U.S. Implements Threatened Tariffs on Canada, Mexico and China

U.S. President Donald Trump announced on March 3, 2025, that the tariffs he threatened under the International Emergency Economic Powers Act (IEEPA), which were delayed from an earlier Feb. 4 effective date, would enter into force on Tuesday, March 4. For a detailed analysis of the previously threatened IEEPA tariffs, see Holland & Knight's alert, "An Overview of IEEPA Duties on Canada, Mexico and China," Feb. 4, 2025.

Effective at 12:01 a.m. ET on March 4, all goods arriving at U.S. ports and originating from Canada or Mexico are subject to 25 percent tariffs. Certain Canadian energy resources are subject to a lower 10 percent tariff.

All goods presented for entry at U.S. ports and originating from China, including Hong Kong, are subject to a 10 percent tariff. This is in addition to the 10 percent tariff on Chinese imports that was effective on Feb. 4.

Chinese goods entered into the U.S. for consumption between Feb. 4 at 12:01 a.m. ET and March 7 before 12:01 a.m. ET may not be subject to these tariffs if they were loaded onto a vessel at the port of loading, as well as those goods that were in transit on the final mode of transport prior to entry into the United States before 12:01 a.m. ET on Feb. 1.

China, Canada and Mexico account for more than 40 percent of imports into the U.S. and they are the top three export markets in the U.S. All have announced retaliatory measures against U.S. exports.

China announced tariffs on some U.S. goods, effective March 10. China's retaliatory measures include a 15 percent tax on U.S. chicken, wheat, corn and cotton and a 10 percent tariff on U.S. sorghum, soybeans, pork, beef, fruits, vegetables, dairy and fish products. China also filed another lawsuit against the U.S. in the World Trade Organization, as it did when the first 10 percent tariffs were imposed on its imports into the U.S. on Feb. 4. China added 10 U.S. companies to its unreliable entities list and 15 to its export controls list. These companies mostly operate in the defense and intelligence space. China has published additional information on its retaliatory tariff list.

Canada announced 25 percent tariffs on 30 billion Canadian dollars (approximately $20.7 billion) in goods imported from the U.S., effective immediately. Canada plans to impose 25 percent tariffs on another $CA125 billion on U.S. imports within 21 days if the U.S. tariffs are not withdrawn. Canada is also considering non-tariff measures, potentially relating to North American security and energy security. Canada has published its retaliatory tariff list.

Mexican President Claudia Sheinbaum stated on March 4 that there is no justification for President Trump's 25 percent tariffs on imports from Mexico. She announced that her government will respond with both tariff and non-tariff measures, which will be formally unveiled on Sunday, March 9.

Analysis

These tariffs are assessed on all goods presented at U.S. ports, regardless of when they were loaded. The tariffs do not apply to products entering through the de minimis exemption, for goods with a declared value of less than $800 and shipped directly to the U.S. consumer.

The Trump Administration has provided no exemption or exclusion process, nor any indication of what constitutes sufficient action by these countries to address the entry of fentanyl and illegal immigrants, the basis for President Trump invoking IEEPA to impose these tariffs.

No duty drawback is available upon the export of Canadian-, Mexican- and Chinese-origin products. Further, these products must be entered into Foreign Trade Zones as "privileged foreign status," meaning the merchandise is classified and appraised, with duties and taxes determined as of the date the application is filed.

Additional Reciprocal Tariffs?

President Trump issued a memorandum on Feb. 13, 2025, announcing his administration's intention to impose reciprocal tariffs.

U.S. Department of Commerce Secretary Howard Lutnick indicated that the U.S. may impose reciprocal tariffs, in addition to the March 4 IEEPA tariffs, on Canada and Mexico.

The U.S. is currently conducting an investigation into unfair trade or non-reciprocal foreign trade practices. The U.S. Trade Representative (USTR) is soliciting comments from the public to inform the investigation. The deadline for submitting comments is March 11, 2025.

For a closer look at the administration's memo on reciprocal tariffs and the fast-approaching comment deadline, see Holland & Knight's previous alert, "USTR Seeks Public Comment on Unfair and Non-Reciprocal Foreign Trade Practices," March 3, 2025.

For more information or questions, please contact the authors or another member of Holland & Knight's Tariff Task Force.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.