On February 1 2025, President Trump issued Executive Orders imposing tariffs on imports from Canada, China and Mexico. These tariffs are effective at 12:01 am Eastern Time (ET), February 4, 2025 with the President invoking authority principally under the International Emergency Economic Powers Act (IEEPA) and referencing section 301 of the Trade Act of 1974.
The following tariffs will be in addition to any other applicable duties, fees and charges:
- The tariffs will be 25% on all products of Canada, except for Canadian ‘energy or energy resources,’ which will have a 10% tariff.
- The term “energy” or “energy resources” means 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).
- The tariffs will be 25% on all products of Mexico.
- The tariffs will be 10% on all products of China in addition to the current Section 301 tariffs
“Products of” Canada, Mexico and China will be defined in a separate Federal Register notice by the Department of Homeland Security when it creates additional Harmonized Tariff Schedule of the United States provisions to apply these tariffs. The United States may increase or expand in scope the tariffs if a country retaliates.
Application To Existing Programs
Goods admitted into a Foreign Trade Zone (FTZ) must do so under privileged foreign status and will be subject to the additional duty upon entry into the commerce of the US effective February 4. There is an exception for goods entered into an FTZ under ‘domestic status.'”
There will be no duty drawback allowed for the additional duties paid. There will be no section 321/de minimis (less than $800) shipments allowed for products of Canada, Mexico or China.
Exceptions
If shippers can certify that goods were on the vessel or in transit on the final mode of transport by 12:01 am ET on February 1, 2025, and entered for consumption or withdrawn from warehouse for consumption on or after 12:01 am ET February 4, the goods will not be subject to the tariffs.
The duties do not apply to the personal communications which do not involve a transfer of anything of value, donations (expect those that may be covered under 50 USC 1701) informational materials, any transactions ordinarily incident to travel to or from any country.
The trade is seeking clarification as to whether the duty-free base rate for goods qualifying for FTA preference will be impacted and whether chapter 98 goods are excluded from the additional tariffs. There is no mention of an exclusion process.
Canada Retaliatory Tariffs
On February 1, Canada announced its retaliatory tariffs of 25% on $155 Billion on US goods, with tariffs of $30 billion going into effect on February 4, and the remainder to go into effect in 21 days to allow Canadian companies time to adjust and ships goods. These US goods include products such as orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper effected on February 4. The remainder of US goods includes products such as passenger vehicles and trucks, including electric vehicles, steel and aluminum products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles, and recreational boats.
It is not known how Mexico and China will respond, but more retaliatory tariffs are anticipated – possibly announced today. The US may increase Canadian imports again according to the Executive Order.
Mohawk Global will continue to monitor developments related to the Executive Orders and provide updates as more information becomes available. We are here to help in navigating tariff updates and leveraging duty mitigation strategies – reach out today.