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During his campaign and since being confirmed as the President-Elect, Donald Trump has been vocal about imposing various new tariffs. Many of those proposed actions are now a reality and will be impacting trade costs significantly.
Key Takeaways:
Today we’re going to focus on what we already know about Trump’s tariff policy and what importers can do in anticipation of the changes.
The 30-day hold on President Trump’s executive orders imposing tariffs on Mexico and Canada officially expired as of March 4, 2025.
From this time forward, imports entering from Mexico and Canada to the United States may be charged a 25% ad valorem duty in addition to any standard duties that may be owed.
However, the president has agreed to a tariff break with regard to products that are part of the current U.S.-Mexico-Canada Agreement (USMCA). Examined more closely, that covers about 50% of Mexican imports and 38% of Canadian imports.
Energy-related imports from Canada may still be subject to a slightly lower 10% tariff.
Products from China, which never reached a deal with the U.S. in February, have been subject to a 10% duty rate. As of March 4, that has now been doubled to 20% ad valorem. Importers should also understand that such duties are in addition to current tariffs owed as part of any Section 301 tariffs.
China already imposed counter tariffs on certain products in response to the initial 10% duty increase. After the announcement was made that the rate would increase to 20% ad valorem, further actions were taken.
Officials from Beijing are planning in placing a tariff between 10-15% on various agricultural products, including:
These tariffs are set to take effect on March 10, 2025.
Canada also has a series of tariffs prepared in response, set to 25%, which will take effect in two stages. The first stage of increases was put in place at the same time as the U.S. actions: 12:01 AM March 3.
Based on the information they released in February, the first round of retaliatory tariffs is likely to impact about $21 billion (USD) in products. After 21 days, additional measures targeting another $86.5 billion in products will be imposed as well, if no agreements go into effect.
No official word from Canada has stated whether these measures will be rolled back in light of the agreement with President Trump allowing USMCA products to continue flowing between the nations without paying additional duties.
Imports that contribute to major industries within the United States are likely to be impacted, resulting in potential shortages and increased consumer prices. Oil and petroleum products one import that the U.S. gets from both, but let’s go into some specifics.
Products from Mexico include:
Products from Canada also include cars and automotive parts as well as:
After a request from three major American automakers, President Trump did allow for a one month tariff exclusion on car imports from both countries. According to White House press secretary Karoline Leavit, the exclusion was granted "so they[automakers] are not at an economic disadvantage".
Regardless of product, all importers should be speaking with their customs brokers to confirm product codes and corresponding new tariff amounts to be owed upon entry.
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On February 1, 2025, President Trump moved forward with the proposed tariffs on goods from Mexico, Canada, and China. The tariffs fall in line with his America First Trade Policy and were set to remain in effect indefinitely.
Here’s how the tariffs were initially announced:
No specific HTS code list accompanied any of the three new executive orders, so importers would expect that the import of any product intended for consumption in the U.S. will be subject to the additional tariff.
However, importers should know that tariffs against Mexico and Canada will be delayed at least 30 days. Each nation reached a tentative agreement with the U.S., which has not rescinded the order, but provided further time for negotiations and stabilization.
For importers bringing in goods China the tariffs will still be enforced as of 12:01 am EST on February 4, 2025 on imports either entering the country for consumption or being withdrawn from a bonded warehouse for consumption.
In addition to the ad valorem tariffs being applied to imports from each of the nations, there are other provisions written into the order to provide clarity on specific exceptional situations.
All orders were pushed through as part of a national emergency under the International Emergency Economic Powers Act (IEEPA) and the National Emergencies Act.
Canada, under the direction of Prime Minister Justin Trudeau, initially responded by declaring a matching 25% tariff on two lists of imported American products also set to be enforced on February 4, 2025.
The first list covered beverages, cosmetics, and various paper products with a trade value of $20 billion USD. The second list would have included passenger vehicles, trucks, steel and aluminum products, various types of produce, pork, and dairy products as a start. Trade value for the second list is estimated at $85 billion USD. Like the proposed U.S. tariffs - these remain paused as Canada and the U.S. work to come to a long-standing agreement.
Mexican President Claudia Sheinbaum initially stated in a social media post that her country would also be imposing retaliatory tariffs, but as mentioned, was they were able to reach an agreement with President Trump resulting in enforcement being delayed by one month.
Representatives from the People’s Republic of China (PRC) have responded by announcing they will apply tariffs to several American products and plan to launch an anti-trust investigation into Google, potentially placing a sanction.
Should China move forward with it's counter tariffs, they would take affect Monday, February 10, 2025. The following products would be affected:
Increasing tariffs on U.S. imports was one of Trump's main platforms during the presidential campaign. At that time, he claimed he would impose up to a 60% tariff on imports from China and 10% tariffs on imports from other nations, primarily the EU.
Now, with Trump set to take office in less than two months, he has provided further details on what he plans to enact starting day one, January 20.
On November 25, 2024, Trump posted his proposed tariff plan for Mexico and Canada to his social media site, Truth Social. Among other things it states: “I will sign all necessary documents to charge Mexico and Canada a 25% tariff on all products coming into the United States, [...].”
In a separate post that same day, he addressed plans for China, stating the following: “[...] we will be charging China an additional 10% tariff, above any additional tariffs, on all of their many products coming into the United States of America.”
For those involved in international trade, managing tariffs is nothing new. Tariffs have been imposed on various Chinese products since Trump enacted Section 301 Tariffs against that nation during his last term in office in 2018.
However, the USMCA trade agreement, of which Mexico and Canada make up two thirds, has allowed duty-free trade among the three nations for several years for a wide variety of products and raw materials. The imposition of a tariff here could have wide-reaching consequences.
Let’s take a closer look into each of these situations.
In September 2024, the Biden administration confirmed that section 301 tariffs on various Chinese products would continue. New tariffs and an increase of several existing tariffs also went into effect.
While some businesses have gotten a break through the use of the tariff exclusion process, their availability has significantly decreased.
An additional 10% tariff (on top of existing tariffs) could drive the import price of products past the point of profitability with current pricing. That leaves businesses with three possible solutions:
With trade relations between the two nations already tense, it may also be the final straw for certain companies to move production and sourcing out of China entirely. Importers able to benefit from a current tariff exclusion (likely because the product simply can’t be reliably sourced outside of China) will have far fewer choices.
Supply chain disruptions as new sources are confirmed and set up are also a strong possibility.
Related: How to Calculate Import Duties and Taxes From China to the US
Since 2023, Mexico has enjoyed the benefits of being the USA’s number one trade partner. Businesses on both sides of the border have benefited from the nearly free trade policies.
A 25% tariff on incoming products would be in direct contradiction to the USMCA. However, there are several other questions we’re still left with.
It’s impossible to truly predict how businesses, not to mention the Mexican government, would respond. However, trade in the following industries would likely feel the greatest impact:
The steel industry has already faced some of these issues. Section 232 tariffs on steel and aluminum were recently raised in response to abundant amounts of foreign materials from countries (such as China) exporting to Mexico in an attempt to bypass heavy anti-dumping duties imposed elsewhere.
Most recently, though, a flat 25% tariff on steel and aluminum imports were added, removing exceptions for Mexico and Canada.
Related: Import Costs From Mexico
Like Mexico, Canada has benefited from USMCA provisions that allow it to trade freely with its southern neighbors.
While not the manufacturing powerhouse that Mexico is becoming, Canada exports abundant amounts of oil to both nations. After expanding its pipeline, the U.S. on average imports 4 million barrels of crude oil per day, with most traveling to domestic refineries.
In terms of commodities, Canada is also a top source of lumber, meat, grains, and electronics. Since both countries share similar production, quality standards, and a common language, trade in these and most other commodities is often simpler. The extensive land border also tended to make shipping less expensive.
An additional 25% tariff doesn’t remove those benefits, but it also makes them far less profitable. While the USD is stronger than the Canadian Dollar, it’s hardly a built-in profit margin when compared to Mexican Pesos (as an example). Not to mention, labor costs in Canada are similar to that of the U.S., so manufactured imports also takes a hit.
Related: How Much Does it Cost to Import Goods From Canada?
As we mentioned at the start, these tariff proposals are just that: proposals. Until President-Elect Trump is officially in office, nothing can happen. Of course, that doesn’t mean you shouldn’t prepare for it.
We suggest taking time to do the following:
No matter what happens with Trump’s tariff policy changes, your business will benefit from your active interest and beneficial partnerships with trade professionals.
At USA Customs Clearance, we want to see your import business ventures succeed. We’ll be following these potential tariff changes ourselves, and our export customs agents are staying informed so they’re ready to help when you need it.
Have more questions? Schedule a 1-on-1 consultation with one of our customs experts and get the answers you’re looking for.
Call us directly at (855) 912-0406 to get started, or send us a direct mention through our online contact form.
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