Details Emerge on New Tariffs Targeting Mexico, Canada, and China

On November 25, 2024, President-elect Trump announced his intention to impose an additional 25% tariff on goods imported into the U.S. from Mexico and Canada and an additional 10% tariff on goods imported into the U.S. from China. These additional tariffs could go into effect as early as January 20, 2025.

The announcement comes shortly after the introduction of the Restoring Trade Fairness Act (“RTFA”), which as we reported aimed to revoke China’s Permanent Normal Trade Relations (“PNTR”) status with the United States, increase the rates of duty applicable to goods from China, and end de minimis imports from China. Additional tariffs announced on November 25 by President-elect Trump do not appear to rely on the passage of the RTFA and will likely be levied in addition to any existing duties or tariffs.

Specifically, President-elect Trump announced that on January 20, 2024, he “will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States.” President-elect Trump explained that “[t]his Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”

As to goods coming from China, the announcement indicates that until China can stop the flow of drugs into the United States, “we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America.” It is unclear from the announcement when exactly the 10% additional China tariff will go into effect, but it is likely that it will also be implemented on or around January 20, 2025.

Even though not specifically discussed in the announcements, it is likely that there will be an opportunity to request tariff exclusions for specific products should the additional tariffs on goods from Mexico, Canada, and China go into effect. If available, the exclusion request process will likely be aligned with the exclusion practice adopted by previous administrations for the existing Section 301 China tariffs. As such, we highly recommend that importers interested in applying for an exclusion reach out to us ahead of time to begin collecting information to be prepared if additional tariffs are levied and exclusion requests are available.

Notably, the countries that are targeted with the potential additional tariffs have shown the readiness to respond in the past and are proactively threatening potential countermeasures that may be taken against U.S.-made goods.

In 2018, Canada responded to U.S. tariffs on Canadian steel and aluminum by imposing counter-tariffs of 10% to 25% on various U.S.-made products, including steel, aluminum, and other products. Based on this, it is likely that Canada may not shy away from retaliation should the additional tariffs go into effect. Specifically, the U.S.-made products destined for Canada that may be affected by retaliation can be found here. We strongly recommend reviewing this list to confirm whether any of your U.S.-made products may be subject to countermeasures. Likewise, Mexico’s president, Claudia Sheinbaum, stated that Mexico will respond with tariffs of its own on U.S.-made goods should the additional 25% Mexico tariff go into effect.

Imposition of the additional tariffs on goods from Mexico, Canada, and China will likely be followed by numerous private legal actions to challenge the validity of the tariffs in line with the ongoing litigation concerning the existing Section 301 China tariffs as we previously reported. Also, imposition of tariffs on goods from Mexico and Canada can violate the terms of the U.S.-Mexico-Canada Agreement (“USMCA”), which could open the U.S. to legal challenges domestically and by foreign governments. Finally, the proposed tariffs on Mexico and Canada can also be used as leverage by President-elect Trump to renegotiate the terms of the USMCA coming up on review in 2026.

Businesses with Chinese and North American supply chains should brace for a potentially volatile 2025 and substantial increases in duties and tariffs. We strongly advise that such businesses review their product lines and supply chains for any potential hikes in duties and tariffs, assess forthcoming countermeasures from the target countries, and begin compiling information for tariff exclusion requests. To assist with any of these matters and to accommodate smooth transition into the turbulent 2025 trade landscape please contact one of our trade professionals here.