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Trump 2.0: U.S. Tariffs on China Take Effect; Mexico and Canada Granted 30-Day Pause

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Following President Trump’s February 1, 2025, announcement of a sweeping set of tariffs on imports from Canada, Mexico, and China, citing immigration concerns and the flow of fentanyl, trade tensions have lurched unpredictably between escalation and temporary resolution. While negotiations between heads of state on February 3, 2025, led to a 30-day pause on both U.S. tariffs for Canada and Mexico and parallel retaliatory measures, the 10% tariff on imports from China took effect at 12:01 a.m. on February 4, 2025. 

China has responded with a series of retaliatory measures, including new tariffs on U.S. goods, export controls on critical raw materials, an anti-monopoly investigation, and the designation of two U.S. companies on its Unreliable Entity List. While media reports that President Trump is no longer scheduled to speak with Chinese President Xi Jinping today, China’s retaliatory measures go into effect on February 10, leaving a window of opportunity for both countries to de-escalate tensions and roll back the U.S. tariffs against China.  

China: U.S. Tariffs Proceed as Planned, China Announces Retaliation
Despite the temporary reprieve for Canada and Mexico, the United States proceeded with its planned additional 10% tariff on imports from China (including Hong Kong) at 12:01 a.m. on February 4, 2025. The Federal Register notice confirms the following: 

  • Temporary allowance for goods already in transit before February 1, 2025, provided they arrive in the U.S. by March 7, 2025; 
  • No duty drawback for these additional tariffs; 
  • No duty-free de minimis treatment under 19 U.S.C. 1321; and 
  • No clear exemption process. Certain exemptions remain in place, including personal communications (such as postal, telegraphic, and telephonic exchanges) that do not involve a transfer of value, donations of essential goods for humanitarian relief, informational materials like publications, films, news feeds, and artwork, and personal-use products carried in travelers’ accompanied baggage. 

In response to the U.S. tariffs, China immediately announced a number of retaliatory measures.  

  • Retaliatory Tariffs: China’s Finance Ministry has imposed targeted tariffs on certain U.S. goods, including a 15% tariff on coal and LNG and 10% for crude oil, agricultural equipment and cars.  
  • Export Controls on Metal-Related Items: China’s Ministry of Commerce (MOFCOM) and the Customs Administration have imposed new restrictions on the export of certain tungsten, tellurium, bismuth, molybdenum, and indium. These restrictions could impact key U.S. industries, including semiconductor manufacturing, pharmaceuticals, electronics, aerospace, defense, and electric vehicles. 
  • Anti-Monopoly Investigation Against Google: China’s State Administration of Market Regulation has launched an anti-monopoly investigation into Google.
  • Unreliable Entity List (UEL) Designations: MOFCOM has designated two major U.S. companies to the Unreliable Entity List. The UEL designation notice does not specify the exact restrictions that will apply to these companies at this time. 

MOFCOM also indicated that China has filed a case against the U.S. tariff measures under the WTO dispute settlement mechanism. 

As noted above, these are subject to change, pending upcoming discussions between the two leaders.  

Mexico and Canada: Delay of Implementation
On February 3, 2025, Prime Minister Justin Trudeau and President Trump confirmed a 30 day pause with relation to the tariffs on Canada, as well as Canada’s announced retaliatory measures. President Trump has released an Executive Order confirming this pause, noting that the tariffs will instead go into effect on March 4, 2025. President Trump and President Sheinbaum similarly agreed to a pause on tariffs and retaliatory measures related to Mexico. President Trump has confirmed this delay in a separate Executive Order.  

Both executive orders include a provision allowing for immediate implementation of the tariffs if the illegal migration and illicit drug crises worsen or if the relevant government fails to take sufficient action to address them. 

Next Steps
The current trade environment remains highly volatile, with the 10% tariff on Chinese imports now in effect and tariffs on Canada and Mexico temporarily paused until March 4, 2025. President Trump has also indicated that the European Union (EU) may be the next target for U.S. tariffs, citing trade imbalances and urging the EU to increase purchases of American oil and gas.  

Given the fluidity of the situation, global businesses should actively monitor developments from the White House, the Department of Homeland Security, and relevant regulatory agencies, as well as responses from China, Canada, Mexico, and the EU. Companies with supply chain exposure to these regions should assess potential impacts and prepare contingency plans for various scenarios, including the imposition of new tariffs or retaliatory measures.