President Trump has made good on a number of campaign commitments since being sworn in on January 20. Perhaps the one issue that has created the most uncertainty is how the Trump administration will use tariffs as a lever for negotiations in the President’s second term. In fact, the only thing that is certain is that tariffs are causing an ever-changing landscape to the international logistics and supply-chain arena. The speed of change to major trade policy is as abrupt as a half-spin of a kaleidoscope—and it looks different depending on the minute.
On February 1, the Trump administration stated it would impose a 25% import tariff on goods from Canada and Mexico, a 10% tariff on Canadian energy products, and an additional 10% tariff on imports from China.[1] The tariffs were to take effect on February 4 with a stated purpose to bring our international trade partners to the table to assist with limiting the importation of dangerous and illegal narcotics across U.S. borders. In response, Canada and China announced retaliatory tariffs, and Mexico pledged to do the same. On February 3, President Trump agreed to delay imposing the tariffs on Canada and Mexico for 30 days after speaking with Prime Minister Justin Trudeau and President Claudia Sheinbaum.[2] The 10% tariff imposed on imports from China, however, went into effect.
On February 10, President Trump signed proclamations to increase the tariffs on all aluminum and steel imports from 10% to 25%.[3] The proclamations end all prior country exemptions and terminate the specific product exclusion process and all existing general approved exclusions. The proclamations also apply the tariffs to more derivative aluminum and steel products but exclude derivative articles made from aluminum “smelted and cast” and steel “melted and poured” in the United States. These increased tariffs are slated to take effect on March 12.
On February 13, the Trump administration announced its plan for reciprocal tariffs on all countries that charge tariffs on U.S. imports.[4] President Trump stated, “On trade, I have decided for purposes of fairness, that I will charge a reciprocal tariff, meaning whatever countries charge the United States of America, we will charge them. No more, no less.” The memorandum issued by the administration ordered the calculation of tariffs other countries charge and the preparation of a response, but it stopped short of imposing tariffs.
On February 27, the Trump administration made clear that the announced and subsequently delayed tariffs on goods from Canada and Mexico would go into effect on March 4, as well as doubling the tariff on goods from China to 20%. President Trump stated that there was “no room left” for a deal to avoid the tariffs, expressing displeasure for the haste in which Cananda and Mexico acted to support his administration’s efforts to stop fentanyl and other deadly drugs from entering the U.S.
As of March 4, the new tariffs include a 25% import tariff on goods from Canada and Mexico, a 10% tariff on Canadian “energy or energy resources,” and a 20% tariff on imports from China.[5] These new tariffs are in addition to the tariffs already imposed on imported goods from those countries. The tariffs began to apply to products that were entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EST, March 4, 2025. The orders state that “no drawback shall be available with respect to the duties imposed.”
As for Canadian “energy or energy resources,” the Trump administration has not provided a comprehensive list of HTS codes indicating what qualifies as “energy or energy resources.” The executive order defines the term to 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.”[6] “Critical minerals” is further defined as any nonfuel mineral, element, substance, or material designated as critical by the Secretary of the Interior.[7]
Imports from the three countries that qualify for de minimis treatment (i.e. under $800) are currently exempt from the new tariffs. But such treatment will cease if the Secretary of Commerce notifies the president that adequate systems are in place to fully and expediently process and collect tariff revenue for covered articles otherwise eligible for de minimis treatment.
The only other exclusions provided in the orders include merchandise specified in 50 U.S.C. § 1702(b), which includes personal communications, donations, informational materials, and transactions ordinarily incidental to travel. The tariffs also do not apply to goods imported under a temporary importation bond provision of chapter 98.
Importantly, the new tariff orders do not include provisions allowing importers to apply for product specific exclusions, which Trump’s 2018 tariff policy permitted. While a process was not established in the most recent executive orders, it is possible that an exclusion process may be introduced. On March 5, Commerce Secretary Howard Lutnick stated there might be carveouts coming to the tariffs placed on Canada and Mexico. Shortly thereafter, at the behest of the three big automakers, the Trump administration announced that the new tariffs imposed on Canada and Mexico would be delayed for one month for automakers. Likewise, the Trump administration is considering exemption for certain agricultural commodities from Canada and Mexico.
Early on March 6, Secretary Lutnick indicated that one-month exemptions for more than just automakers are likely, potentially extending to all goods compliant with the United States-Mexico-Canada Agreement (USMCA), which was negotiated during Trump’s first term. Later that day, President Trump confirmed that he would delay the new tariffs for all goods from Canada and Mexico that fall under the USMCA until April 2.
While the extensiveness and depth of the developing trade wars are unknown, one thing is clear - it is an ever-changing landscape. On March 4, China swiftly announced a 15% retaliatory tariff on certain U.S. goods, and Canada announced a 25% tariff on certain U.S. goods immediately and on additional U.S. goods in three weeks. Mexico likewise promised retaliatory tariffs are coming. Additional tariff increases by President Trump are also possible, and the Trump administration is maintaining that it will move forward with its reciprocal tariffs on April 2.
For myriad industries, from construction contractors placing bids on projects to customs brokers to manufacturers, the tariff terrain is turbulent and full of risk. With this fast and changing trade environment, it is important that you understand the classification of products sourced from overseas manufacturers, the country of origin, and the relative existing regulatory requirements to import such products. Many businesses are evaluating alternative sources of goods and products from U.S. based manufacturers or from countries of origin that are not as severely impacted by the recent tariff policy. As companies begin to enter supply-chain contracts, place purchase orders with manufacturers for future orders, and import goods, it is critical to evaluate and analyze your contractual language and protect yourself from potential large changes in pricing and cost caused by the tariffs. It is also important to make sure you are properly classifying and applying the tariff schedule to imported goods—otherwise, you could be liable for large fines and penalties by U.S. Border and Customs Patrol.
The Adams and Reese Global Trade, Transportation and Logistics Team is ready to assist you through the tariff changes.
FOOTNOTES
- Exec. Order No. 14,193, 90 Fed. Reg. 9113 (Feb. 7, 2025); Exec. Order No. 14,194, 90 Fed. Reg. 9117 (Feb. 7, 2025); Exec. Order No. 14,195, 90 Fed. Reg. 9121 (Feb. 7, 2025).
- Exec. Order No. 14,197, 90 Fed. Reg. 9183 (Feb. 10, 2025); Exec. Order No. 14,198, 90 Fed. Reg. 9185 (Feb. 10, 2025).
- Proclamation No. 10,895, 90 Fed. Reg. 9807 (Feb. 18, 2025); Proclamation No. 10,896, 90 Fed. Reg. 9817 (Feb. 18, 2025).
- Memorandum on Reciprocal Trade and Tariffs, 90 Fed. Reg. 9837 (Feb. 19, 2025).
- Exec. Order No. 14,193, 90 Fed. Reg. 9113, amended by Exec. Order No. 14,197, 90 Fed. Reg. 9183 and Exec. Order 14,226, 90 Fed. Reg. 11369 (Mar. 6, 2025); Exec. Order No. 14,194, 90 Fed. Reg. 9117, amended by Exec. Order No. 14,198, 90 Fed. Reg. 9185 and Exec. Order 14,227, 90 Fed. Reg. 11371 (Mar. 6, 2025); Exec. Order No. 14,195, 90 Fed. Reg. 9121, amended by Exec. Order No. 14,200, 90 Fed. Reg. 9277 (Feb. 11, 2025) and Exec. Order, Further Amendment to Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China (Mar. 3, 2025).
- Exec. Order No. 14,193, 90 Fed. Reg. at 9114 (citing Exec. Order 14,156, 90 Fed. Reg. 8433, 8436 (Jan. 29, 2025)).
- Exec. Order 14,156, 90 Fed. Reg. at 8436 (citing 30 U.S.C. § 1606(a)(3)).