On February 1, 2025, the Trump Administration issued three executive orders imposing significant tariffs on imports from Canada, Mexico,¹ and China,² effective on February 4, 2025, citing national security concerns related to unlawful migration and fentanyl flows. On February 3, 2025, Mexico, Canada and the United States reached temporary agreements, respectively, postponing the implementation of the tariffs for 30 days. This Alert discusses the tariffs imposed on China only, though similar principles would apply to Mexico and Canada if the tariff would ultimately be implemented.

In addition to all existing Tariffs for China, the executive order for China imposes a 10% additional tariff on imports from China. The new tariffs will be reflected in applicable tariff rates published in the US Harmonized Tariff Schedule (HTSUS), effective February 4, 2025, and are in addition to any existing duties. These actions are taken using powers claimed by the President under the International Emergency Economic Powers Act (IEEPA), which allows the President to regulate commerce in response to national emergencies.

The tariffs will remain in effect indefinitely, until the President deems the national emergency to be alleviated. Tariffs may further increase if China retaliates, and China has announced that it intends to retaliate. The administration is rumored to target the European Union with blanket tariffs of 10% to which the European Union preemptively responded with an announcement of similarly targeted retaliatory tariffs.

Because these changes are ongoing, we will continue to disseminate updated Alerts periodically for our clients on the relevant changes. 

Tariff Implementation

Typically, tariff changes are enacted through a combination of notices in the Federal Register (FR) and regulatory amendments to the Code of Federal Regulations (CFR). Given the untested use of IEEPA in this case, it remains an open question whether additional formal rulemaking will be announced.³

On February 3, the US Customs and Border Protection (CBP) provided technical guidance concerning China (which includes Hong Kong) and Canada (before the 30 days’ extension was granted).⁴ The unpublished FR notice was filed on February 3, with the published version expected on February 5, 2023 (https://federalregister.gov/d/2025-02293).

Limited Exceptions and Exclusions

As announced, the executive orders do not provide for any mechanism for exceptions or exclusions. The tariffs apply to products that are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Standard Time on February 4, 2025. There is a limited carve out for goods “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.”⁵ This exception will require goods that qualify for this mechanism to be entered for consumption between February 4 and March 7, 2025.

Further, the tariffs are imposed on all goods except for merchandise excluded under 50 U.S.C. § 1702(b), namely (1) personal communications, (2) donated articles, (3) informational materials, and (4) transactions ordinarily incident to travel.

In addition, goods from China will no longer benefit from duty-free treatment under the Section 321 de minimis entry process (shipments of less than $800). Duty drawback will no longer be available for tariffs paid on goods imported from China.

These measures were met with swift responses from with China declaring its intent to respond via complaint to the World Trade Organization. 

Mexico and Canada

We will provide updated alerts as the negotiations between Mexico, Canada and the United States proceeds. 

China

China has rejected the U.S. rationale linking tariffs to fentanyl control and has vowed to respond firmly. In immediate retaliation to the latest US tariffs, China’s Finance Ministry announced new levies on key US exports, including a 15% tariff on coal and LNG and a 10% tariff on crude oil, farm equipment, and some automobiles, effective February 10, 2025. Additionally, effective immediately, China’s Commerce Ministry and Customs Administration imposed export controls on five critical metals—tungsten, tellurium, molybdenum, bismuth, and indium—citing national security concerns. Defense, clean energy, and high-tech industries are heavily reliant on Chinese supply chains for these metals, with the US having no domestic production of refined bismuth since 1997 and stopping tungsten mining in 2015. China also launched an anti-monopoly investigation into Google (Alphabet Inc.) and added PVH Corp. (Calvin Klein and Tommy Hilfiger) and Illumina (a biotech company) to its “unreliable entities list.” Finally, China plans to challenge the US tariffs at the World Trade Organization (WTO). The Chinese government has emphasized that the US should manage its own drug problems internally rather than leveraging tariffs and promised to implement “necessary countermeasures to defend its rights and interests.”

Economic Implications and Practical Considerations

These tariffs are expected to increase consumer prices in the US as costs are passed on to buyers, affecting various sectors, including agriculture, electronics, and automobiles marking a significant escalation in trade tensions, with potential widespread implications for international trade and domestic economies. In anticipation of continuous escalation of the US tariffs as well as the retaliatory responses, businesses should review existing agreements and supply chain logistics including:

• Review of the current supply chain, exploring opportunities of sourcing from countries currently not subject to tariff increases;
• Rerouting (i.e. drop-shipping) shipments when country of origin is not China;
• Explore use of Bonded Warehouse storage, Foreign Trade Zones and other potential duty reduction strategies to mitigate timelines for paying duties during what may continue to be fluctuating changes. Importantly, Drawback is not permitted;
• Review HTS classifications and country or origin for all product inputs and finished products throughout the supply/manufacturing process to potentially minimize tariff impact;
• Review product valuation, including opportunities for First Sale valuation when transactions are multi-tiered. Review paid commissions and other services and fees, that may be legally excluded to reduce duties.
• Amending contractual agreements to include clauses mitigating tariff increases. Our litigation colleagues have published a helpful alert Does Your Force Majeure Clause Provide Refuge from Trump’s Threatened Tariffs?

For guidance tailored to your business needs, please contact Dentons Cohen & Grigsby’s International Trade team.

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Dentons Cohen & Grigsby will continue to monitor these developments and provide additional updates. We provide our clients access to resources in Canada, Mexico, China, and globally to help navigate these rapidly changing trade measures.

1. Executive Order of February 1, 2025: “Imposing Duties to Address the Situation at Our Southern Border” (unpublished). ↩
2. Executive Order of February 1, 2025: “Imposing Duties to Address the Synthetic Opioid Supply Chain in the People's Republic of China” (unpublished). ↩
3. Please see DCG’s alert Trade Forecast Quick Implementation discussing implementation mechanisms for Tariffs. The use of IEEPA to impose tariffs is relatively untested and may face legal challenges from affected importers or other parties. IEEPA authorizes the President to regulate commerce during a national emergency presenting an unusual and extraordinary threat to the U.S. The majority of prior legal challenges to the use of IEEPA have not been successful, given the broad authority contained in the statute and U.S. courts' deference to the Executive Branch in matters of national security.↩
4. The CBP guidance on Canada identified “Products of Canada” as the target of the additional tariffs, as opposed to all tariffs crossing the border form Canada.↩
5. Customs is expected to provide guidance on the certification process that importers must use for the “goods in transit” exception referred to in the executive orders.↩