President Trump Imposes 25% Tariffs on Canada and Mexico, and 10% Tariffs on China

Alert

02 February 2025

9 min read

On February 1, 2025, President Trump issued three executive orders directing the United States to impose new tariffs on imports from Canada,¹ Mexico,² and China,³ to take effect on February 4, 2025.⁴ The tariffs are an additional 25% ad valorem rate of duty on imports from Canada and Mexico and 10% on imports from China. The tariffs will apply to all imports except Canadian energy resources exports, which will face a 10% tariff instead. The tariffs apply to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Standard Time on February 4, 2025. Goods already in transit to the United States before to 12:01 a.m. on February 1, 2025 (the day Trump issued the executive orders) are exempt from the tariffs. The executive orders also suspend access to the Section 321 customs de minimis entry process, subjecting shipments below US$800 (which are often e-commerce retail shipments) to the tariffs.

The tariffs will remain in effect indefinitely, until the president decides to remove them. Further tariff increases – by the United States and the target countries – are possible over the next few weeks. The orders state that the president may raise the tariffs further if Canada, Mexico, and China retaliate. All three countries have signaled their intention to retaliate.

Canada tariffs

Tariff rate: The additional tariffs for imports from Canada will be 25% ad valorem. The new tariffs will apply in addition to any other duties, fees, exactions, and charges applicable to the covered imports. “Energy or energy resources” imported from Canada will be subject to a lower tariff rate of 10%, instead of the 25% tariff. However, the reprieve may be temporary. Trump has said he intends to increase tariffs on oil and gas in mid-February.
Products covered: The president’s order does not include a full list of covered Harmonized Tariff Schedule of the United States (HTSUS) codes. The order’s references to the tariffs covering “all articles” suggests the 25% tariff would apply to all merchandise imported for consumption, other than “energy or energy resources.” “Energy or energy resources” is defined based on Trump’s January 20 National Energy Emergency Executive Order, which states that “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.”⁵ The term “critical minerals” is further defined as any non-fuel mineral, element, substance, or material designated as critical by the Secretary of the Interior, who has published a comprehensive list.⁶ Full details of the covered HTSUS codes and the new HTSUS chapter 99 special tariff number will likely be included in a technical annex either when the government publishes the president’s order to the Federal Register or in a follow-up Federal Register notice by the Department of Homeland Security (DHS).

Mexico tariffs

Tariff rate: The additional tariffs for imports from Mexico will be 25% ad valorem. The new tariffs will apply in addition to any other duties, fees, exactions, and charges applicable to the covered imports. Unlike Canada, there is no reduced tariff rate for energy or energy resources imported for Mexico.
Products covered: The president’s order does not include a full list of covered HTSUS codes. The order’s references to the tariffs covering “all articles” suggests the tariffs would apply to all merchandise imported for consumption. Full details of the covered HTSUS codes and the new HTSUS chapter 99 special tariff number will likely be included in a technical annex either when the government publishes the president’s declaration to the Federal Register or in a follow-up Federal Register notice by DHS.

China tariffs

Tariff rate: The additional tariffs for imports from China will be 10% ad valorem. The new tariffs will apply in addition to any other duties, fees, exactions, and charges applicable to the covered imports.
Products covered: The president’s order does not include a full list of covered HTSUS codes. The order’s references to the tariffs covering “all articles” suggests the tariffs would apply to all merchandise imported for consumption. Full details of the covered HTSUS codes and the new HTSUS chapter 99 special tariff number will likely be included in a technical annex either when the government publishes the president’s declaration to the Federal Register or in a follow-up Federal Register notice by DHS.
Application to Hong Kong and Macau: The additional tariffs appear to apply only to products classified as originating from the People’s Republic of China (ISO Country Code CN). There is no indication in the executive order that the duties would apply to goods that originate in Hong Kong (HK) or Macau (MO).

Consistent language across all three executive orders

Entry into force: The tariffs apply to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Standard Time February 4, 2025. The orders provide an exception for some goods that are already in transit, stating imports that were loaded onto their final mode of transit before entering the United States prior to 12:01 a.m. on February 1, 2025 are exempt.
Customs de minimis entry: The orders suspend access to the Section 321 customs de minimis entry process. Prohibiting these import shipments from de minimis entry would subject them to the applicable tariff, as well as more costly entry filing processes.
Exclusions for certain personal, travel, charity, and media products: The executive orders state that the tariffs will exclude any merchandise encompassed by 50 U.S.C. § 1702(b).⁷ The provision prohibits IEEPA-based actions from regulating or prohibiting, directly or indirectly, (1) personal communications, (2) donated articles, (3) informational materials, and (4) transactions ordinarily incident to travel.
Duty drawback: The orders state that “no drawback shall be available with respect to the duties imposed pursuant to this order.”
US Foreign Trade Zone implications: The orders state that goods subject to the additional tariffs and admitted into a US foreign trade zone (FTZ) on or after 12:01 a.m. Eastern Standard Time on February 4, 2025 may only be admitted in “privileged foreign status.” Upon entry for consumption from the FTZ, such a product would be subject to the rates of duty related to the classification under the applicable HTSUS subheading in effect at the time of admittance into the FTZ.
Temporary importation under bond: The initial orders make no references to changes in treatment of merchandise entered through temporary importation under bond (TIB) programs in HTSUS chapter 98. More information may be provided in the forthcoming technical annexes. Past Trump administration actions, such as the China Section 301 tariffs and the steel and aluminum Section 232 tariffs, have allowed importers to continue using TIB (though the bonded amount would now have to account for the higher duty rate).
Further guidance: US Customs and Border Protection (CBP) will provide additional technical guidance after receiving instructions from the president, including for the certification process importers will need to use for the goods in transit exception. The compressed timeline for implementation makes it possible that the importers will be obligated to pay the tariffs before the government can issue full technical instructions.

Other potential tariff actions

Businesses should anticipate continued escalation in the coming days and weeks as Canada, Mexico, and China are all likely to retaliate against the United States. Trump’s executive orders indicate that the United States may raise its tariffs further if the targeted countries retaliate. Additionally, Trump has recently raised tariff threats against other economies, including the European Union and BRICS member countries (Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates). Beyond country-specific tariffs, Trump has also suggested the possibility of new global tariffs on semiconductors, pharmaceuticals, oil, steel, aluminum, and copper.

These actions illustrate Trump’s willingness to use tariffs aggressively to pressure other countries over various policy disputes that extend beyond traditional trade policy concerns, regardless of the economic and diplomatic costs. Historically, the United States, including during Trump's first term, has typically reserved the use of tariffs for trade disputes. However, Trump is now adopting an expansive approach, treating tariffs as a universal tool to address any foreign policy dispute. Free trade agreement (FTA) partners will not be immune from these actions, raising questions about the reliability of any trade commitments made by the United States, including those made under the United States-Mexico-Canada Agreement (USMCA).

International Emergency Economic Powers Act

Trump is using the International Emergency Economic Powers Act (IEEPA) as the basis for the tariff orders. Though no US president has ever used IEEPA to impose tariffs, policy advisors close to Trump have argued the law’s extensive authorities could allow the president to rapidly implement tariffs with less need for investigations or oversight. With few procedural limits around the use of IEEPA, Trump can escalate conflicts very suddenly, as he did in this case.

The scope of the authority spelled out in IEEPA is broad, allowing the president to “regulate […] any […] importation […] of, or dealing in, […] or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States” in response to national emergencies. IEEPA does not require investigations or reports before implementing trade restrictions, unlike Section 301, Section 232, and Section 201. To use IEEPA, the president declares a national emergency under the National Emergencies Act (NEA) and then exercises discretionary authority under IEEPA, which may involve imposing import tariffs. A national emergency can be based on a threat to the US national security, foreign policy, or the economy. Presidents have typically used the law to impose sanctions on US adversaries. The scope and breadth of such emergencies has evolved over time to cover more expansive issues. For the February 1 tariff orders, Trump is asserting that fentanyl smuggling and irregular migration are the relevant national emergency.

_{1 Executive Order of February 1, 2025:}_{“Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border.}_{”
2 Executive Order of February 1, 2025: “Imposing Duties to Address the Situation at Our Southern Border” (unpublished).
3 Executive Order of February 1, 2025: “Imposing Duties to Address the Synthetic Opioid Supply Chain in the People's Republic of China” (unpublished).}
_{4 See also, the White House fact sheet on the announcement, “}_{President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico and China,}_{” February 1, 2025.
5 Executive Order 14156 of January 20, 2025, “}_{Declaring a National Energy Emergency}_{,” 90 FR 8433.
6 “}_{2022 Final List of Critical Minerals}_{,” 87 FR 10381 (February 24, 2022).}
₇_{50 U.S.C. §1702(b)}_.

_{White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.}

_{This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.}