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U.S. Tariffs on Mexico and Canada Take Effect; Increased Tariff Rate on China Imposed

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On March 4, 2025, in an escalation of its tariff-heavy trade strategy, the Trump Administration officially implemented the previously paused tariffs on imports from Canada and Mexico while simultaneously increasing existing duties on Chinese goods by an additional 10%. These measures, introduced under the International Emergency Economic Powers Act (IEEPA), come after an initial 30-day delay in imposing tariffs on the North American trading partners on February 3, 2025.  

Tariffs on Imports from Canada and Mexico Take Effect 

As of March 4, 2025, at 12:01 a.m. EST, a 25% tariff applies to all imports for consumption originating from Canada and Mexico, with a reduced 10% duty on Canadian “energy and energy resources.” (On March 5, 2025, in response to concerns raised by major U.S. automakers, the Trump Administration paused application of the 25% tariff solely for auto imports for 30 days, which expires on April 4, 2025.) The orders retain the same limited exceptions as the February Executive Orders.  Additionally: 

  • Goods in transit: These tariffs provide no exemption for goods already in transit before the effective date. 
  • Drawback restrictions: No drawback (refund of duties) is available for these additional tariffs. 
  • De minimis exception: Per the March 2, 2025 amendments to the Canada and Mexico EOs, duty-free de minimis treatment (for shipments under $800) remains available for now, until the Department of Commerce confirms full tariff collection capabilities. 

Retaliation from Canada and Mexico 

As foreshadowed last month, Canada has announced 25% tariffs on $155 billion of U.S. goods (listed by HTS code), starting with tariffs on an initial $30 billion in goods effectively immediately on March 4, 2025. The Canadian government has outlined the additional $125 billion in goods that will be subject to duties but provided a comment period of 21 days before those additional duties become effective. On March 5, 2025, Canada filed a formal complaint with the World Trade Organization (WTO) challenging the U.S. tariff measures applied to Canadian goods.  

Mexico has signaled its intention to respond with its own retaliatory tariffs, with President Claudia Sheinbaum expected to announce her response on March 9, 2025. 

China Tariff Increase Targets Synthetic Opioid Supply Chain 

The Trump Administration has also increased existing tariffs on all goods entered for consumption from China (including Hong Kong) from 10% to 20%, effective March 4, 2025. This follows the President’s determination that China has not taken sufficient action to curb the illicit synthetic opioid trade.   

Goods that were already in transit before February 1, 2025, and arrive in the U.S. between February 4 and March 7, 2025, may qualify for an exemption from the new tariffs , provided that importers certify their eligibility. 

China’s Retaliation: WTO Complaint, New Tariffs, and Sanctions 

Since the first tariffs imposed by the new Trump Administration on February 4, 2025, Beijing has reacted strongly to the escalation, announcing a series of countermeasures. This includes: 

  • A formal complaint filed with the World Trade Organization (WTO), challenging the legality of the unilateral U.S. tariff hikes; 
  • Retaliatory tariffs on U.S. imports, including imported poultry, fresh produce, and wheat, effective March 10, 2025; and 
  • Sanctions against multiple U.S. companies. 

Looking Ahead 

At this time, the Trump Administration has not announced any exclusion process for the IEEPA tariffs.  Importantly, these tariffs will be imposed in addition to tariffs under other trade authorities, including section 232 and antidumping and countervailing duty (AD/CVD) orders.  The Trump Administration has announced plans to impose a 25% tariff on all steel and aluminum imports, effective March 12, 2025, and initiated investigations under section 232 for copper and lumber products and derivative articles.  The White House has also suggested that it will pursue further sectoral tariffs on semiconductors, automobiles, pharmaceuticals, and agricultural products, set to take effect as soon as April 2, 2025. Further, the Trump Administration’s “Fair and Reciprocal Plan” announced on February 13, 2025, seeks to penalize trading partners that impose tariffs, non-tariff barriers, or other restrictions on U.S. exports.  The comment period for reciprocal tariffs expires on March 11, 2025.   

U.S. trading partners have signaled an intention to impose countermeasures on newly announced tariffs imposed on their exports, suggesting continued escalation in the global trade landscape. With global trade increasingly defined by escalating tariffs and countermeasures, businesses should closely monitor these developments, assess supply chain risks, and explore mitigation strategies.