U.S. Tariffs on Mexico and Canada Become Effective, Tariffs on China Increase

Effective March 4, 2025, the United States has imposed a 25% ad valorem tariff on all imports from Canada and from Mexico and increased the current ad valorem tariff on all imports from China to 20%. Energy resources from Canada will be subject to a lower 10% tariff instead of the standard 25%. Canada, Mexico and China have announced retaliatory tariffs on U.S. products to come into force in the coming days.

The tariff applies to all products with the country of origin determined to be Canada, Mexico or China. Country of origin is primarily determined through use of materials originating in a country or through substantial transformation in the country which results in a tariff classification shift.

• Products moving into a U.S. foreign trade zone are not subject to the ad valorem tariff but rather the applicable Harmonized Tariff Schedule (HTS) rate for the products. Affected products must be admitted into a U.S. foreign trade zone on or after March 4, 2025 as “privileged foreign status”, and will be charged the full 25% tariff if admitted into the United States.
• Importers cannot receive a refund of the 25% tariff upon exporting the product out of the United States.

As a reminder, on March 12, 2025, all imports of steel, aluminum, and specific products made from steel and aluminum, will become subject to a 25% ad valorem duty rate, which will be added to these March 4 tariffs for applicable products of Canada, Mexico or China.

Additional reciprocal tariff announcements and tariffs on targeted products are expected to be announced later this month and are likely to be effective April 2, 2025.

Executive orders targeting imports of copper and wood have initiated investigations into unfair trade practices, which may result in additional tariffs being imposed on such imported products.

In the United States, tariffs are collected by U.S. Customs and Border Protection from the importer of record, which is the party that owns or has purchased the products being imported.  The importer of record is responsible for properly declaring the value, classification, and country of origin of entered products, as well as paying duties, taxes and other fees.

Honigman’s Regulatory & Executive Order Task Force is closely monitoring developments and offering guidance to help businesses navigate these changes. Please reach out to Angela Gamalski, Chauncey Mayfield, or another member of the Regulatory Practice Group or Commercial Transactions Practice Group with any questions or for further assistance in navigating these changes.