New Tariffs on Imports from Canada, Mexico, and China: What You Need to Know

President Trump has issued three executive orders imposing new tariffs on imports from Canada, Mexico, and China effective February 4th. Canada has responded with retaliatory tariffs on imports from the U.S. On February 3^rd, the U.S. and Mexico reached a deal to delay the start of U.S. tariffs for one month.

The de minimis exception for tariffs applied to small import shipments of less than US$ 800 has also been suspended. This exemption has been used frequently by online retailers, particularly in China, to sell products into the U.S. duty-free.

U.S. Tariffs on Imports from Canada

Tariff rate: 25%, effective February 4th on almost all imports from Canada.
There is an exception for “energy or energy resources” imported from Canada. These will be subject to a lower tariff rate of 10%. However, Trump has also stated that tariffs will be increased on oil and gas from Canada, as soon as later this month. “Energy or energy resources” is defined as crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, and critical minerals. A list of critical mineral has been published by the Department of the Interior.

Canadian Tariffs on Imports from the U.S.

Two tranches of 25% tariffs, the first effective February 4 and the other going into effect 21 days later.
The initial target for the tariffs is a wide range of consumer products, including: food, cosmetic, hygiene and toiletry products, tires, clothing, footwear, accessories, wood and paper products, household appliances, glassware, flatware and utensils, and other consumer products.
The second round of products will be broader, and include cars, steel, aluminum, and a wide range of agricultural products.
Canadian importers may apply for refunds if inputs cannot be sourced within Canada or if there will be “severe adverse impacts on the Canadian economy.”

U.S. Tariffs on Imports from Mexico

Tariff rate: 25% on all imports from Mexico.
No reduced tariff rate for energy imports from Mexico.
Mexico was reportedly planning tariffs on steel, aluminum, and food imported from the U.S., although an agreement has postponed the onset of U.S. tariffs and Mexican retaliatory tariffs.

U.S. Tariffs on Imports from China

New Tariff Rate: 10% on all imports from China. The new tariffs will apply in addition to any other customs duties and other fees applicable to the imports from China.
Hong Kong/Macao Exempt: Under the executive order, the tariffs do not appear to apply to products from Hong Kong or Macao.

Rationale for Tariffs

The executive orders state the president is imposing the tariffs under the broad powers granted to him under the International Emergency Economic Powers Act (IEEPA) and in response to drug smuggling (particularly fentanyl) from the countries targeted, as well as in response to illegal immigration.

Other Tariff Measures Coming

The executive orders state that the US will apply tariffs further if the targeted countries retaliate. In addition, Trump has discussed raising tariffs against the E.U., Brazil, Russia, India, Indonesia and various countries in the Middle East and Africa. In additional Trump has proposed tariffs on semiconductors, pharmaceuticals, oil, steel, aluminum, and copper imported from all countries.