President Trump announced March 3 a number of actions that will increase tariffs on imports from China, Canada, and Mexico, which have or will likely soon respond with retaliatory measures.
ST&R offers a three-pronged approach to avoiding, mitigating, and/or recovering these and other tariffs. For more information on which of these strategies might be most effective for your business, please contact ST&R.
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Mexico and Canada
Effective at 12:01 am EST on March 4, tariffs of 25 percent will be assessed on imports of articles that are products of Canada or Mexico, except that energy products from Canada are subject to a 10 percent tariff. These tariffs were imposed despite the duty-free provisions of the U.S.-Mexico-Canada Agreement, no drawback will be available for them, and there is no grace period for goods in transit. In addition, U.S. Customs and Border Protection states that it will reject non-compliant entry summaries and that the importer of record may be subject to liquidated damages if a rejected entry summary is not resubmitted timely with payment.
The tariffs apply to both (1) goods of Canada or Mexico under the rules of origin set forth in 19 CFR Part 102, as applicable, and (2) goods for which Canada or Mexico was the last country of substantial transformation prior to importation into the U.S. ST&R is seeking clarification on how U.S. Customs and Border Protection intends to interpret and implement this provision.
However, there are various exemptions from these tariffs, including goods for personal use, humanitarian donations, informational materials, and certain goods entered under HTSUS Chapter 98.
In addition, de minimis imports from Canada and Mexico will continue to be allowed (and not subject to tariffs, including those imposed March 4) until the Department of Commerce determines that adequate systems are in place to process and collect tariffs on such imports.
Canadian Prime Minister Justin Trudeau responded to the U.S. tariffs by saying that his country will impose 25 percent tariffs on C$155 billion worth of imports from the U.S. in two phases and that these tariffs will remain in place until the U.S. eliminates its tariffs against Canada. The first phase, which took effect March 4, covers C$30 billion worth of goods, including orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper. The second phase, which is slated to take effect March 25, will include passenger vehicles and trucks, steel and aluminum products, certain fruits and vegetables, aerospace products, beef, pork, dairy, recreational vehicles, and recreational boats.
“Should U.S. tariffs not cease,” Trudeau added, “we are in active and ongoing discussions with [Canadian] provinces and territories to pursue several non-tariff measures.”
At press time Mexico had not announced any specific retaliatory measures.
China
Effective at 12:01 am EST on March 4, additional tariffs on virtually all imported articles that are products of China were increased from 10 percent to 20 percent.
There are limited exemptions for goods for personal use, humanitarian donations, informational materials, and certain goods entered under HTSUS Chapter 98. In addition, goods from China may be exempted if they (1) were loaded onto a vessel at the port of loading, or in transit on the final mode of transport prior to entry into the U.S., before 12:01 am EST on Feb. 1, and (2) are entered or withdrawn from warehouse for consumption on or after 12:01 am EST on Feb. 4 and before 12:01 am EST on March 7.
In addition, de minimis imports from China will continue to be allowed (and not subject to tariffs, including those imposed March 4) until the DOC determines that adequate systems are in place to process and collect tariffs on such imports.
See related article in this issue regarding China’s announced retaliatory measures.
Steel and Aluminum
Effective at 12:01 a.m. EDT on March 12, tariffs of 25 percent will be imposed on (1) additional steel derivative products classified in HTSUS Chapter 73, (2) aluminum and derivative products previously subject to 10 percent tariffs, and (3) additional aluminum derivative products classified in HTSUS Chapter 76.
The effective date for 25 percent tariffs on additional steel derivative products not classified in HTSUS Chapter 73, and additional aluminum derivative products not classified in HTSUS Chapter 76, will be established once the DOC determines that adequate systems are in place to process and collect those tariffs. These tariffs will only apply to the declared value of the steel or aluminum content of the derivative article. Tariff exemptions will apply to newly-added derivative products provided they were processed in another country from steel articles that were melted and poured, or aluminum articles that were smelted and cast, in the U.S.
If aluminum derivative products are from Russia, or any amount of primary aluminum used to make those articles is smelted or cast in Russia, they are subject to 200 percent tariffs.
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