Key Takeaways:
- President Trump has announced duties ranging from 10-25 percent on imports from Canada, Mexico and China based on national emergency authority.
- These duties are set to take effect at 12:01 a.m. on Feb. 4 and will apply to all shipments with no de minimis value exemption.
- As a result of last-minute negotiations, the U.S. reached an agreement with Canada and Mexico to pause duties on imports from each country for one month, allowing time for further negotiations.
On Feb. 1, President Donald Trump signed executive orders imposing duties on imports: 25 percent on products from Canada (10 percent on energy products), 25 percent on products from Mexico and 10 percent on products from China. These duties apply to all imports from these countries, with exceptions under 50 U.S.C. 1702(b) for postal items, personal communications without value transfer, information and informational materials, donations, and personal travel baggage.
The duties will take effect at 12:01 a.m. ET on Feb. 4. Products imported into the U.S. after this time are exempt only if they were loaded on a vessel or in transit before 12:01 a.m. ET on Feb. 1. U.S. Customs and Border Protection will require certificates to be filed to claim exemptions for goods that already were in transit.
The duties are imposed in addition to any other duties, fees and charges such as general duties, Section 301 China duties, Section 232 steel/aluminum duties, and antidumping and countervailing duties.
The duties are not eligible for duty drawback – imported goods that are subsequently exported do not qualify for a refund of paid duties. Duty-free de minimis treatment under 19 U.S.C. 1321, which is normally accorded to shipments valued at no more than $800, is not available for goods subject to the duties.
Canada, Mexico and China have quickly announced retaliation for the U.S. duties. Canada has introduced a $155 billion tariff package on certain U.S. goods. Mexico’s president has also ordered retaliatory tariffs. China announced it would file a lawsuit with the World Trade Organization and take measures to protect its rights and interests. According to the executive orders, the president may increase or expand the scope of duties in response to retaliation.
President Trump invoked a rarely used authority under the International Emergency Economic Powers Act (IEEPA) at 50 U.S.C. 1702(a)(1)(B) to impose duties on Canada, Mexico and China, citing emergencies declared at the northern and southern borders related to fentanyl, drug trafficking and illegal immigration concerns. Notably, IEEPA requires the president to consult with Congress before exercising this authority, although it remains unclear whether this procedure was followed. Additionally, IEEPA authorizes Congress to terminate the national emergency declared by the president by passing a concurrent resolution to that effect.
Please contact Mike Snarr, Matt Caligur, Ron Baumgarten or Tung Nguyen if you would like to discuss these tariff measures and the retaliatory tariffs being imposed by other countries.