For more insights and analysis from Cleary lawyers on policy and regulatory developments from a legal perspective, visit What to Expect From a Second Trump Administration.
On February 1, President Trump issued executive orders announcing sweeping tariffs on products of Canadian, Mexican, and Chinese origin. As discussed in our previous publication, effective February 4, all products of Chinese origin became subject to an additional 10% tariff pursuant to these orders, while the imposition of tariffs on products of Canadian and Mexican origin were delayed by one month after President Trump reached last-minute agreements with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum to delay the tariffs during ongoing negotiations.
Those delays expired on March 4. Accordingly, effective March 4, all products of Mexican and Canadian origin were subject to an additional 25% tariff – with the exception of “energy resources”[1] of Canadian origin, which are subject to an additional 10% tariff. Additionally, President Trump announced that, effective March 4, all products of Chinese origin are now subject to an additional 10% tariff, raising the tariff rate introduced on February 4 from 10 to 20%. On March 3, U.S. Customs and Border Protection (“CBP”) released for public inspection three Federal Register notices to implement the tariffs on Canadian-, Mexican– and Chinese-origin products. However, on March 6, President Trump announced that he had reached agreements once again with Mexican President Sheinbaum and with the Canadian government to delay the additional tariffs on most, but not all, Mexican- and Canadian-origin products, this time until April 2. Under the terms of the agreements, all Mexican- and Canadian-origin products that qualify for preferential treatment under the U.S.-Mexico-Canada Agreement (“USMCA”) are exempt from the 25% tariff until April 2.[2]
None of the March 3 Federal Register notices reference any potential exclusions from the tariffs or any forthcoming possibility to request product-specific exclusions.[3] CBP has clarified that the duties will apply in addition to all existing duties, and that the tariffs apply to Canadian- and Mexican-origin products notwithstanding application of the USMCA; although, as noted, the products that qualify under the USMCA are now exempt from these tariffs until April 2. As such, all products of Canadian- or Mexican-origin that do not qualify under the terms of the USMCA are subject to the additional tariffs. Also, all Chinese-origin products already subject to Section 301 duties are now also subject to an additional 20% tariff, which means that many Chinese-origin products are now subject to up to 45% additional tariffs on top of general rates of duty. Other tariffs, including existing and upcoming Section 232 duties on steel and aluminum, will likewise stack on top of the new tariffs on Canadian-, Mexican-, and Chinese-origin products.
Although no formal exclusion process or product-specific exclusions were introduced to these new tariffs (aside from the temporary delay for products qualifying under the USMCA), CBP provided certain exemptions for specific circumstances. The key exemptions include products for personal use, U.S. goods returned (and similar Harmonized Tariff Schedule of the United States, chapter 98 provisions), certain donations, and informational materials. Given that these new tariffs have been imposed on a country-specific basis, importers should consider taking steps to ensure that the country of origin of imported products is correct. Exceptions to these tariffs and potential mitigation measures are discussed in greater detail in Section II and III of our previous publication.
Canada has retaliated, imposing 25% tariffs on $30 billion worth of U.S.-origin products immediately. Plans to expand these tariffs to another $125 billion worth of U.S.-origin products in 21 days have been delayed following President Trump’s pause on tariffs on Canadian-origin products qualifying under the USMCA. China has retaliated with tariffs on U.S.-origin farm products and trade and investment restrictions on certain U.S. companies.
Cleary’s international trade team is continuing to track developments on the Trump administration’s tariff policy, and is available to provide guidance on navigating the impact of the new tariffs on China, Canada, Mexico.
[1] “Energy resources,” as defined in section 8 of Executive Order 14156, include “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).”
[2] Additionally, any potash imported from Canada or Mexico that falls outside the USMCA preference will be subject to an additional 10% tariff, the same rate applied to Canadian-origin energy imports.
[3] Note, however, that President Trump initially granted a one-month reprieve from the 25% tariffs on Mexican-origin products to automakers who imported cars and parts through the USMCA on March 5 (this reprieve has since been subsumed by the general pause on tariffs for Mexican-origin goods subject to the USMCA).