In response to the tariffs imposed by President Trump on Canada, Mexico, and China on February 1, 2025 under the International Emergency Economic Powers Act (IEEPA), each of those three countries has indicated it plans to enact countermeasures in response. The specifics of those measures continue to be unveiled and Husch Blackwell will monitor them as they unfold. We discussed President Trump’s initial tariffs in greater detail in our earlier February 2nd post here.
Canada
On February 1, 2025, Canada became the first country to enact tariffs against the U.S. in response to the U.S. IEEPA tariffs. Prime Minister Trudeau announced 25% tariffs on all U.S.-origin imports, (i.e., those goods eligible to be marked as a good of the U.S. in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (CUSMA Countries) Regulations) such Canadian retaliatory tariffs beginning on Tuesday, February 4 and anticipated to cover $30 billion of U.S. goods. Additional Canadian retaliatory tariffs are scheduled to take effect on February 21 on $125 billion of U.S. goods. Canada’s tariffs are expected to cover U.S.-origin food and beverages, including beer, wine, spirits, and fruit, in addition to apparel, household appliances, and a variety of other items. The full list of items identified by tariff code can be found here.
Canada stated that its tariffs “will remain in place until the U.S. eliminates its tariffs against Canada.” U.S. goods that were in transit to Canada on February 1 are not subject to the Canadian retaliatory tariffs.
In addition to the retaliatory tariffs, certain Canadian provinces including Ontario, British Columbia and Nova Scotia, have announced “non-tariff” measures in response to the U.S. IEEPA tariffs, such non-tariff measures to include removing U.S.-origin liquor and other alcohol beverages from government stores.
Mexico and China
In a statement announced February 1, Mexico President Claudia Sheinbaum stated that she has instructed “the Secretary of Economy to implement Plan B that we have been working on, which includes tariff and non-tariff measures in defense of Mexico’s interests.”
China’s Ministry of Commerce stated: “China will file a lawsuit with the [World Trade Organization] for the wrong practices of the United States and will take corresponding countermeasures to firmly safeguard its own rights and interests.”
Neither Mexico nor China has yet provided further specifics regarding its intended retaliatory tariffs or measures, and Husch Blackwell will continue to monitor any updates.
As previously reported, in all three executive orders implementing the IEEPA tariffs, the President reserved the right to “increase or expand in scope” the IEEPA duties imposed.
Legal Authority
As discussed in our earlier post, President Trump imposed tariffs on the three countries through three Executive Orders (“EO”) under Section 1702(a)(1)(B) of IEEPA, declaring a national emergency due to increased immigration and fentanyl flows into the United States. IEEPA grants the President sweeping authority to address any “unusual or extraordinary threat to national security, foreign policy, or economy of the United States” with respect to which the President has declared an emergency. Significantly, though, on February 2, President Trump defended his decision to impose tariffs, stating “The USA has major deficits with Canada, Mexico, and China (and almost all countries!), owes 36 Trillion Dollars, and we’re not going to be the ‘Stupid Country’ any longer.” It is possible that countries looking to challenge the IEEPA tariffs may seize on President Trump’s language to argue there is no “unusual or extraordinary threat” posed and that the true reason for the tariffs rests with a trade deficit with those countries. With respect to Canada specifically, it is also not immediately clear what facts support the immigration and fentanyl threat cited as being “unusual and extraordinary.” For example, Reuters has reported the total amount of fentanyl seized at the Canadian border as 43 pounds in FY 2024 and two pounds in FY 2023.
Unintended Consequences
The tariffs, and any protracted back-and-forth countermeasures between the United States and the countries, may also have unintended consequences. Recalling the U.S. tariffs imposed on China during the first Trump administration on more than $550 billion of Chinese goods, China retaliated with tariffs of its own that reached $185 million of U.S. products in a relatively short amount of time.
An analysis of the IEEPA tariffs also raises questions as to whether these actions could push companies to move their manufacturing facilities elsewhere, including even China. For example, a U.S. company facing 25% tariffs on goods from Mexico or Canada may find a more favorable rate on certain Chinese-manufactured goods, particularly when one accounts for both the new IEEPA 10% tariff plus the existing 7.5% tariff rate for goods subject to Section 301 tariffs of 7.5% under List 4A.
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