On February 1, 2025, the President signed executive orders that imposed 25 percent tariffs on products from Mexico and most products from Canada. The executive orders also imposed 10 percent tariffs on products from China. Energy resources from Canada were subjected to 10 percent tariffs. The tariffs would be imposed in addition to other tariffs and duties already imposed on merchandise from Canada, Mexico and China. The President’s executive order also removes the “de minimis” exemption from duties on small shipments from Canada, Mexico, and China. Under previous rules, small-value imports were exempt from payment of customs duties.
The President imposed the tariffs pursuant to the International Emergency Economic Powers Act (“IEEPA”) and the National Emergencies Act (“NEA”). The IEEPA provides that the President may, among other things, regulate importation of any property in which any foreign country or a national thereof has any interest. The IEEPA authority granted to the President may be exercised to deal with any unusual and extraordinary threat to the national security, foreign policy, or economy of the United States, provided that the threat originates outside the United States and the President declares a national emergency with respect to such threat. The authority granted to the President pursuant to the IEEPA may only be exercised to deal with the unusual and extraordinary threat with respect to which the national emergency that has been declared and may not be exercised for any other purpose.
The President cited the national emergency he declared on January 20, 2025, with respect to the influx of illegal aliens and illicit drugs into the United States. Pursuant to the NEA, the executive orders signed on February 1, 2025, expanded the scope of the declared national emergency to cover the threat to Americans posed by the public health crisis due to the use of fentanyl and other illicit drugs. The expanded scope also included the alleged failures of Canada, Mexico, and China to arrest, seize, detain, or intercept drug trafficking organizations (“DTOs”) and transnational criminal organizations (“TCOs”) that launder revenues from the production, shipment, and sale of illicit synthetic opioids. According to the executive orders, the failure of Canada, Mexico, and China to act constitutes an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States for which the President decided to impose the tariffs.
The executive orders excepted merchandise from the tariffs that was 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, provided that the importer certifies to U.S. Customs and Border Protection that the merchandise was so loaded or in transit. The IEEPA also provides that the authority it grants to the President does not include the authority to regulate:
- Any postal, telegraphic, telephonic, or other personal communication which does not involve a transfer of anything of value;
- Donations of articles such as food, clothing, and medicine intended to be used to relieve human suffering;
- The importation of any information or informational materials such as publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, and news wire feeds; and
- Any transactions ordinarily incident to travel to and from any country, including importation of accompanied baggage for personal use and maintenance within any country.
On February 3, 2025, the President reached an agreement with Canada and Mexico and issued executive orders that pause the respective tariffs for thirty days. The President determined that the Governments of Canada and Mexico have taken steps designed to alleviate the illegal migration and illicit drug crisis through cooperative actions. In recognition of the steps taken by Canada and Mexico, the tariffs on those countries are paused and will not take effect until March 4, 2025.
According to the President’s post on X, Mexico’s President Claudia Sheinbaum agreed to supply 10,000 Mexican soldiers to the border who will be specifically designated to stop the flow of fentanyl and illegal migrants into the United States. On Truth Social, the President posted that Canada will implement a $1.3 billion border plain to reinforce its border with new helicopters, technology, personnel, and resources to stop the flow of fentanyl. In addition, Canada will appoint a fentanyl czar, list cartels as terrorist organizations, and launch a joint strike force with the United States to combat organized crime, fentanyl, and money laundering. The President’s posts indicated that further negotiations with Mexico would be headed by Secretary of State Marco Rubio and that the President would seek an economic deal with Canada.
The February 1, 2025, tariffs imposed on products from China have not been paused. In response to the tariffs, on February 4, 2025, China indicated that it would retaliate with tariffs on coal, crude oil, agricultural machinery, and certain cars. It also announced export controls on certain mineral elements used by the technology sector such as tungsten, tellurium, bismuth, indium, and molybdenum. China also launched an antitrust investigation of Google and placed PVH Corp. and Illumina on its unreliable entity list. The February 1, 2025, executive orders indicated that the President may increase or expand in scope the duties imposed pursuant to the executive orders, should Canada, Mexico, or China retaliate against the United States.
As discussed, tariffs on products imported into the United States can change rapidly. Contact our international trade group to get the most up-to-date advice regarding your merchandise imported into the United States.
