U.S., Canada, and Mexico Trade Response: New Tariffs and Retaliatory Measures

March 3, 2025. As part of ongoing trade developments, the U.S. government has announced new tariffs on imports from Canada, Mexico, and China. In response, both Canada and Mexico have outlined retaliatory measures. Additionally, these changes may necessitate adjustments to customs surety bonds for importers. Below is an updated overview of these actions and their potential impact. 1. U.S. New Tariffs on Canada, Mexico, and China:

• Tariffs on Canada and Mexico:On February 1, 2025, President Donald Trump issued Executive Orders imposing the following tariffs:
  • A 25% tariff on all imports from Canada and Mexico, excluding Canadian energy products, which are subject to a 10% tariff.
  These measures were enacted under the International Emergency Economic Powers Act (IEEPA) to address national security concerns related to illegal immigration and the influx of illicit drugs, including fentanyl.
  • Effective Date: Initially set for February 4, 2025, the implementation was postponed to March 4, 2025, to allow for further assessment.
• Tariffs on China:An additional 10% tariff was imposed on goods from China, effective February 4, 2025.  Effective March 04, 2025 an additional 10% tariff will be added to goods from China.  This will bring the Chinese tariffs to 20% in total.  This tariff is in addition to the existing tariffs on China-origin goods that have been imposed since 2018.
• De Minimis Provision:President Trump issued executive orders on Sunday, March 2, 2025, postponing the removal of the de minimis exemption (duty-free treatment for shipments valued at $800 or less) for imports from Canada and Mexico in advance of the planned imposition of 25% tariffs on March 4. However, the executive orders stated that "Such duty-free de minimis treatment shall cease to be available for such otherwise eligible covered articles upon notification by the Secretary of Commerce to the President that adequate systems are in place to fully and expeditiously process and collect tariff revenue."

2. Canada's Retaliatory Measures: In response to the U.S. tariffs, Canada had announced a two-phase implementation of retaliatory tariffs—Phase 1, which included tariffs on C$30 billion worth of U.S. imports, and Phase 2, which added tariffs on an additional C$125 billion worth of U.S. imports. However, these measures have been postponed. The specific products affected have not yet been disclosed. Canada's approach aims to defend its economic interests in light of the recent U.S. actions. 3. Mexico's Retaliatory Measures: Mexico has also announced its intention to impose retaliatory tariffs on U.S. products. While specific details are pending, President Claudia Sheinbaum has directed the economy ministry to implement both tariff and non-tariff measures to protect Mexican economic interests, with a focus on combating illegal immigration and the fentanyl trade. 4. Customs Surety Bond Requirements: The implementation of these tariffs will result in significant increases to duty outlays by importers, impacting their customs surety obligations. Importers must understand these obligations to avoid disruptions in the flow of imports.

• Bond Sufficiency: The imposition of universal tariffs on goods from Canada, Mexico, and China will require U.S. bondholders to re-evaluate the sufficiency of their current bonds. If a bond does not cover the value of duties at the time of import, U.S. Customs and Border Protection (CBP) may issue a notification requiring the importer to increase their bond. Importers are typically granted a 30-day grace period to adjust their surety to appropriate levels. Failure to do so may result in bond termination, leading to goods being held at the border until adequate surety is secured or duties are paid in full.

Potential Implications:

• Supply Chain Disruptions: The new tariffs and corresponding retaliatory measures may lead to increased costs and delays, particularly for businesses reliant on imports from these regions.
• Increased Consumer Prices: The implementation of tariffs is expected to raise prices on various goods, from automotive parts to fresh produce, affecting both businesses and consumers.
• Customs Compliance: Importers must ensure their customs surety bonds are sufficient to cover increased duty liabilities to prevent import disruptions.

Our team at Buckland is committed to assisting you in navigating these complex trade developments. Please reach out with any questions or for assistance in adapting your operations and customs compliance to the new tariff landscape. Sincerely, Buckland