Tariffs: What We Know So Far- From AICC Partner, The Small Business Legislative Council (SBLC)

Lots of questions on tariffs and not enough answers.  This is still an evolving situation, but here is the update from all of the activity last night.

On February 1, 2025, President Trump announced 25% tariffs on imports from Mexico and Canada and a 10% additional tariff on imports from China under the legal authority of the International Emergency Economic Powers Act (“IEEPA”).  Additionally, imports of energy products from Canada will be assessed a 10% tariff.  As justification for a national emergency under IEEPA, the President is citing the “extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl.”

The White House published the Canada Executive Order (“EO”) on the White House website here: https://www.whitehouse.gov/presidential-actions/2025/02/imposing-duties-to-address-the-flow-of-illicit-drugs-across-our-national-border/.  The Mexico and China Executive Orders were distributed by the White House, via email, but have not been posted to the website as of this update.  We have attached what we received, but caution that the attached EOs may not technically be considered the final/formal versions.

Here are the key points for consideration:

• The effective date and time of the tariff actions is on or after 12:01 a.m. eastern time on Tuesday, February 4, 2025. The EO’s have a carve out for goods that are in transit before 12:01 a.m. eastern time on February 1, 2025. Note that the carve out cites to an importer certification that will be specified in a future Federal Register Notice. The National Archives will likely not publish a “public inspection” version until Monday, February 3rd. The White House website does not include a draft Federal Register Notice.

• • “[E]xcept that goods entered for consumption, or withdrawn from warehouse for consumption, after such time that were loaded onto a vessel at the port of loading or in transit on the final mode of transport prior to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 U.S. Customs and Border Protection within the Department of Homeland Security as specified in the Federal Register notice.”

• The EO’s do not provide for a product exclusion process. President Trump is the first president to impose tariffs under IEEPA and the statute does not specifically require a product exclusion process. So, it is at President Trump’s discretion whether or not to provide for a product exclusion process.  Since it is the first time IEEPA has been used for this type of tariff imposition, we expect that lawsuits will follow – but it is impossible to assess any litigation until it’s been filed in court.

• The IEEPA tariffs appear to cover every imported product from Canada, Mexico, and China. Again, the EO’s cite to a future Federal Register Notice that will likely be more specific, but the EO language says “all products that are products of Canada/Mexico/PRC.”
  • “All articles that are products of Canada as defined by the Federal Register notice”
  • “All articles that are products of Mexico, as defined by the Federal Registernotice”
  • “All articles that are products of the PRC, as defined by the Federal Register notice.”

• The EO’s include a retaliation clause that should Canada/Mexico/China retaliate against the U.S. in response (i.e. tariffs on U.S. exports), then the “President may increase or expand in scope the duties imposed under this Executive Order to ensure the efficacy of this action.”
  • Last evening, Mexican President Claudia Sheinbaum ordered her economy minister to implement tariff and non-tariff measures to defend Mexico's interests.
  • Canada also posted its CA$30 billion retaliation list that will be subject to a 25% tariff. It’s a long list, but generally seems to cover food and drink, toiletries/beauty products, building goods, tires, travel goods, lumber and wood products, toilet paper, cardboard boxes and containers, printed products, carpets, apparel, jewelry, household appliances, tools, motorcycles, unmanned aircraft, firearms, furniture, mattresses, light fixtures, video game consoles, lighters, and paintings. The Canadian government is standing up a “remission process,” which sounds like an exclusion process from the retaliatory tariffs.

• Moreover, the EO’s state that “No drawback shall be available with respect to the duties imposed pursuant to this order.”  (i.e., no refunds of duties, taxes, and fees paid to import goods that are then exported or destroyed).

• Finally, the EO’s restrict the use of de minimis treatment for imports that are less than $800.  Previously, certain qualifying shipments valued at $800 or less were eligible for duty-free de minimis exemption – but that is not an option for the newly enacted tariffs.

As this further unfolds, we can provide members with policy updates.  Please remember, everyone will need their own trade counsel to advise particularly on how the tariffs impact a specific business.   But, to start, we wanted to make sure you had the initial policy analysis within 24 hours of the announcement.

China Tariff Information

Mexico Tariff Information