On February 1, 2025, the Trump administration imposed tariffs on imports from Canada, Mexico, and China under the International Emergency Economic Powers Act (IEEPA). And while the proposed tariffs on Canada and Mexico have been suspended for at least 30 days as of February 4, 2025, business owners that rely on imported goods from these countries would be wise to prepare for them to be reinstated at any time. The administration is tying these tariffs to national security concerns over illegal narcotics, particularly fentanyl, and there’s no predicting when/if they will come back.
The tariffs include:
- 25% additional duty on imports from Canada (except energy resources, which get a 10% duty)
- 25% additional duty on imports from Mexico
- 10% additional duty on imports from China
These tariffs stack on top of existing ones, such as the Section 301 tariffs on China and Section 232 tariffs on steel and aluminum.
Bottom line? If your business sources materials, equipment, or products from these countries, you need to prepare for potentially higher costs and supply chain delays – yes, even though the pause is in effect. This delay doesn’t mean tariffs are off the table. Further, these tariffs are structured so businesses can’t claim a drawback (meaning, you won’t get money back).
So, what should you do?
Now is not the time to wait and see what happens. If your business might be affected, start making moves now:
- Review your supply chain. Are there alternative source options?
- Check your import classifications. Are your HS codes, customs valuation, and country of origin accurate?
- Explore duty deferral programs, which may legally reduce your tariff burden.
- Stay ahead of potential exemption processes. If the government does roll out an exemption program, you want to be first in line.
Bottom Line
Even with the temporary pause on Canada & Mexico’s tariffs, be prepared for increased costs, supply chain hiccups, and the potential for more trade battles. Use this pause to mitigate your financial risk.
If you need help figuring out your best move, reach out.
