China, Mexico, Canada Will Be First Targets of Tariff Hikes

President-elect Trump said this week that he plans take action immediately following his inauguration on Jan. 20, 2025, to impose higher tariffs on imports from China, Canada, and Mexico.

Trump said he will sign an executive order levying a 25 percent tariff on all products coming into the U.S. from Canada and Mexico until they take action to stop the “invasion” of illegal aliens and drugs across their borders into the U.S. Trump also cited drugs as the reason he intends to issue a separate EO to impose an additional 10 percent tariff on imports from China, most of which are already subject to Section 301 tariffs of 7.5 to 25 percent.

The announcement raises a number of questions, including what legal authority would be used to implement the tariff increases, when exactly they would take effect, and what recourse U.S. importers might have under the U.S.-Mexico-Canada Agreement, which generally provides for duty-free trade between the three partner countries.

According to press reports, Mexican President Claudia Sheinbaum responded that “for every tariff” the U.S. imposes on imports from her country “there will be a response in kind.” Neither China nor Canada has yet issued any similar retaliatory threats, but they are generally considered a likelihood if the U.S. pursues the kind of measures Trump is threatening.

With fewer than two months until the higher tariffs could take effect, importers should act now to consider how to avoid, mitigate, or recover the anticipated cost increases. There are numerous options, from tariff engineering to implementing a first sale valuation structure to utilizing foreign-trade zones and other duty deferral mechanisms. ST&R will be reporting in more detail on these options in the near future, but for more information now please contact an ST&R professional.