On February 1, 2025, President Donald Trump signed executive orders imposing tariffs on almost all imports from Canada, Mexico and China. Tariffs on China became effective on February 4, 2025, while Canada and Mexico reached agreements with the U.S. to delay tariffs until March 4, 2025.
The executive orders (collectively, “the Tariff EOs”) are:
- “Imposing Duties To Address the Flow of Illicit Drugs Across Our Northern Border” (Canada EO).
- “Imposing Duties To Address the Situation at Our Southern Border” (Mexico EO).
- “Imposing Duties To Address the Synthetic Opioid Supply Chain in the People’s Republic of China” (China EO).
The actions are unprecedented. This is the first time a U.S. president has used the International Emergency Economic Powers Act (IEEPA) to impose tariffs. And the Tariff EOs are far more expansive in scale and scope than previous trade remedy measures, such as the Section 301 tariffs imposed on Chinese imports.
Key Takeaways
- 10% ad valorem tariffs on Chinese products and Canadian energy and energy resources.
- 25% ad valorem tariffs on Mexican products and Canadian products (other than Canadian energy or energy resources subject to the 10% ad valorem tariffs).
- The mandated tariffs apply in addition to any preexisting tariffs.
- Drawback will not be available for the tariffs imposed under the Tariff EOs.
- Goods covered by the Tariff EOs are no longer eligible for de minimis duty-free treatment and must enter through the formal entry process.
A Snapshot of the Tariffs
| CANADA | |
|---|---|
|
|
| MEXICO | |
|
|
| CHINA | |
|
Current Status
Canada
President Trump and Canadian Prime Minister Justin Trudeau reached an agreement on February 3, 2025, which delayed the implementation of the Canada EO until March 4, 2025. President Trump has since issued an additional EO, “Progress on the Situation at Our Northern Border” (Canada EO 2.0), that updates the original Canada EO.
As part of the agreement to delay the Canada EO, Canada committed to the following measures:
- Implementing a $1.3 billion border security plan (previously announced in December 2024), which includes reinforcing the U.S.-Canada border through enhanced coordination with U.S. law enforcement, increased information sharing, limiting traffic at the border, and the deployment of drones and Black Hawk helicopters for surveillance.
- Appointing a “fentanyl czar.”
- Listing drug cartels as terrorist organizations.
- Launching a Canada-U.S. Joint Strike Force to combat organized crime, fentanyl and money laundering.
- Implementing a $200 million intelligence directive on organized crime and fentanyl.
Mexico
President Trump and Mexican President Claudia Sheinbaum reached an agreement on February 3, 2025, which delayed the implementation of the Mexico EO until March 4, 2025. President Trump has since issued an additional EO, “Progress on the Situation at Our Southern Border” (Mexico EO 2.0), that updates the original Mexico EO.
As a part of the deal to delay the Mexico EO, Mexico and the U.S. committed to the following measures:
- Immediately reinforcing the U.S.-Mexico border with 10,000 National Guard members to prevent trafficking of drugs — particularly fentanyl — from Mexico to the United States.
- The U.S. committed to working to prevent the trafficking of high-powered weapons to Mexico.
China
No agreement has been reached between President Trump and President Xi Jinping. China has taken retaliatory measures against the China EO, as described below.
Timing
Canada
Under the Canada EO 2.0, the imposition of additional tariffs has been delayed until March 4, 2025, at 12:01 a.m. EST. However, if the U.S. determines that the migration and drug crises have worsened and the Canadian government has failed to take adequate action, President Trump may immediately implement the tariffs described in the original Canada EO.
Mexico
Under the Mexico EO 2.0, the imposition of additional tariffs has been delayed until March 4, 2025 at 12:01 a.m. EST. However, if the U.S. determines that the migration and drug crises have worsened and the Mexican government has failed to take adequate action, President Trump may immediately implement the tariffs described in the original Mexico EO.
China
Tariffs on goods subject to the China EO went into effect on February 4, 2025. The tariffs may be suspended if China takes appropriate action to alleviate the opioid crisis, though the EO makes no mention of specific actions China must take or metrics it must meet. If the U.S. deems that China has not taken adequate action, it may take additional remedial action. Additionally, if China retaliates, as has already occurred in response to this EO, U.S. actions under the EO can be increased or expanded.
Goods Covered
Canada
Before President Trump and Prime Minister Trudeau reached an agreement on the Canada tariffs, an unpublished Federal Register notice was released that has since been withdrawn. The information provided below is based on this withdrawn Federal Register notice. Should tariffs be reinstated prior to March 4, 2025, they will likely reflect what was on this notice.
The withdrawn Federal Register notice implementing the Canada EO imposed 25% ad valorem duties on all Canadian goods, with the exception of energy and energy resources, which were subject to 10% ad valorem duties. The notice stated that Canadian goods, including goods considered to be substantially transformed in Canada, were subject to the additional tariffs.
The Canada EO allowed for a short grace period for goods that were loaded onto a vessel at the time the EO was published. The Canada EO 2.0 eliminates this grace period.
The withdrawn Federal Register notice contained an exception for goods that fell under 50 U.S.C. 1702(b), such as personal communications, donations, publications and transactions incident to travel, which were not subject to the additional tariffs under the Canada EO.
The ad valorem duties did not apply to most goods that were eligible for duty-free entry under a provision of Chapter 98 of the tariff schedule. For certain types of goods eligible for duty-free treatment under Chapter 98, duties did apply to the value of repairs, alterations, processing or the value of the article assembled abroad minus the cost or value of such product in the U.S.
Mexico
Presidents Trump and Sheinbaum’s February 3, 2025, deal resulted in the delay of tariffs. As a result, no Federal Register notice was released detailing the scope of the tariffs on Mexico.
If the 25% ad valorem duties under the Mexico EO 2.0 is imposed on March 4, 2025, there will be no grace period for goods that were loaded onto a vessel at the time the EO was published.
China
The Federal Register notice implementing the China EO imposed 10% ad valorem duties on all Chinese goods (including products from Hong Kong) imported into the U.S. for consumption, or removed from a warehouse for consumption, on or after 12:01 a.m. EST on February 4, 2025.
However, goods that were either (i) loaded onto a vessel at the port of loading or (ii) on the final mode of transport prior to entry into the U.S. before 12:01 a.m. EST on February 1, 2025, will not be subject to these additional duties. This will be the case as long as (a) the importer declares the goods under the new applicable Harmonized Tariff Schedule of the United States (HTSUS) subheading and (b) the goods are entered into the U.S. for consumption, or removed from a warehouse for consumption, before 12:01 a.m. EST on March 7, 2025.
Goods that fall under 50 U.S.C. 1702(b), such as personal communications, donations, publications and transactions incident to travel, will be entered under new HTSUS headings and will not be subject to the 10% ad valorem duties.
The 10% ad valorem duties will not apply to most goods that are eligible for duty-free entry under a provision of Chapter 98 of the tariff schedule. For certain types of goods eligible for duty-free treatment under Chapter 98, duties will apply to the value of repairs, alterations, processing or the value of the article assembled abroad minus the cost or value of such product in the U.S.
Drawback Duties
Under the Tariff EOs, drawback duties are not available for goods subject to the imposed tariffs. Thus, tariffs must be paid upon entry into the U.S. with no possibility of drawback duty refunds. The elimination of drawback is highly unusual and does not appear to have ready analogues in prior tariff actions.
De Minimis
Under the Tariff EOs, de minimis treatment for low-value entries is not available for goods subject to the imposed tariffs. Thus, all goods must be entered through the formal entry process and tariffs paid for such goods. Here, again, the elimination of the de minimis exemption is an unusual feature, albeit one that echoes certain regulatory and legislative proposals seeking to limit the exemption with respect to Chinese imports.
Retaliation
Canada
On February 3, 2025, Canada announced a CA$155 billion tariff package to be implemented in two phases. The first phase was to go into effect on February 3, 2025, and impose 25% tariffs on CA$30 billion in goods imported from the U.S. The remaining CA$125 billion in tariffs was set to go into effect 21 days after the initial phase.
These tariffs were delayed following the agreement Canada and the U.S. reached to delay the Canada EO. However, should the Canada EO go into effect, we expect Canda’s retaliatory tariffs will also be implemented.
Items in the first phase of the retaliatory tariff package included:
- Cosmetics and body care (CA$3.5 billion).
- Appliances and other household items (CA$3.4 billion).
- Pulp and paper products (CA$3 billion).
- Tires (CA$2 billion).
- Plastic products (CA$1.8 billion).
- Precious gems and metals (CA$1.7 billion).
- Furniture (CA$1.6 billion).
- Wood products (CA$875 million).
- Coffee (CA$714 million).
- Grains (CA$600 million).
- Wine, grape, spirits and other products (CA$589 million).
- Cocoa products (CA$569 million).
- Tools (CA$560 million).
- Dairy (CA$555 million).
- Sugar and products containing sugar (CA$542 million).
- Sauces and dressing (CA$517 million).
- Orange juice and fruits (CA$512 million).
The premiers of Ontario, British Columbia and Newfoundland were also set to pull U.S. wine, beer, spirits and seltzers off shelves and restaurant menus.
For the second phase of the retaliatory package, the full list of these goods was initially going to be made available for a 21-day public comment period prior to implementation. It was set to include:
- Passenger vehicles and trucks (including electric vehicles).
- Steel and aluminum products.
- Certain fruits and vegetables.
- Aerospace products.
- Beef.
- Pork.
- Dairy.
- Commercial trucks and buses.
- Recreational vehicles.
- Recreational boats.
Canada also proposed to take steps to mitigate the impact of its tariff countermeasures on Canadian workers and businesses by establishing a remission process to consider requests for exceptional relief from the tariffs imposed, including for future actions.
In addition to this initial response, additional measures have been considered, including nontariff measures, potentially relating to critical minerals, energy procurement and other partnerships, applying export taxes on Canadian oil and targeting Elon Musk’s companies.
Mexico
At the moment, Mexico has not set out retaliation measures with respect to the tariffs imposed by the Mexico EO. In a press conference held on February 3, 2025, President Sheinbaum said there was no current need to resort to retaliation and reiterated that Mexico will always defend integration among the three countries — Canada, Mexico and the United States — and especially integration between the United States and Mexico.
China
On February 3, 2025, immediately following the imposition of the China EO, China responded by retaliating in the following ways:
- Imposing a 15% levy on less than $5 billion of U.S. energy imports, which includes entries made under 8 tariff codes in Chapter 27.
- Imposing a 10% fee on American oil and agricultural equipment, which includes entries made under 72 tariff codes ranging from Chapter 27 to Chapters 84 and 87.
- Launching an investigation into Google for alleged antitrust violations.
- Imposing new export controls on tungsten and other critical minerals.
- Placing the following entities on the Unreliable Entity List that could affect their operations:
- Calvin Klein and Tommy Hilfiger owner, PVH Corp.
- Illumina Inc.
Additionally, on February 4, 2025, China filed a request for consultations with the World Trade Organization’s (WTO’s) Dispute Settlement Body, challenging the U.S. tariffs. This filing is the first step of a WTO dispute settlement proceeding.
See the full Executive Briefing publication
This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.