On March 4, 2025, after the 30-day pause since the initial announcement by the Trump Administration of sweeping tariffs on virtually all Canadian, Mexican, and Chinese goods imported into the US, the White House is proceeding with implementing the tariffs.  In response, Canada announced retaliatory measures, with the initial tariff package targeting CA$155 Billion dollars of US goods imported into Canada. Meanwhile, China also imposed retaliatory tariffs and took additional actions, including within the framework of the World Trade Organization. Mexico plans to take action next week.

US Measures

On February 1, 2025, pursuant to the Executive Order and by the Presidential authority under the International Emergency Economic Powers Act (IEEPA), the US President announced a 25% additional tariff on imports from Canada. Energy resources from Canada would have a lower 10% tariff. "Energy" or "energy resources" was defined by this and prior Executive Orders as covering crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals. However, following the negotiations on February 3, 2025, the US and Canada agreed to postpone the tariffs for at least 30 days. Canada committed to reinforce the border with new equipment, technology, and personnel, enhanced coordination across North America, and increased resources to stop the flow of fentanyl.

The White House also announced a 25% additional tariff on imports from Mexico and a 10% additional tariff on imports from China. On February 3, 2025, the US President and Mexican President agreed to an immediate pause of anticipated tariffs for one month. Mexico committed to immediately supply 10,000 Mexican soldiers to the border with the US, specifically designated to stop the flow of fentanyl and unlawful migration. The tariffs with respect to China came into effect on February 4, 2025.

Following the 30-day pause, due to a combination of political disagreements and unmet expectations regarding fentanyl and unlawful immigration, the trade negotiations collapsed, and effective March 4, 2025, the new tariffs with respect to Canada and Mexico came into effect. Furthermore, an additional 10% tariff has been imposed on China.

Goods from Canada and Mexico will continue to benefit from the duty-free treatment under the US de minimis (below $800) value threshold, and duty drawback will be available for tariffs paid on goods imported from Canada and Mexico. But the exemption will end once Commerce notifies the US President that systems are in place to effectively process and collect tariff revenue applicable for covered articles otherwise eligible for de minimis treatment. 

The President's Executive Order identified the basis for the use of IEEPA as a national security emergency stemming from unlawful migration and fentanyl flows from Canada, Mexico, and China. The official White House fact sheets announcing the tariffs and calling for implementation are available here and here, respectively. The action is consistent with Trump's "America First Trade Policy" memorandum of January 20, 2025, declaring trade policy as a critical component in national security.

The new tariffs will be imposed through amendments to the US Harmonized Tariff System (HTSUS), expected shortly. The new duties would be in addition to any existing tariffs on those products.

There is a limited carve out for goods in transit, meaning 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."¹

The US can further accelerate tariffs or impose other restrictive measures, should Canada, Mexico, or China retaliate against the United States in response to the tariffs through import duties on US exports or similar measures.

The US stated that the tariffs will remain in place until a further determination is made that the national emergency underlying the tariffs has been alleviated. Such a determination may be made by the President, or the agencies designated to implement the Executive Order – in this case, the Departments of Homeland Security, Treasury, Commerce, and Justice.

While the US Congress is unlikely in the near term to override this Executive Order, the relatively novel use of IEEPA may create legal challenges by affected importers or others. IEEPA by its terms authorizes the President to “regulate” the importation and exportation of goods during a time of emergency presenting an “unusual and extraordinary threat… to the national security, foreign policy, or economy of the United States.” Pursuant to IEEPA, the President should consult with, and report to, the Congress regarding exercising any of the authorities under IEEPA. The majority of prior legal challenges to the use of IEEPA have not been successful, given the broad authority contained in the statute and US courts' additional deference to the Executive Branch in matters of national security.

Canada Measures

On February 1, 2025, the Canadian Prime Minister announced that Canada would impose counter-measures on Canadian goods.  The measures include a first round of $30 billion counter-tariffs on US goods (targeting certain food items), and a second round escalating to $125 billion within 21 days (focusing on steel, aluminum, and other products).  While the initial United States Surtax Order (2025-1) published in February has been repealed, it was registered again on March 3 with Canadian counter-tariffs entering into force on at 12:01 a.m. on Tuesday March 4, 2025.

The United States Surtax Order (2025) which is adopted under subsection 53‍(2) and paragraph 79‍(a) of the Customs Tariff.

The first set of tariffs on CA$30 Billion on US goods includes products such as orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper. The Order in Council sets out 1256 HS codes that are subject to the 25% tariff as of March 4, 2025.

Under the United States Surtax Order (2025) US-origin goods are based on the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations. The applicable origin rule under the marking regulation is as follows:

1. the goods are wholly obtained or produced;
2. the goods are produced exclusively from domestic materials;
3. each of the foreign materials incorporated into the goods undergoes an applicable change in tariff classification and satisfies any other applicable requirements of these Regulations; or
4. a good is considered to originate under a Chapter Note set out in Schedule III.

Note that Schedule III of the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations includes several tariff shift rules.

The remaining CA$125 Billion in tariffs will be subject to a 21 day consultation period and will then enter into force. Among other goods, this will include products such as passenger vehicles and trucks, including electric vehicles, fruits and vegetables, beef, pork, dairy, electronics, steel, aluminum, trucks, and buses. Finance Canada will The full list of goods for this portion of the package is not yet available. Finance Canada will is actively consulting on goods that will form part of that list. Submissions can be online here or to consultations@fin.gc.ca.

Additional, non-tariff measures relating to procurement, energy and critical minerals are also being considered for potential future measures.

Impacted parties will be able to seek a remission order from the Department of Finance, that can effectively exclude tariffs for individual businesses. Remission submissions are increasing detailed and complex and need to be approached with significant rigour. Remission order submission details are available here.

In addition, a Customs Notice issued by the Canada Border Services Agency on March 4 confirms that Canada’s duty relief and duty drawback programs will apply to the surtax on US goods.

In addition to the announcement by the Canadian Federal government various Canadian premiers and municipalities, have announced various actions that range from limiting procurement to US entities/ individuals, cancelling existing contracts held by US entities, and removing US alcohol from Canadian provincially controlled liquor stores. Notably, Ontario’s premier has stated that a 25% export tax on electricity it sends to 1.5 million homes in Minnesota, Michigan and New York will be imposed with potential for a full shut down for further tariffs.

Mexico Measures

In the beginning of February, Mexican President Claudia Sheinbaum reportedly said that her government was ready to respond in kind and instructed the Secretary of Economy to implement the "Plan B" that would include tariff and non-tariff measures, without specifying what specific US goods the Mexican government would target. Mexico's likely focus would be on precision strikes against US products in so-called carousel retaliation, which would periodically rotate the US products subject to retaliatory tariffs. Mexico previously employed retaliation tariffs on steel, pork, cheese, apples, and bourbon in 2018, in response to US tariffs on steel. 

On February 3, 2025, the US and Mexico agreed to postpone the tariffs for one month. Since then, Mexico took proactive steps to address US President’s concerns, such as sending troops to the US border to deter migrants, dismantling migrant caravans, and imposing tariffs on Chinese imports.  Following the US proceeding with the tariffs on March 4, Mexican President Sheinbaum promised to announce Mexico retaliatory measures on March 9, 2025 at a public event.

China Measures

China responded to the US actions by tightening controls on fentanyl-like substances and imposing retaliatory tariffs on US imports. On February 10, 2025, China set tariffs at 15% on coal and liquefied natural gas and 10% on crude oil, agricultural machinery, and large-engine cars. By March 4, additional 15% and 10% tariffs were placed on US products like chicken, wheat, corn, and cotton, and various agricultural goods. China also filed a dispute against the US at the World Trade Organization, expanded export controls on critical minerals, added multiple US companies to its Unreliable Entity List, and launched an antitrust investigation into Google.

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Dentons will continue to monitor these developments and provide additional updates, as the matter evolves.

1. Separately, standard limited exceptions apply under the IEEPA: personal communications, donations by persons subject to the jurisdiction of the United States of articles, such as food, clothing, and medicine, intended to be used to relieve human suffering (subject to limited exceptions), the importation of any information or informational materials, and transactions ordinarily incident to travel, such as importation of baggage for personal use.↩