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.
Written on March 6, 2025
United States President Donald Trump issued two executive orders (“EOs”) on March 6, 2025 delaying for thirty (30) days the 25% tariffs imposed against products of Canada or Mexico (10% tariffs for energy products of Canada) pursuant to the International Emergency Economic Powers Act (“IEEPA”). The EOs specifically provide that goods qualifying and entered for preferential treatment under the United States-Mexico-Canada Agreement (“USMCA”), as provided in General Note 11 of the Harmonized Tariffs Schedule of the United States (“HTSUS”), shall not be subject to the previously issued IEEPA tariffs until April 2, 2025. The EOs apply to all such goods entered on or after 12:01 a.m. eastern standard time on March 7, 2025. As a result:
- USMCA qualifying goods will not have to pay the additional IEEPA tariffs at the time of entry from March 7, 2025 through April 2, 2025.
- USMCA-originating goods entered from March 4, 2025 through March 6, 2025 (i.e., three days) remain subject to the IEEPA tariffs.
- All goods that do not meet the USMCA requirements will remain subject to the IEEPA tariffs from March 4, 2025.
- Additionally, IEEPA tariffs on non-USMCA originating potash, a product typically used in fertilizer production, will be reduced to ten percent (10%) effective March 7, 2025.
The EOs indicate that the 1-month suspension serves “to minimize disruption to the United States automotive industry,” which they describe as “a major source of United States employment and innovation and is integral to United States economic and national security.” While the automotive sector is cited as the rationale, the 30 day delay applies to all USMCA qualifying goods.
For non-originating USMCA goods, the IEEPA tariffs on Canada, EO 14193 (Feb. 1, 2025), remain a 10% ad valorem tariff on all non-USMA originating energy products of Canada, and a 25% ad valorem tariff on all other non-USMCA originating products of Canada. Likewise, IEEP tariffs on Mexico, EO 14194 (Feb. 1, 2025) remain a 25% ad valorem tariff on all non-USMCA originating products of Mexico. (For more background information on both EOs, see Update of March 4, 2025.)
Approximately 50% of the imports entering the United States from Mexico and 38% of the imports from Canada claim USMA preferential treatment. A significant amount of non-USMCA originating products from the two countries include energy resources, which typically claim preferential treatment at a later time. However, the United States General Accountability Office (“GAO”) recently determined that $16.5 billion of U.S. imports of automotive vehicles and $53 billion of imports of automotive parts do not claim USMCA preferential treatment. GAO-24-106330, INTERNATIONAL TRADE: USTR Should Improve Coordination on New Automotive Rules of Origin. For automotive vehicles, this is a significant increase from $1.1 billion in the pre-USMCA period, with the overwhelming majority of automotive imports not using USMCA-preferential treatment coming from Mexico. These goods typically use the 2.5% most favored nation (“MFN”) rate, which must now be added to the IEEPA tariffs.
The White House has made no announcement as to the status of the Section 232 steel and aluminum tariffs scheduled to enter into effect on March 12, 2025 (with tariffs on new steel and aluminum derivative products to be announced at potentially a later time). April 2, 2025 marks the planned launch date for President Trump’s broad-based reciprocal tariff plan.
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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