U.S. 25% Tariff on Canada and Mexico Imports In Effect March 4th

Trade Update • March 3, 2025

s of March 3, 2025, President Donald Trump has confirmed that the United States will impose a 25% tariff on all imports from Canada and Mexico, effective March 4, 2025.

Trump has also requested the Commerce Department to carry out a total review of the country’s trading relationships and report back by April 1 — a study that could prompt another layer of tariffs on countries that Trump perceives as taking advantage of the U.S.

U.S. Tariffs In Effect March 4

On February 1, 2025, President Donald Trump signed an executive order imposing a 25% tariff on imports from Canada and Mexico, with a 10% tariff on Chinese goods. While the original executive order was tied to the flow of deadly fentanyl, the president said earlier this month the pause would allow time to reach a “final economic deal.” These tariffs are set to take now take effect on March 4, 2025.

Under the order:

• A 25% tariff will apply to all Canadian and Mexican goods crossing the border after midnight on March 4, 2025.
• A 10% tariff will be imposed specifically on energy imports from Canada.
• Removal of the de minimis exemption for duty-free imports from Canada and Mexico has been delayed – details here.
• A 10% tariff is in effect on Chinese goods, extending beyond previous tariff schedules.

The executive order, citing the International Emergency Economic Powers Act (IEEPA), the National Emergencies Act (NEA), and the Trade Act of 1974, argues that illicit opioids and drug trafficking networks constitute an ongoing national emergency. It accuses Canada of failing to coordinate effectively with U.S. law enforcement to curb fentanyl production and trafficking.

More details on Canada – USA’s Federal Register – Implementation of Additional Duties on Products of Canada
More details on Mexico – USA’s Federal Register – Implementation of Additional Duties on Products of Mexico

CBP Guidance on Additional Duties on Imports from Canada
CBP Guidance on Additional Duties on Imports from Mexico

Read More: Key Details on U.S. Tariffs & Canada’s Retaliatory Tariffs

Canada’s Retaliatory Tariffs

In response to the U.S. tariffs in February, Canada announced a $155 billion retaliatory tariff package – full list here. Foreign Affairs Minister Mélanie Joly stated on March 3 – “We are ready with $155 billion worth of tariffs and we are ready with the first tranche of tariffs, which is $30 billion, which has already been announced.” She went on to state – “We know this is an existential threat to us. There are thousands of jobs in Canada at stake. Now, we’ve done the work, we are ready, should the U.S. decide to launch their trade war.”

The initial phase includes a 25% tariff on $30 billion worth of U.S. goods, targeting products such as:

• Orange juice
• Peanut butter
• Wine, spirits, beer, and coffee
• Appliances
• Apparel and footwear
• Motorcycles
• Cosmetics
• Pulp and paper

A second phase, involving an additional $125 billion in tariffs, will be finalized after a 21-day public consultation period. Potentially affected products include:

• Passenger vehicles
• Steel and aluminum products
• Fruits and vegetables
• Aerospace products
• Beef, pork, and dairy
• Trucks, buses, recreational vehicles, and boats

Canada’s Update on Retaliatory Tariffs: International Trade and Finance Policy.

China Surtax Remission Order In Effect

This remission order is intended to minimize the negative effects on Canadian companies and the economy of the 25% surtax payable on certain steel and aluminum goods imposed by the China Surtax Order (2024), which came into effect on October 22, 2024.

Full Details Here: China Surtax Remission Order In Effect

U.S.-Mexico-Canada Agreement

These U.S. tariffs effectively leave the U.S.-Mexico-Canada Agreement (CUSMA) compromised, ending decades of free trade in North America.

Some prominent American voices are already speaking out against the president’s trade action, including legendary investor Warren Buffett. Buffett, who at 94 still runs conglomerate Berkshire Hathaway, said it’s American consumers who will ultimately pay the price of Trump’s tariffs. “We’ve had a lot of experience with [tariffs]. They’re an act of war, to some degree,” he said in an interview with CBS News over the weekend. “Over time, they’re a tax on goods. I mean, the tooth fairy doesn’t pay ’em,” Buffett said. “And then what? You always have to ask that question in economics. You always say, ‘And then what?'” (Source CBC)

Industry Concerns

The National Association of Manufacturers (NAM) expressed deep concern over the tariffs’ impact on North American supply chains. Jay Timmons, NAM President and CEO, warned that one-third of critical U.S. manufacturing inputs come from Canada and Mexico, and a 25% tariff could disrupt production, increase costs, and threaten American jobs—particularly for small and medium-sized enterprises.

“However, with essential tax reforms left on the cutting room floor by the last Congress and the Biden administration, manufacturers are already facing mounting cost pressures. A 25% tariff on Canada and Mexico threatens to upend the very supply chains that have made U.S. manufacturing more competitive globally. The ripple effects will be severe, particularly for small and medium-sized manufacturers that lack the flexibility and capital to rapidly find alternative suppliers or absorb skyrocketing energy costs. These businesses—employing millions of American workers—will face significant disruptions. Ultimately, manufacturers will bear the brunt of these tariffs, undermining our ability to sell our products at a competitive price and putting American jobs at risk.” (NAM)

Potential Economic Impacts

Economists warn that escalating tariffs could lead to higher consumer prices, supply chain disruptions, and job losses. The automotive, energy, and agricultural sectors are expected to bear the brunt of these trade barriers.

• Automotive Industry: Higher tariffs on steel and aluminum could increase vehicle production costs.
• Energy Sector: A 10% tariff on Canadian energy imports may drive up fuel prices in the U.S.
• Agriculture: U.S. farmers and ranchers, already facing challenges from previous trade disputes, could experience further market access restrictions.

The full economic impact will depend on the duration of the tariffs and any potential negotiations among the affected nations.

The imposition of new tariffs by the United States and the retaliatory actions by Canada and Mexico have heightened trade tensions in North America. As each country moves to protect its interests, these developments highlight the complexity of North American economic interdependence.

Businesses and policymakers alike are closely monitoring the situation, hoping for a resolution that prevents further economic disruption and maintains the stability of cross-border trade.

How GHY Can Help?

GHY specializes in helping businesses navigate and reduce the impacts of tariffs through strategic solutions tailored to their needs. Our experts can audit your supply chain to identify inefficiencies, uncover cost-saving opportunities, and ensure compliance with evolving trade regulations. We also employ tariff engineering techniques to optimize product classification and sourcing strategies, minimizing duty exposure and maximizing profitability.

By partnering with GHY, your business gains access to the tools and expertise needed to streamline operations and stay competitive in a challenging trade environment.

Contact Us Today! gts@ghy.com, or call +1 (800) 667-0771.