President Trump signed an Executive Order late yesterday imposing significant tariffs on imports from Canada, Mexico, and China. These tariffs will take effect on February 4, 2025.
Invoking statutes of the International Emergency Economic Powers Act (IEEPA), the President has declared a national emergency, citing the crisis related to fentanyl and illicit drugs as the basis for these tariffs.
The order specific to Canada states that all products of Canada will be subject to a 25 percent ad valorem rate of duty. Energy and energy resources from Canada will be subject to a 10 percent ad valorem rate of duty. These tariffs are in addition to any other duty, fee, or charges applicable to the imported article.
The additional duties imposed by the order are not eligible for duty drawback, and items subject to the order are not eligible for duty-free de minimis treatment under Section 321.
Clarification is pending on several matters related to this order, including Section 321 eligibility, what is considered a Product of Canada, whether the duty-free base rate for goods eligible for free trade agreements will be impacted, and whether goods under chapter 98 are excluded.
A 25% tariff has also been imposed against Mexico and a 10% tariff against China, both of which will be in addition to any existing Section 301 or other tariffs normally applicable to the imported article.
Canada, Mexico, and China have responded with significant retaliatory measures.
Canada has announced a 25% tariff on $155 billion of U.S. origin products, with the first $30 billion coming into effect on Tuesday, February 4th, and the balance to follow within 21 days, to allow Canadian supply chains and companies to find alternative solutions. The Prime Minister mentioned that the list of products impacted is ‘far-reaching’ and includes everyday items such as American alcohol, produce, clothing, shoes, household appliances, furniture and more.
Mexico announced that it will invoke its ‘Plan B’ response, which includes both tariff and non-tariff measures. The specifics of Plan B are not yet known.
China has announced that it will be filing a complaint with the WTO and will take ‘corresponding countermeasures to resolutely defend its rights’.
We continue to closely monitor developments of this quickly evolving situation and will provide updates in supplemental bulletins as additional details become known.