Article by: Rick Walker, Vice President, TradeInsights, LCB/CCS

Well, it’s official now. After much speculation in the trade, on Saturday afternoon, President Trump signed three executive orders placing additional tariffs on Canada, Mexico, and China. Trump imposed the tariffs under the International Emergency Economic Powers Act (IEEPA), a nearly 50-year law that gives the president sweeping power to impose sanctions after declaring an emergency. No president has previously used the law to impose tariffs, although Trump threatened to use it against Mexico in his first term and more recently against Colombia when they balked at accepting a planeload of migrants deported by the United States. The White House issued a fact sheet which explains the what and why of this action. It stated, in part:

The extraordinary threat posed by illegal aliens and drugs, including deadly fentanyl, constitutes a national emergency under the International Emergency Economic Powers Act (IEEPA).

• Until the crisis is alleviated, President Donald J. Trump is implementing a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China. Energy resources from Canada will have a lower 10% tariff.
• President Trump is taking bold action to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country.

The White House posted the first Executive Order which was the Executive Order for Canada issued on Saturday and stated: Such rate of duty shall apply with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern time on February 4, 2025, except that goods entered for consumption, or withdrawn from warehouse for consumption, after such time that were loaded onto a vessel at the port of loading or in transit on the final mode of transport prior to entry into the United States before 12:01 a.m. eastern time on February 1, 2025, shall not be subject to such additional duty, only if the importer certifies to CBP as specified in the Federal Register notice. We assume the Mexico and China orders are in the pipeline, incorporating similar provisions.

We read the above paragraph to state that shipments that were already loaded at the foreign port of loading or otherwise in the final leg of transit to the U.S. as of 12:01 AM Feb 1, will NOT be subject to the new tariffs.

As of this writing, the trade has not received a system update from CBP regarding implementation of the new tariffs, but we expect them to provide an update shortly. It typically takes Customs several days to update their system with new tariffs. We have also not seen the Federal Register Notice referred to in the Executive order but will pass that along as soon as it is available.

Further updates to follow as they become available.

Please contact your V. Alexander account team, or you may also contact our Trade Compliance team at tradeinsights@valexander.com with any questions.