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Trump 2.0: U.S. Imposes Tariffs on Key Trading Partners 

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After months of anticipation, on February 1, 2025, President Trump announced the imposition of significant tariffs on Mexico, Canada, and China through three Executive Orders (EOs). While additional details are expected to be published in the Federal Register in days to come, the tariffs mark a significant shift in U.S. trade policy. Key points are outlined below.  

Scope 

Effective February 4, 2025, the United States will impose a: 

  • 25% tariff generally on all imports from Mexico and Canada;
  • 10% tariff on “energy resources” from Canada; and 
  • 10% tariff on all imports from China.

“Energy resources” are defined in the President’s earlier Executive Order on Declaring a National Energy Emergency, and include crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals, as defined by statute.   

Overall, the tariffs will be cumulative to any current trade measures, meaning that they will stack on top of existing duty rates. Further, no de minimis treatment will be available for shipments under $800. Very few exemptions appear available at this time, except for a narrow category of items explicitly exempted from Presidential authority under the International Emergency Economic Powers Act (IEEPA), such as donations intended to relieve human suffering or certain informational materials. 

The administration has justified these tariffs on national security grounds, citing concerns over illegal immigration, drug trafficking, and economic dependence on foreign supply chains. 

Legal Authority 

President Trump’s decision to impose tariffs under IEEPA represents an unprecedented use of this statute. Alongside the tariffs, the President has declared a national emergency under the National Emergencies Act (NEA), citing similar national security concerns. 

While historically IEEPA had been used to impose economic sanctions, this is the first instance of it being invoked to impose tariffs. 

The Secretary of Homeland Security, in consultation with the Secretary of the Treasury, Attorney General, and Secretary of Commerce, has been delegated authority to implement the tariffs, including issuing rules and regulations. While the tariffs are to take effect on February 4, 2025, some enforcement delays may occur as agencies issue guidance and regulations to facilitate implementation. 

Retaliatory Measures from Key Trading Partners 

Canada, Mexico, and China have responded swiftly to the new tariffs, despite a provision in the Executive Orders warning that retaliation could trigger additional U.S. duties. Each country has signaled its intent to take countermeasures. 

  • Canada: Prime Minister Justin Trudeau has announced a 25% retaliatory tariff in two stages: 
    • $30 CAD billion in U.S. goods (effective February 4, 2025); and 
    • $125 CAD billion in additional tariffs (after 21 days to allow businesses to adjust). 
  • Mexico: President Claudia Sheinbaum stated that Mexico will impose retaliatory tariffs on U.S. goods, though specific products have not yet been identified. 
  • China: While not announcing immediate countertariffs, China has stated it will file a lawsuit with the World Trade Organization (WTO) and take “necessary countermeasures” in response. 

Additional details are expected to be published in coming days. 

Potential Exemption Process 

Historically, emergency tariff actions have been rare. The closest precedent is President Nixon’s 1971 use of the Trading with the Enemy Act (TWEA)—IEEPA’s predecessor—to impose a 10% tariff on all imports in response to a monetary crisis. Although President Trump in 2019 threatened to use IEEPA to impose tariffs on Mexico over immigration concerns, that action was never taken. 

Given this unprecedented use of IEEPA, it remains unclear whether an exemption or exclusion process will be introduced. Conversely, it is also possible that these actions may be challenged through litigation or by members of Congress.  

Additional Tariffs on the Horizon 

The administration has signaled that these initial tariffs are only the beginning. Additional measures under consideration include: 

  • European Union Tariffs (Steel, Aluminum, Copper): President Trump has suggested forthcoming tariffs on EU metals, prompting threats of retaliatory tariffs from the EU. 
  • Energy Sector Tariffs (Oil & LNG): The administration is also reportedly considering tariffs on European oil and liquefied natural gas (LNG) unless the EU commits to increasing purchases of U.S. energy products. 
  • Technology & Pharmaceuticals: President Trump has indicated that tariffs may be imposed on semiconductors, pharmaceuticals, and medical supplies to reduce reliance on foreign supply chains and boost domestic production. 

The European Union has indicated it will respond in kind with countermeasures if tariffs are imposed.

Impact & Next Steps 

The wide-ranging tariffs and complex global dynamics will create immediate challenges for multinational businesses. Companies operating in the U.S. should consider the following steps: 

  • Review supply chains and vendor contracts: Identify imported goods from Mexico, Canada, and China that may be subject to tariffs and proactively seek to assess supply chain vulnerabilities.
  • Monitor for exemption and exclusion processes: If the administration introduces an exemption or exclusion process, be prepared to submit applications promptly. 
  • Prepare for retaliatory measures: If engaged in exports, assess exposure to countertariffs from China, Mexico, and Canada, particularly for agricultural, automotive, or manufactured goods. 
  • Engage with the Administration and Congress: To the extent possible, leverage public policy tools to seek potential relief through policy engagement, a strategy some companies successfully used during the prior Trump administration. 

The tariffs mark a significant shift in U.S. trade policy, with broad economic and geopolitical implications. By invoking IEEPA to justify tariffs, the administration is expanding the use of national security authorities in ways not previously tested. In order to respond, businesses should closely monitor enforcement developments, tariff mitigation strategies, and potential legal challenges, and remain prepared to adapt to evolving retaliatory measures.