcement that the 25% tariffs on Canadian and Mexican goods originally paused until March 4 were back "on" again (for prior coverage, see the alert published February 28, 2025). Canada immediately retaliated with an announcement that it would impose tariffs of 25% on C$30 billion worth of unspecified American goods that would be increased to C$125 billion in 21 days.
After the U.S. stock market plunged on March 5, President Trump announced that the "Big 3" U.S. automakers would receive a reprieve until April 2 from paying the 25% tariff on imports of vehicles and parts used in vehicle production (but not after-market parts). On March 6, President Trump extended the reprieve to all imported products originating in Mexico and later included all Canadian-originating goods. The reprieve is expected to expire on April 2 (to coincide with the announcement of reciprocal tariffs that the Administration is currently in the process of finalizing). Should the IEEPA tariffs resume after that date, the duty on Canadian potash (a key ingredient of fertilizer) would drop from 25% to 10%.
In a related development, another EO was signed on March 1 to increase U.S. lumber production. The EO also ordered an investigation under Section 232 of the Trade Expansion Act of 1962 to determine whether additional tariffs were warranted on imports of lumber as a threat to U.S. national security. Almost half of U.S. imports are sourced from Canada, and these imports been the subject of long-running U.S. antidumping and countervailing duty disputes since the 1980s. The latest dispute is the subject of a pending USMCA binational panel case.
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