On February 1, U.S. President Trump signed four executive orders introducing tariffs on imports from Mexico, Canada, and China, scheduled to go into effect on February 4. Following last-minute negotiations, tariffs on Canadian and Mexican goods were delayed for one month.
Background
On Feb. 1, 2025, U.S. President Trump signed four executive orders (EOs) introducing significant tariffs on imports from Mexico, Canada, and China. They are:
- National emergency expansion. This EO expands on a previous EO (Proclamation 10886, Jan. 20, 2025, declaring a national emergency at the southern border) to include Canada and China. It restates that the national emergency falls under the International Emergency Economic Powers Act (IEEPA) and the National Emergencies Act (NEA).
- Tariffs on Mexico. An EO targeting Mexico applies a 25% tariff on all goods entering the United States from Mexico. The reasons cited include threats to national security, including undocumented migration and illicit drug trafficking at the U.S. southern border. The EO also removes any existing duty-free treatment for de minimis items described in the order.
- Tariffs on Canada. A separate EO targets Canada with a 25% tariff on goods other than energy resources entering the United States from Canada. Energy resources are subject to a 10% tariff. The reason given for the tariffs relate to criminal and illicit drug activities from Canada that contribute to a public health crisis in the United States. The EO also removes existing duty-free treatment for de minimis items as described in the order.
- Tariffs on China. The fourth EO applies a 10% tariff on imports from China. Reasons cited for the tariffs include China’s involvement in the flow of illicit substances to the United States and its lack of decisive action to stem the activities. The EO initially revoked the de minimis treatment for shipments under $800 from China. This policy was clarified in a subsequent Feb. 5, 2025 EO, stating that the revoked de minimis treatment was temporary until adequate systems are in place to fully and expediently process and collect applicable tariff revenue.
Timeline
The tariffs were scheduled to take effect at 12:01 a.m. Eastern Time on Tuesday, Feb. 4, 2025. Following last-minute negotiations between the United States and Canadian and Mexican governments on Feb. 3, 2025, implementation of the tariffs on Canada and Mexico is delayed for one month. The tariffs on China are in effect as scheduled. There is no specified end date for the tariffs.
In response, China announced retaliatory tariffs of up to 15% on coal and liquified natural gas from the United States and 10% duties on American crude oil, farm equipment, and certain cars and trucks, along with export controls on some products related to critical minerals beginning February 10.
Key points
Key points of the Trump EOs include:
- Trade authority. The tariffs are implemented under the IEEPA, which allows the president to take swift action after declaring a national emergency. The president may terminate the national emergency, or the U.S. Congress can terminate the emergency by enacting a joint resolution of disapproval.
- Existing tariffs. The new tariffs are in addition to any existing duties, fees, exactions, or charges on imported articles.
- Items covered. HTSUS codes will be published in a future Federal Register notice.
- Drawback. No drawback will be available for the duties imposed by these orders.
- Exclusions. There is currently no exclusion process mentioned in the EOs.
- Escalation. The United States may escalate these actions in the event of retaliation against U.S. exports.
Actions to consider
Since the tariffs were announced on Feb. 1, 2025, negotiating activities have been fast-paced. Early on Feb. 3, 2025, Mexico quickly reached an interim agreement with the U.S. administration for a one-month reprieve, and later in the day, Canada also secured a 30-day pause. Absent further action by the U.S. administration the tariffs will go into effect when the pause expires. The tariffs on China have been implemented according to schedule, and retaliatory tariffs on U.S. goods are scheduled to take effect on February 10.
With new tariffs underway and trade policies evolving, strategic planning is crucial. Here’s where to start.
Plante Moran will continue to monitor relevant tariff and trade actions and issue updates. We recommend keeping up to date on presidential actions at whitehouse.gov and impacts of emerging trade and tariff policy at groups such as the Motor Equipment Manufacturers Association (mema.org), which has a government affairs council and a Washington, DC office, and the National Association of Manufacturers (nam.org) that closely tracks and analyzes regulatory and legislative activity. For more insights, join our webinar, “Navigating global shifts: Strategic sourcing for manufacturing leaders,” on February 26, where our experts will discuss managing new tariffs, optimizing operations, and sourcing strategies in North America and Southeast Asia to stay competitive.
Considering rapidly changing commentary and the unpredictable nature of policy stance from Washington, it’s crucial to work closely with an outside advisor who can help you anticipate and plan ahead. If your company is impacted by any of the EOs, please contact one of our supply chain and international trade and policy experts.