President Trump Imposes 25% Tariffs on Imports From Canada and Mexico, Additional 10% Tariffs on Imports From China, Amid Flurry of Other Trade Activity

At a Glance

• On March 3, 2025, under his authority via the International Emergency Economic Powers Act (IEEPA), U.S. President Donald Trump implemented tariffs against goods imported from Canada and Mexico, and increased existing IEEPA tariffs against goods imported from China. Federal Register notices and Cargo Systems Messaging Service (CSMS) instructions regarding implementation of the tariffs are now available.
• The 25% tariffs on Canada and Mexico took effect at 12:01 a.m. ET on March 4, 2025, with an exception for energy and energy resources from Canada, which are subject to 10% tariffs. The 10% increase in IEEPA tariffs on China also went into effect at 12:01 a.m. ET on March 4, 2025. The now-20% duty applies to goods that are products of China and Hong Kong.
• Retaliation by Canada, Mexico and China is underway. This breaking news came in the midst of the release of Federal Register notices implementing the steel and aluminum tariffs announced in February, as well as the announcement of a Section 232 investigation on lumber, timber and their derivative products.

Tariffs on Canada and Mexico

The Federal Register notices concerning tariffs on Canadian and Mexican imports to the United States are available here and here.

The Federal Register notices implementing the 25% tariffs on Canadian and Mexican imports clarify the following:

• Rule of Origin: Products of Canada and Mexico will be determined by the USMCA Marking Rules, as applicable, as well as the goods for which Mexico or Canada was the last country of substantial transformation prior to importation into the United States.

Some are reading this instruction to mean that United States–Mexico–Canada Agreement (USMCA) marking rules apply if the good is imported from Canada or Mexico, so if the USMCA marking rules determine that it is not a good of Canada/Mexico, then the tariffs will not apply. Others are reading this to mean that even if the USMCA marking rules find it is not a good of Canada/Mexico, but the good is substantially transformed in Canada/Mexico, the tariffs may apply. We are attempting to clarify this with U.S. Customs and Border Protection (CBP); but traditionally only the USMCA marking rules would be used to determine origin when importing directly from Canada or Mexico.

• Chapter 98 provisions provide an exemption from the tariffs. For Heading 9802, the additional duties apply to the value of repairs/alterations. For goods entered under subheading 9802.00.80, the additional duty will be applied to the value of the article assembled abroad, less the cost or value of such products in the United States.
• Goods considered to be donations, such as food, clothing and medicine intended to relieve human suffering, are exempt from the tariffs.
• Goods considered to be information materials are exempt from the tariffs.
• These tariffs are in addition to any other retaliatory tariffs — e.g., Section 301, Section 232 and general rates of duty, if applicable.
• No drawback is allowed.
• Articles that are products of Canada/Mexico, except those that are eligible for admission to a foreign trade zone under “domestic status” as defined in 19 C.F.R. § 146.43 and are admitted into a United States foreign trade zone on or after 12:01 a.m. ET on March 4, 2025, must be admitted as “privileged foreign status” as defined in 19 C.F.R. § 146.41.
• There is no in-transit, i.e., “goods on the water,” exemption.

Directly prior to the announcement of these tariffs, on March 1, 2025, President Trump issued two new executive orders (EOs) clarifying that de minimis entries may not be available as a mitigation tactic for the 25% tariffs on Canada and Mexico. However, CBP is not currently equipped to process and collect tariffs on such entries. Accordingly, the president directed the secretary of Commerce to notify importers when the exemption is no longer available, the date of which remains unknown.

The de minimis EOs are available here and here.

On March 5, 2025, President Trump announced an additional one-month pause for automakers after speaking with the heads of General Motors, Ford and Stellantis (Chrysler). The extent of the pause and details on the exemption are pending, including whether it will be importer-specific to those U.S. automakers or extend to a subset of Harmonized Tariff Schedule of the United States (HTSUS) codes has yet to be announced. Further, White House spokesperson Karoline Leavitt stated that President Trump was “open” to additional tariff exemptions beyond the pause on automakers.

Increased Tariffs on China

As of 12:01 a.m. ET on March 4, 2025, the previously implemented IEEPA tariffs against goods that are products of China and Hong Kong were increased from 10% to 20%.

The China Federal Register notice is available here.

Retaliation

Canada

Canada has announced the following countermeasures in response to the 25% tariffs imposed on most Canadian goods and the 10% tariffs imposed on Canadian energy.

1. New Tariffs

Tariffs (surtaxes) of 25% on $155 billion worth of U.S. goods have been announced, enacted in the following stages:

• Immediate tariffs on $30 billion worth of U.S. products as of 12:01 a.m. ET on March 4, 2025: The full list of tariff codes subject to surtaxes as of March 4, 2025, is available here. The surtax will not apply to U.S. goods that are in transit to Canada on the day on which the surtax comes into force.
• Further tariffs on $125 billion worth of U.S. products starting 21 days later (March 25, 2025), is available here.
• The announced tariffs include a variety of products including but not limited to fruits, vegetables and juices, U.S.-origin beer, wine and liquor, perfume, clothing, and shoes, as well as major consumer products such as household appliances and sports equipment, and lumber and plastic products.

Certain goods have been carved out of the order, specifically new-rubber pneumatic tires for use as original equipment in the production of certain vehicles, machines or appliances. Aftermarket tires will be subject to the surtax.

The surtax will apply to U.S.-origin goods pursuant to USMCA marking rules.

U.S. goods (as determined under the USMCA marking rules) will still be subject to the surtax even if exported from a country other than the United States.

However, relief is still available. Specifically:

• Canada Border Services Agency (CBSA) Duties Relief and Duty Drawback programs remain available.
• The duty-relief provisions of Chapters 98 and 99 still apply, unless the specific Chapter 98 or 99 tariff relief code is identified in a surtax order (currently these primarily include certain personal importations).
• An exclusion process, known as “remission” to address situations where goods used as inputs cannot be sourced domestically, either on a national or regional basis, or reasonably from non-U.S. sources, or where other exceptional circumstances exist that could have severe adverse impacts on the Canadian economy.

2. Additional Measures

Canadian Prime Minister Justin Trudeau has not (yet) announced export tariffs or quantitative restrictions on Canadian energy products, or any of the nontariff measures believed to be under discussion with respect to critical minerals, energy and other partnerships.

Announcements of various measures may be undertaken at the provincial level.

China

China has quickly retaliated in response to the 10% tariff increase, imposing the below countermeasures.

1. New Tariffs

The following tariffs will be imposed on U.S. merchandise, taking effect on March 10, 2025:

• An additional 15% tariff on chicken, wheat, corn and cotton. The specific list of products is available in Annex 1.
• An additional 10% tariff on sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products. The specific list of products is available in Annex 2.

Notably, goods that have departed from the place of shipment before March 10, 2025, and are imported before April 12, 2025, will not be subject to the additional tariffs stipulated above.

2. Additions to the Export Control List

The People’s Republic of China’s Ministry of Commerce (MOFCOM) announced the inclusion of 15 additional U.S. entities to the Export Control List.

3. Additions to the Unreliable Entity List

MOFCOM added 10 entities to the Unreliable Entity List.

Additionally, MOFCOM announced its decision to prohibit certain exports of gene-sequencer products to China from an entity added to the Unreliable Entity List on February 4, 2025.

Foreign entities included on the Unreliable Entity List may be subject to one or more of the following measures, with an announcement to be issued: restricting or banning their engagement in imports to and exports from China; restricting or banning their investment in China; restricting or banning the entry of relevant persons and means of transportation in China; restricting or canceling work permits, stays or residential qualifications of relevant persons in China; imposing a fine of a corresponding amount as appropriate; and/or other necessary measures.

4. Anti-Circumvention Investigation

MOFCOM launched an Anti-circumvention Investigation on U.S. Fiber Optical Products.

This marks the first anti-circumvention investigation by the Chinese government. The petition alleges that U.S. exporters have circumvented China’s antidumping measures on U.S. non-dispersion-shifted single-mode optical fiber products by exporting the relevant cut-off wavelength-shifted single-mode fibers to China.

5. Suspension of Imports

Finally, China’s General Administration of Customs (GACC) suspended the soybean import qualification of three U.S. companies.

The reason for suspension was listed as: “China Customs has detected ergot and treated soybean seeds in imported U.S. soybeans. To protect the health of Chinese consumers and ensure the safety of imported grains.”

GACC also announced the suspension of log imports from the United States. The reason for suspension was listed as, “China Customs has detected quarantine forest pests such as bark beetles and longhorn beetles in imported U.S. logs. To prevent the introduction of harmful organisms and protect the country’s agricultural and forestry production as well as ecological security.”

Mexico

Mexico has announced that details of its countermeasures will be released on Sunday, March 9, 2025.

Steel and Aluminum Tariffs

Also on March 3, 2025, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) published the Federal Register notices implementing the steel and aluminum tariffs that were first announced on February 10, 2025, via executive order. We first discussed the imposition of the steel and aluminum tariffs in our February 12, 2025, alert, available here. 

The steel and aluminum Federal Register notices are available here and here.

Most notably, the implementation of tariffs on derivative articles not in Chapters 73 or 76 will be delayed beyond March 12, 2025, although the derivatives have been identified in implementing language in paragraph (n) in the steel notice and paragraph (k) in the aluminum notice. At this time, the actual date of future implementation is unknown. We continue to advise to plan for the implementation of these tariffs in the near future.

The following items were different than in the executive orders:

• Despite no reference to Chapter 98 in the original executive orders, Chapter 98 duty-free treatment may be used, except for 9802.00.60.
• There is still very little guidance with respect to the steel and aluminum content-reporting requirements for imports of derivatives not in Chapter 73 or Chapter 76.
• Importers must report the quantity in addition to value of steel and aluminum content in kilograms for each entry not in chapters 73 or 76.
• Notably, we are seeking clarification from the agency with respect to the steel derivative imports not in Chapter 73, as the HTSUS references that duties apply to all imported “derivative iron and steel products,” which is contrary to the implementation language that states that duties shall be assessed on the steel content (understanding that there is a significant difference between an iron component and a carbon-alloy steel component).
• We note that for the derivative steel articles not in Chapter 73, the delayed implementation specifically notes that duties apply even for goods entered into a foreign trade zone (FTZ) under “privileged foreign status” prior to March 12, 2025. We read this as goods entered into the FTZ prior to March 12, 2025, but which exit after the future implementation date will be subject to duties.
• Notably, there is no matching provision for the aluminum derivatives that are not in Chapter 76 regarding FTZ admissions. We are working to clarify this with the agency.
• Finally, 7317.00.30 was included in the steel February 2025 Annex, but is NOT included in this Federal Register notice. We believe that this is likely in error and we are working to clarify this with the agency.

We note that CBP has yet to release its implementing CSMS messages instructing customs brokers how to make entry, which may clear up some of the remaining questions above.

Tariffs on Lumber, Timber and Their Derivative Products

Finally, to round out the flurry of trade activity, President Trump also issued an executive order announcing tariffs on lumber, timber and their derivative products (paper products, furniture and cabinetry). Specifically, President Trump has directed the Commerce Department to open a Section 232 investigation to determine the effects on the national security of imports of timber, lumber and their derivative products.

Section 232 investigations require that a report be issued within 270 days, after which President Trump has 90 days to decide on appropriate action. The trade action then follows within 15 days of President Trump’s decision. However, all of these timeframes can be sped up. Additionally, the governing regulations are permissive with respect to requirements for notice and comment, so interested parties may not be given an opportunity to weigh in on future tariffs.

For More Information

Please note that we will continue to closely monitor this situation and provide timely updates, as warranted. In the meantime, please do not hesitate to reach out to a member of the Faegre Drinker Customs and International Trade Team if you have any questions.

Legal clerk Lucy Zhang contributed to the publication of this article.