Key Updates
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At 10:30am on Feb. 3, Mexican President Claudia Sheinbaum announced on X that the Mexico tariffs will be paused for one month. She stated that the United States and Mexico had come to an agreement relating to Mexico’s reinforcement of the northern border and the United States’ actions to prevent trafficking of high-powered weapons to Mexico. No official document regarding the pause is available yet from either country.
Summary
On February 1, President Trump signed executive orders imposing additional tariffs on Canada, Mexico, and China under the International Emergency Economic Powers Act (IEEPA) in response to an emergency declared at the border related to fentanyl, drug trafficking, and illegal immigration concerns. As to Mexico, the order provides the following:
- Legal basis: International Emergency Economic Powers Act (IEEPA)
- Rate: The order confirms 25% on “all articles that are products of Mexico” as defined in a forthcoming Federal Register (FR) notice.
- Timing: The tariff applies to “goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern time on February 4, 2025, except that goods entered for consumption, or withdrawn from warehouse for consumption, after such time that were loaded onto a vessel at the port of loading or in transit on the final mode of transport prior to entry into the United States before 12:01 a.m. eastern time on February 1, 2025, shall not be subject to such additional duty, only if the importer certifies to CBP as specified in the Federal Register notice.”
- Other important details:
- The order confirms that rates are cumulative with all other tariffs that would apply to the imported goods, including the existing Section 301 tariff action as applicable to any specific good. Section 2(b).
- No de minimis treatment will be available for shipments under $800 under 19 USC 1321. Section 2(g).
- No drawback will be available for these duties (but drawback is otherwise still available). Section 2(f).
- Duty inversion benefits will not be available for the duties under this order with respect to merchandise entered into the United States from foreign trade zones. Section 2(e).
- No exclusions/exemptions, including for USMCA originating goods, except a very narrow category of items expressly exempted from the President’s authorities under IEEPA in 50 USC 1702(b). Those items include communications, donations intended to relieve human suffering, certain “informational materials,” and “transactions ordinarily incident to travel” like personal baggage. Section 2(i).
- The order also states that if Mexico retaliates, “the President may increase or expand in scope the duties imposed under this order to ensure the efficacy of this action.” Section 2(c).
Retaliatory Actions
2/3: Over the weekend, President Sheinbaum had announced on X that the Economy Minister should implement the “Plan B” retaliation measures. Given the U.S.-side pause, we assume Mexico’s retaliation is paused as well.
2/2: Mexico has announced retaliation against the U.S. action. Specifically, President Sheinbaum announced on X that the Economy Minister should implement the “Plan B” retaliation measures. Everyone is awaiting details, which may not come until Tuesday as Monday is a federal holiday in Mexico.
Additional Documentation
