New Duties on Imports from Canada, Mexico and Increased Duties on Chinese Imports – What Companies Need to Know

An update to our previous alert on new tariffs on Mexican and Canadian imports.

Yesterday, as announced in several early February Executive Orders, the U.S. government imposed new duties on most imports from Canada and Mexico and increased duties on most imports from China by an additional 10 percentage points.

• The tariff on most Canada-origin merchandise is 25%, while the new tariff on energy or energy resources as defined in Executive Order 14156 is 10%.
• The tariff on Mexico-origin merchandise is 25%.
• The 10% tariffs imposed on China-origin merchandise beginning on February 4 have doubled to 20%.

These new tariffs supplement tariffs already in place. While there generally were no tariffs on Canadian and Mexican imports, there were already major tariffs on Chinese imports.

Under March 2 Executive Orders regarding Canada and Mexico, President Trump clarified that – as with the new China tariffs – duty-free de minimis treatment under Section 321 will, for some time, remain available for Canada-origin and Mexico-origin merchandise. The administration has indicated that it will terminate Section 321 treatment of imports from all three countries once the Secretary of Commerce confirms that “adequate systems are in place to fully and expeditiously process and collect tariff revenue applicable pursuant to imports of merchandise eligible for de minimis treatment.”

The statutory basis for these new duties is unprecedented, as it is typically invoked for economic sanctions. We expect parties to challenge the duties’ validity in court.

China has retaliated with additional duties of 10% to 15% on imports of agricultural products from the United States, and also has expanded the list of U.S. companies subject to export controls and other restrictions. Canadian Prime Minister Trudeau announced that Canada is immediately imposing 25% tariffs on more than $20 billion worth of U.S. products, and will impose such tariffs on an additional $86 billion worth of U.S. products in 21 days. Mexico reportedly is considering how and when it will retaliate.