New Tariffs on China, Ordered Tariffs on Canada and Mexico Paused until March 4th

On February 1, 2025, the White House issued unprecedented, broad tariffs on products of Canada, Mexico, and China. This is a dynamic and fluid situation, as the governments of Canada and Mexico have obtained a one-month delay in these tariffs by committing troops and funding to border security, which remains subject to the White House’s ongoing review.  The government of China has announced responsive tariffs on American products.

In the United States, tariffs are collected by U.S. Customs and Border Protection from the importer of record, which is the party that owns or has purchased the products being imported.  The importer of record is responsible for properly declaring the value, classification, and country of origin of entered products, as well as paying duties, taxes and other fees.

Summary of New Chinese Tariff Order

The White House issued an executive order imposing a 10% ad valorem tariff on all imports from China. Effective February 4, 2025, this new tariff applies in addition to all other tariffs and duties that may be applied under existing tariff regulations, such as those imposed on Chinese-origin steel and aluminum.

• The tariff applies to all products of China. Country of origin is primarily determined through use of materials originating in a country or through substantial transformation in the country which results in a tariff classification shift.
• Chinese products that were in-transit and 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, are exempt from these tariffs.
• Importers cannot utilize standard available exceptions, including the de minimis threshold for small-value shipments.
• Chinese products moving into a U.S. foreign trade zone are not subject to the ad valorem tariff but rather the applicable Harmonized Tariff Schedule (HTS) rate for the products. Chinese products admitted into a U.S. foreign trade zone on or after 12:01 a.m. Eastern Time on February 4, 2025, must be admitted as “privileged foreign status” as defined in 19 CFR 146.41. These products will be subject to the ordinary rates of duty charged according to the HTSUS subheading classification at the time of admittance into the U.S. foreign trade zone.
• Importers cannot receive a refund of the 10% duty upon exporting the product out of the United States.
• These tariff rates are subject to review and may be escalated to counter any responsive tariffs imposed on U.S. products by Chinese authorities.
• The full text of the executive order is available on the White House’s website and will be published with additional specifications in the Federal Register. https://www.whitehouse.gov/presidential-actions/2025/02/imposing-duties-to-address-the-synthetic-opioid-supply-chain-in-the-peoples-republic-of-china/

Summary of Canadian and Mexican Tariff Order

The White House issued an executive order imposing a 25% ad valorem tariff on all imports from Canada and from Mexico. Energy resources from Canada will be subject to a lower 10% tariff instead of the standard 25%.  As noted above, these tariff orders are delayed for further negotiations, but are currently set to become effective March 4, 2025.

• The tariff applies to all products with the country of origin determined to be Canada or Mexico. Country of origin is primarily determined through use of materials originating in a country or through substantial transformation in the country which results in a tariff classification shift.
• Once effective, importers cannot utilize standard available exceptions, including the de minimis threshold for small-value shipments.
• Products moving into a U.S. foreign trade zone are not subject to the ad valorem tariff but rather the applicable Harmonized Tariff Schedule (HTS) rate for the products. Affected products admitted into a U.S. foreign trade zone on or after 12:01 a.m. Eastern Time on March 4, 2025, must be admitted as “privileged foreign status” as defined in 19 CFR 146.41. These products will be subject to the rates of duty related to their classification under the applicable HTSUS subheading at the time of admittance into the U.S. foreign trade zone.
• Importers cannot receive a refund of the 25% tariff upon exporting the product out of the United States.
• The full text of the executive order is available on the White House’s website and will be published with additional specifications in the Federal Register. https://www.whitehouse.gov/presidential-actions/2025/02/imposing-duties-to-address-the-flow-of-illicit-drugs-across-our-national-border/

Companies should review supply chains and assess the potential impact of these new tariffs on the cost of products imported into the United States. Understanding the full scope of these orders will assist in making informed decisions and preparing for any necessary adjustments in supplier relationships, distribution channels, or other business changes.

Our team is closely monitoring the situation and will provide updates as new information becomes available. Please reach out to Angela Gamalski, Chauncey Mayfield, or another member of the Regulatory Practice Group or Commercial Transactions Practice Group with any questions or for further assistance in navigating these changes.