MEMA Releases Canada, Mexico and China Tariff Updates

[Counterman]

*After this statement was released, Mexico President Claudia Sheinbaum announced on X (formerly Twitter) that the U.S. and Mexico have reached an agreement to delay tariffs for a month. In exchange, Mexico will be putting 10,000 National Guard troops on the Mexico/U.S. border as conversations between the countries continue.

This letter from Bill Long, president & CEO, MEMA, The Vehicle Suppliers Association, to

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members “breaks down everything we know so far about the executive orders for tariffs impacting trade with Canada, China and Mexico.”

Dear MEMA Members,

On February 1, 2025, President Donald J. Trump

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:

• An Executive Order expanding a previous Executive Order (Declaring a National Emergency at the Southern Border – Proclamation 10886, Jan 20, 2025) to include Canada and China and to reiterate a national emergency under the International Emergency Economic Powers Act (IEEPA) and the National Emergencies Act (NEA).
• An Executive Order imposing a 25% tariff (ad valorem rate of duty) on all goods entering the United States from Mexico.
• An Executive Order imposing a 25% tariff (ad valorem rate of duty) on all goods (except energy resources) entering the United States from Canada. Energy resources will be subject to a 10% tariff.
• An Executive Order imposing a 10% tariff (ad valorem rate of duty) on imports from China.

Trade Authority: These new tariffs are being implemented under the International Emergency Economic Powers Act (IEEPA). Under IEEPA, the President has the ability to take certain actions quickly after declaring a national emergency. The President may terminate the emergency. The U.S. Congress, “could terminate the underlying national emergency by enacting a joint resolution of disapproval.”

Source: Congressional Research Service

Timeline: The tariffs will go into effect at 12:01 a.m. eastern time on Tuesday, February 4, 2025. There is currently no date by which the tariffs will sunset.

Existing Tariffs: The new tariffs articulated in these Executive Orders will be imposed on top of any prior and existing “duties, fees, exactions, or charges applicable to such imported articles.”

Items Covered by the Tariffs: At this time, it appears that all items will be subject to the 25% tariff except in the case of Canada, where a lower 10% tariff will be applied to energy resources. The Trump Administration will publish a Federal Register notice containing the specific HTSUS (Harmonized Tariff Schedule of the United States) codes. This notice is not yet available.

Goods in Transit: The Executive Orders concerning Canada, Mexico, and China note that the duty will apply, “except that goods entered for consumption, or withdrawn from warehouse for consumption, after such time that were 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, shall not be subject to such additional duty, only if the importer certifies to CBP as specified in the Federal Register notice.”

De Minimis: The Executive Orders revoke duty-free “de minimis” treatment for goods coming into the U.S. from Mexico, Canada, and China that are subject to the order. According to CBP, “De minimis provides admission of articles free of duty and of any tax imposed on or by reason of importation, but the aggregate fair retail value in the country of shipment of articles imported by one person on one day and exempted from the payment of duty shall not exceed $800.”

For more information, see Section 321 Programs | U.S. Customs and Border Protection

Drawback: The Executive Orders note that “no drawback shall be available with respect to the duties imposed pursuant to this order.”

Exclusions: At this time, there is no language in the Executive Orders concerning an exclusion process.

Escalation: The Executive Orders include language stating that the U.S. may escalate these actions if the other nations take steps to retaliate against U.S. exports and goods.

Canada:

On February 1, 2025, Canada announced plans to impose 25% tariffs on $155 billion worth of U.S. items. The official statement from the Canadian government noted that these tariffs will be imposed in phases.

• The first phase “will include tariffs on $30 billion in goods imported from the U.S., effective February 4, 2025, when the U.S tariffs are applied. The list includes products such as orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper. A detailed list of these goods will be made available shortly.”
• A second phase of tariffs, which will address $125 billion worth of exports from the U.S., will not be imposed until after a 21-day comment period. They will include “products such as passenger vehicles and trucks, including electric vehicles, steel and aluminum products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles, and recreational boats.”

Source: Canada announces $155B tariff package in response to unjustified U.S. tariffs – Canada.ca

Mexico:

On February 1, 2025, Mexico pledged to retaliate against the U.S. tariffs. Press reports indicate that Mexican President Claudia Sheinbaum has directed her government to enact “Plan B.” MEMA is awaiting further details on this action.

China:

China has reacted and pledged retaliatory action against the tariff announcement. However, no specific details were available as of the morning of February 2, 2025. MEMA is monitoring the announcements from the Chinese government on this action.

MEMA will continue to closely monitor these developments and provide our members with timely updates as more details emerge. As we assess the impact of these tariffs, we are actively engaging with members to gather insights and determine the best path forward. Your feedback is invaluable in understanding how these policies affect businesses, employees, customers, and communities.

Be on the lookout for details about member briefings next week, where we will provide further updates and opportunities for discussion, MEMA said.

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