CUSBA wants to keep you informed on fast-moving developments. CUSBA’s newest Board Member, Dan Ujczo of Thompson Hine, has provided an update. More details are shared below.
IEEPA Tariffs Against Canada and Mexico to Enter in Force March 4, 2025; IEEPA Tariffs Against China to Increase to 20% (and may be retroactive to February 4); Canada to Immediately Retaliate
Written on March 3, 2025
The Trump Administration has issued a triad of trade actions designed to advance tariffs against Canada and Mexico and increase tariffs against China effective March 4, 2025, all arising from declared national emergencies at U.S. borders and implemented pursuant to the International Economic Emergency Powers Act (IEEPA), 50 U.S.C. 1701 et seq. We will provide ongoing updates, as always, at SmarTrade SmarTrade | Thompson Hine | Timely Updates on International Trade, but here is the latest:
Specifically, U.S. Customs and Border Protection (US-CBP) has issued draft Federal Register notices (to be published March 6, 2025) Notice of Implementation of Additional Duties on Products of Canada Pursuant to the President’s Executive Order 14193, Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border 2025-03664.pdf and Notice of Implementation of Additional Duties on Products of Mexico Pursuant to the President’s Executive Order 14194, Imposing Duties to Address the Situation At Our Southern Border 2025-03665.pdf that confirm the implementation of the following IEEPA tariffs effective March 4, 2025:
- Ten percent (10%) ad valorem tariffs on energy and energy resources from Canada, defined in the accompanying annex 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 defined by 30 U.S.C. 1606(a)(3)”,
- Twenty five percent (25%) ad valorem tariffs on other products of Canada, and
- Twenty five percent (25%) ad valorem tariffs on products of Mexico.
Additionally, the White House issued an Executive Order Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China that increased the current IEEPA duties on all products of China from ten percent (10%) to twenty percent (20%). Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China – The White House While the Trump Administration’s recent statements suggest the increase is to take effect March 4, 2025, the plain language of the Executive Order indicates that the 20% will be retroactive to February 4, 2025. We anticipate clarification on this issue from the Administration.
All of the relevant IEEPA actions continue to allow for Section 321 de minimis treatment (aka the “$800 dollar” rule) for products of Canada, China and Mexico but such treatment “shall cease to be available for such articles upon notification by the Secretary of Commerce to the President that adequate systems are in place to fully and expediently process and collect tariff revenue” for such goods.
Additionally, the only articles expressly excluded from the ad valorem duties at this time include those listed under IEEPA’s 50 U.S.C. section 1702(b) such as “postal, telegraphic, telephonic, or other personal communication[s], which do[] not involve a transfer of anything of value”, “donations, by persons subject to the jurisdiction of the United States, of articles, such as food, clothing, and medicine, intended to be used to relieve human suffering”, “informational materials, including but not limited to, publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds” and “any transactions ordinarily incident to travel to or from any country, including importation of accompanied baggage for personal use.”
HTSUS Chapter 98 “Special Classifications” will continue to apply and potentially exempt certain articles from tariffs EXCEPT updated valuation rules will apply to various goods fabricated in the U.S. and assembled abroad (9802.00.80), metal goods exported for further processing and returned (9802.00.60) and manufactured articles exported for repairs and alterations (9802.00.40-.50). As many of these “Chapter 98s” have not been regularly used in the duty-free environment of the United States-Mexico-Canada Agreement (USMCA), companies may want review Chapter 98 to determine potential eligibility.
Companies meanwhile must review the Federal Register notices and accompanying annexes to comply with the customs entry procedures including using the new Chapter 9903.01.01-.03 (products of Mexico) and Chapter 9903.01.10-13 (products of Canada) for the entry of such goods. As a result, all products of Mexico and Canada (except those expressly excluded by IEEPA as noted above) must be entered under these new HTSUS codes, effective March 4, 2025. The Annexes further provide:
- Country of origin shall be determined using the standards provides in 19 CFR part 102 (as is the customary) and the last place of substantial transformation.
- All USMCA originating goods are subject to the IEEPA tariffs.
- The IEEPA tariffs are in addition to any other general duties, special duties including antidumping/countervailing duties (AD/CVD), Section 301, Section 232, or other taxes, fees and charges.
- All goods entering foreign trade zones (FTZs) on or after 12:01 am EST on March 4, 2025 must enter under “privileged foreign status” unless otherwise eligible to enter under “domestic status.”
- Duty Drawback will not be available for the tariffs imposed pursuant to IEEPA.
The Annexes do not provide specific HTSUS codes for energy or energy resources products and apply the definition used in Executive Order 14156 Declaring a National Energy Emergency. HTSUS Chapter 27 products such as crude oil and natural gas fall within the plain language of the definition; however, “refined petroleum products” may be subject to further interpretation.
President Trump will present the State of the Union on March 4, 2025. While the IEEPA tariffs will be in effect, this speech to the joint session of Congress may reveal the President’s overall plan for tariffs and potentially provide “off ramps.” We also anticipate the launch of public consultations regarding USMCA will occur this week and further guide North American trade.
Mexico and Canada continue to be surprised by the implementation of the tariffs given the significant security progress at the border. The Prime Minister of Canada has issued a statement indicating that its responsive measures will issue immediately after the IEEPA tariffs enter into effect. Statement by the Prime Minister on unjustified U.S. tariffs against Canada | Prime Minister of Canada The first tranche of retaliatory tariffs of just over CAD 33 billion is available List of products from the United States subject to 25 per cent tariffs effective February 4, 2025 – Canada.ca with the remainder of the CAD 155 billion to follow in twenty-one (21) days (March 25). Canada previously launched a remission process (i.e., an exclusion process) in other matters and details will follow. Process for requesting remission of surtaxes that apply on certain goods from China – Canada.ca
Mexico has not formally indicated its planned response, and all intelligence is that Mexico is unlikely to retaliate at this time.
Key dates:
March 4, 2025
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- IEEPA Tariffs on Mexico and Canada Enter into Force; Increase in IEEPA China Tariffs
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- State of the Union
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- Canada’s Announcement of Retaliation
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- Potential Launch of USMCA Public Consultations by USTR
March 9, 2025
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- Liberal Party Leadership Elections in Canada
March 11, 2025
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- Close of Public Comments on Reciprocal Tariffs / Non-Tariff Barriers by USTR
March 12, 2025
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- Steel and Aluminum Tariffs Scheduled to Enter into force pursuant to Section 232
March 24, 2025
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- Close of Public Comments re: Section 301 China Maritime, Logistics and Shipbuilding Dominance by USTR
April 1, 2025
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- America First Trade Policy Memorandum Reports Due
April 2, 2025
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- Reciprocal Tariffs
CUSBA encourages the countries involved to work diligently towards addressing their shared concerns with the borders, to avoid what could be self-destructive actions aimed not at our adversaries, but at long-time friends and allies.
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