In Federal Register Notices slated to be published on March 6, 2025, Notice of Canadian Tariff Implementation and Notice of
Mexico Tariff Implementation, U.S. Customs and Border Protection (“CBP”) is implementing President Trump’s Executive Orders imposing duties on goods from Canada and Mexico. As previously reported by Washington Trade Watch, President Trump Invokes National Emergency Authority to Impose Tariffs on Canada, Mexico and China, the President is taking these actions based on the International Emergency Economic Powers Act (“IEEPA”). To utilize the authority under IEEPA, the President declared a national emergency on February 1 with respect to “the influx of illegal aliens and illicit drugs into the United States” and declared that the “failure to act on the part of Canada [and Mexico and China] constitutes an unusual and extraordinary threat, which has its source in substantial part outside the United States, to the national security and foreign policy of the United States.” In an interview earlier Monday, Secretary of Commerce Lutnick reportedly said that Canada and Mexico have done a good job at stopping undocumented migrants from entering the United States, but they need to do more to stop the flow of fentanyl.
According to the Notices, additional duties of 25% will apply to products of Mexico or Canada entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on March 4, 2025. The additional duties will apply in addition to all other applicable duties, taxes and fees, and regardless of a product’s USMCA eligibility. The duties will apply to products of Mexico or Canada, including both goods of Mexico or Canada under the rules set forth in part 102, title 19 of the Code of Federal Regulations, as well as goods for which Mexico or Canada was the last country of substantial transformation prior to importation into the United States. The duties will be administered by the creation and required use of new Chapter 99, HTSUS provisions—9903.01.01 for Mexican goods and 9903.01.10 for Canadian goods. Certain Canadian energy products will be subject to 10% additional tariffs instead and be reported under HTSUS 9903.01.13. Drawback of the additional duties will not be allowed.
Based on the Notices as well as CBP Guidance on Mexico Tariffs and CBP Guidance on Canada Tariffs the additional duties will not apply to goods for which entry is properly claimed under a provision of chapter 98 of the tariff schedule pursuant to applicable regulations of CBP, except for goods entered under heading 9802.00.80; and subheadings 9802.00.40, 9802.00.50, and 9802.00.60. For subheadings 9802.00.40, 9802.00.50, and 9802.00.60, the additional duties apply to the value of repairs, alterations, or processing performed (in Canada or Mexico), as described in the applicable subheading. For heading 9802.00.80, the additional duties apply to the value of the article assembled abroad (in Canada or Mexico), less the cost or value of such products of the United States. We expect many importers to revisit these duty allowance provisions as a potential means of mitigating the impact of the tariffs.
CBP statistics on drug interdiction reflect 43 pounds of fentanyl seized at the northern border in FY 2024 in 82 events and 10 pounds of fentanyl seized in FY 2025 (through February 6, 2025) in 20 events. The same statistics reflect 21,100 pounds of fentanyl seized at the southern border in FY 2024 in 863 events and 5,400 pounds seized in FY 2025 (through February 6, 2025) in 248 events.
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