Updates on Potential Trade Tariffs for the Fentanyl Epidemic

At a Glance

• On the day before the election, President-elect Trump promised to combat the flow of fentanyl into the United States through tariffs on Mexico and possibly China. His proposed pre-election statement to combat the fentanyl crisis centers on imposing additional tariffs on goods from both countries.
• Consequently, the recent Section 301 petition, which appeared to be a novel idea and even a stretch under the existing law, may result in new tariffs in the near future.

This is an update on our October 24, 2024, client alert, “Are Tariffs the New Ammunition to Combat the Fentanyl Crisis?” We reported that a Section 301 petition had been filed by a nonprofit, Facing Fentanyl, requesting that the Office of the United States Trade Representative (USTR) conduct a Section 301 investigation into the People’s Republic of China’s alleged involvement with illicit fentanyl trade. Furthermore, Facing Fentanyl’s main request within the petition is an increase of the pre-existing 25% Section 301 tariff for Chinese products on USTR’s lists 1 and 2 to 50%.

Updates Since Election Day

We now note that the principal partner who filed the Section 301 petition is Nazak Nikakhtar. In the previous Trump administration, Ms. Nikakhtar served as the Department of Commerce’s assistant secretary for Industry & Analysis at the International Trade Administration (ITA) and fulfilled the duties of the under secretary for Industry and Security at Commerce’s Bureau of Industry and Security (BIS).

On the day before the election, November 4, 2024, President-elect Trump promised to combat the flow of fentanyl into the United States through additional tariffs on Mexico and possibly China.

Analysis

It is unknown whether President-elect Trump would follow through by imposing tariffs on Mexican and Chinese goods or whether he will use the threat of such tariffs as leverage with Mexico and China. Notably, during his last presidency, he imposed increased tariffs in the range of 7.5 to 25% to address concerns relating to national security, injury to competing domestic industries and trade agreement violations under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the U.S. Trade Act of 1974. Regardless, his pre-election statements are an example of the uncertainty that may become the norm for importers during the second Trump administration. Consequently, the recent Section 301 petition, which appeared to be a novel idea and even a stretch under the existing law, may result in new tariffs in the near future.

For More Information

Our team strives to keep businesses up to date on the ever-evolving trade sector. For more information on these developments, please contact the authors.