On July 31, 2025, President Donald Trump issued an Executive Order amending the tariff rate on imports from Canada and announced that Mexico’s current tariff rate will remain unchanged for an additional 90 days to allow for continued negotiations.
Canada Tariffs – Pursuant to a July 31, 2025 Executive Order, President Trump has modified the duty rate on imports from Canada pursuant to his earlier Executive Order implementing such additional tariffs under the International Emergency Economic Powers Act (IEEPA) to address the national emergency of the flow of illicit drugs crossing the border from Canada. See Thompson Hine Update of February 3, 2025. Referencing Canada’s failure “in stemming the flood of fentanyl and other illicit drugs across our northern border” and Canda’s retaliation with its own tariffs on U.S. goods, President Trump has increased the tariff rate under the earlier February Executive Order from 25% to 35% effective August 1, 2025.
The July 31, 2025 Executive Order addresses transshipment concerns by stating that all articles of Canada that do not qualify as originating under the U.S.-Mexico-Canada Agreement (USMCA) and are determined by U.S. Customs and Border Protection (CBP) to have been transshipped to evade these IEEPA tariffs will be subject to: (i) an additional ad valorem rate of duty of 40%, in lieu of this additional 35% ad valorem tariff rate, to goods of the true country of origin; (ii) any other applicable or appropriate fine or penalty; and (iii) any other U.S. duties, fees, taxes, exactions, or charges applicable to goods of the country of origin. CBP will not allow for mitigation or remission of the penalties assessed on imports found to be transshipped to evade applicable duties. There is no stated “savings clause” in the Executive Order that clearly exempts goods loaded onto a vessel at the port of loading and in transit on the final mode of transit as of August 1, 2025.
An Annex to the July 31, 2025 Executive Order sets forth details on the application of the increased duty rates on Canada under chapter 99 of the Harmonized Tariff Schedule of the United States (HTSUS). The stacking rules set out in Executive Order 14289 of April 29, 2025, and any subsequent order or proclamation addressing stacking of tariffs imposed under the IEEPA, continue to apply to imports of Canadian goods subject to these IEEPA tariffs. See Thompson Hine Update of April 29, 2025, for any needed clarification on that application and the “stacking” of tariffs under various IEEPA tariff actions.
Mexico Tariffs. On July 31, 2025, President Trump stated that he was postponing any further action on reciprocal tariffs toward Mexico for another ninety days to allow for continued negotiations. As a result, Mexico’s tariff rate remains unchanged. These rates include: (i) the 25% IEEPA tariff rate on all products of Mexico due to the flow of fentanyl and other opioids across the southern border; (ii) Section 232 tariffs of 25% on automobiles and auto parts; and (iii) Section 232 tariffs of 50% on aluminum and steel products and their derivatives. Products covered under the USMCA are not included in these tariffs.