UPDATE: On February 7, President Donald Trump issued an executive order (EO) addressing the additional duties placed on imports into the United States of products of China. The article below stated that use of duty-free de minimis treatment on imports for shipments under $800 was being removed for shipments from China. The president has since rescinded this provision in his previous EO, and duty-free de minimis treatment under 19 U.S.C. 1321 is again available for these imports until the Secretary of Commerce informs President Trump “that adequate systems are in place to fully and expediently process and collect tariff revenue applicable” for such low-value shipments from China, at which time the de minimis duty-free exception will again be removed.
On February 1, 2025, President Donald Trump issued three Executive Orders (EOs) implementing tariff actions pursuant to the International Emergency Economic Powers Act (IEEPA) against imported products of Canada, Mexico and China, beginning February 4, 2025, at 12:01 a.m. EST. In response, the three targeted countries announced plans to retaliate with tariffs against U.S. exports, with Canada announcing its initial tranche of $30 billion of retaliatory tariffs starting February 4 also. After President Trump spoke with Mexico’s President Claudia Sheinbaum on February 3, the leaders announced a suspension of their planned tariffs and any retaliation for 30 days, until March 4, 2025. After President Trump spoke later that day with Canada’s Prime Minister Justin Trudeau, the leaders also announced a 30-day suspension of their planned tariffs and any retaliation, with President Trump stating that “[f]urther time is needed, … to assess whether these steps constitute sufficient action to alleviate the crisis.” It is reported that the United States and China will speak on February 4 or 5 regarding the Trump administration’s planned 10% tariff on imports of Chinese goods. Currently, these tariffs on Chinese goods will enter into effect on February 4; the United States, however, has not yet issued a Federal Register notice providing guidance for these tariffs.
According to initial reports, Canada and Mexico have each agreed to deploy up to 10,000 additional security forces to their respective U.S. borders and implement a number of security and immigration-related measures. The Canadian government announced that it will invest $1.3 billion in border security funding, provide “24/7 Eyes” on the border, appoint a Canada-U.S. Joint Strike Force to combat organized crime, designate drug cartels as terrorists (as President Trump did via his “Day One” Executive Orders), and appoint a “Fentanyl Czar.” The specific details of Mexico’s negotiations with the United States have not been made public yet; however, Mexico’s acceptance of the “Remain in Mexico” policy and its increased southern border security have been publicly supported by members of the Trump administration. Additionally, media reports indicate that a leader of one of Mexico’s cartels was arrested by Mexican government authorities on the date the tariff suspension was announced.
These actions appear to be the beginning of the Trump administration’s implementation of its America First Trade Policy agenda (see Thompson Hine update of January 22, 2025). President Trump has already directed the U.S. Trade Representative (“USTR”) to review the “new NAFTA”/USMCA, and the United States has launched analyses of additional sectoral tariffs (e.g., steel, aluminum, semiconductors, copper, oil & gas, and pharmaceuticals). Global supplemental tariffs remain under consideration to reduce the trade deficit.
This 30-day suspension of tariffs in North America is just the beginning of a broader set of trade negotiations. This blog post provides a broad overview and summary of these actions, as they currently stand.
Timeline (as of February 3, 2025):
- February 4, 2025 – 10% tariff on goods “produced by” China enters into effect.
- March 4, 2025 – 10% tariff on energy products “produced by” Canada enters into effect; 25% tariff on all other goods “produced by” Canada enters into effect; 25% tariff on goods “produced by” Mexico enters into effect; Canada’s retaliatory CAD $30 billion of retaliatory tariffs enter into effect.
- March 25, 2025 – Canada’s remaining retaliatory tariffs (for a total of CAD $150 billion) enters into effect.
- April 1, 2025 – America First Trade Policy Memorandum reports due to President Trump.
Trump Tariff EOs
President Trump issued three (3) EOs on February 1, 2025, largely confirming prior reports that the United States would impose the tariffs pursuant to the IEEPA. These tariffs were to take effect on imported “products of” Canada, Mexico and China effective February 4, 2025, as follows:
- The Canada EO implements a 25% tariff on all “products of Canada” but provides only a 10% tariff on “products of Canada” that are “energy resources” defined as 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 critical minerals are defined by 30 U.S.C. 1606 (a)(3)).
- The Mexico EO implements a 25% tariff on all “products of Mexico.”
- The China EO implements a 10% tariff on all “products of China.”
All of these tariffs are in addition to any other duties, fees, exactions or charges already existing on such imports. The definitions of “products of Canada,” “products of Mexico,” and “products of China” will be determined by the U.S. Department of Homeland Security (DHS) and U.S. Customs and Border Protection (CBP) as to be defined in forthcoming Federal Register notices. It is assumed that the rules surrounding country of origin (COO), which govern nearly all customs matters, will be used to define “products of.”
Common aspects to the implementation of all three EOs include:
- No product exclusion process currently for these products.
- “Foreign privileged status” for these products entering foreign-trade zones (FTZs), “locking in” tariffs on the date the goods enter the FTZ rather than on the date when the goods may be withdrawn/sold.
- No duty drawback for these products.
- No use of duty-free de minimis treatment under 19 U.S.C. §1321, which largely exempts certain customs requirements for shipments under $800.
- A tariff exemption for goods entered for consumption, withdrawn from a warehouse for consumption, after such time were loaded on a vessel at the port of loading, or in transit on the final mode of transport prior to entry into the United States before 12:01 a.m. EST on February 1, 2025, if the importer certifies to CBP in accordance with the yet-to-be-published Federal Register notice.
Each EO notes that President Trump reserves the right to “increase or expand in scope the duties” should Canada, Mexico, or China retaliate. They also state that any prior Presidential Proclamation, Executive Order, or other Presidential Directive or guidance that is related to trade with Canada, Mexico or China that “is inconsistent” with these new EOs is “terminated, suspended or modified to the extent necessary.”
The stated purpose of these EOs is: (i) for Canada, its failure “to devote sufficient attention and resources or meaningfully coordinate with United States law enforcement partners to effectively stem the tide of illicit drugs;” (ii) for Mexico, its failure “to devote sufficient attention and resources to meaningfully stem the tide of unlawful migration and illicit drugs;” and (iii) for China, its failure “to stem the ultimate source of many illicit drugs distributed in the United States.” Under each EO, the Secretary of Homeland Security, in coordination with the Secretary of State, the Attorney General, the Assistant to the President for National Security Affairs, and the Assistant to the President for Homeland Security, will recommend any additional actions that may be deemed necessary. The Secretary of Homeland Security, again in consultation with these other officials, may also inform President Trump if Canada, Mexico and/or China have “taken adequate steps to alleviate” these crises so that President Trump can determine if tariffs should be removed.
In announcing these EOs and tariffs, the White House issued a Fact Sheet on these trade actions.
Authority under the IEEPA
These EOs impose these tariffs under the IEEPA, which authorizes the President “to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat.” President Trump declared such a national emergency on January 20, 2025. The three EOs expand that emergency action and include repeated references to fentanyl, opioids, drugs, methamphetamine, cocaine, border security, human trafficking, smuggling, the purported relationship between drug cartels and the Mexican government, and China’s fentanyl traffickers’ purported relationship with the Chinese government, the strain on the U.S. public health system and many other emergency issues.
The IEEPA requires the President to consult with Congress “in every possible instance” before acting under the statute. The President must also perform certain post-imposition actions such as publishing the action in the Federal Register. The main “check” against IEEPA abuse is Congress, which can issue a joint resolution removing the underlying national emergency.
Legal questions may arise regarding the use of the IEEPA to impose these tariffs. Typically, the emergency authority under the IEEPA is used to impose sanctions and seizures (e.g., terrorism-related asset seizures); there is only one instance of imposing tariffs under the IEEPA: President Richard Nixon used it under a predecessor statute in the early 1970s to impose “surtaxes” (i.e., tariffs) to address currency issues.
Canada, Mexico and China Retaliatory Tariffs and Reactions
Shortly after the announcement of U.S. tariffs on Canada, the Canadian government announced retaliatory tariffs of 25% against CAD $155 billion of U.S. goods, with $30 billion to begin February 4, 2025, and the remaining CAD $125 billion to be implemented within the next twenty-one (21) days. These Canadian tariffs will be tailored to specific products in politically important congressional districts (e.g., Republican districts), largely in Ohio, Michigan and Florida. They include, but are not limited to: beer, wine, bourbon, fruits and fruit juices, vegetable, perfume, clothing, household appliances, and lumber. Currently, non-tariff measures such as restrictions on energy and critical minerals are being considered but not imposed.
Mexico has only stated that it will retaliate with a “carousel” of tariffs, where products are drawn from all sectors and cycle on and off the list at set periods. Mexico also has advised that it may impose non-tariff actions. As of Monday, February 3, 2025, the United States and Mexico agreed to “pause” tariffs on each other’s goods for 30 days pending further negotiations after Mexico’s President Sheinbaum agreed to place 10,000 Mexican soldiers on the border to assist in halting the flow of fentanyl and illegal migrants into the United States. Later that day, the United States and Canada entered into a similar 30-day pause.
China only broadly responded by stating that it will take countermeasures and file a complaint at the World Trade Organization (WTO) as the “unilateral imposition of tariffs by the U.S. seriously violates the rules of the WTO.” The U.S. and China are purportedly scheduled for talks on February 5 or 6, 2025.