U.S. Delays Tariffs on Canada and Mexico, Enforces China 10% Tariff
Trade Update • Feb 3, 2025
ffective February 4, 2025, the U.S. was set to impose tariffs on imports from Canada, Mexico, and China. However, while concerns loomed over tariffs on Canada and Mexico taking effect, their implementation has been postponed until at least March 1, 2025. This delay provides additional time for negotiations, potentially leading to agreements that could prevent the tariffs altogether.
Federal Register Notices
In the interim, the Federal Register notices for Canada and China were released, along with Cargo Systems Messaging Service (CSMS) directives from U.S. Customs and Border Protection (CBP) headquarters, outlining instructions for entry at ports. With the postponement, the Federal Register Notice and CSMS for Canada are now void, but the enforcement measures for China remain in place.
A revised Executive Order is expected to formally announce the new March 1 effective date for Canada and Mexico, accompanied by an updated Federal Register notice reflecting the delay.
China Tariffs
Effective February 4, 2025, the U.S. has imposed a 10% tariff on products originating from China and Hong Kong. This tariff is in addition to existing duties, including the Section 301 tariffs and any applicable antidumping or countervailing duties. For instance, a product with an 8% normal duty rate, a 7.5% Section 301 duty, and a 100% antidumping duty will now incur a total duty of 125.5% after adding the new 10% tariff.
10% tariffs will apply to “products of China and Hong Kong” and will be entered using HTSUS 9903.01.20. The standard for determining the origin of the good is substantial transformation.
Additional 10% Tariff on Certain Imports
The U.S. has implemented an additional 10% tariff on certain imports, including goods previously excluded from Section 301 tariffs and those eligible for duty exemptions under HTSUS Heading 9902 – example the Miscellaneous Trade Bill. This tariff applies regardless of prior exemptions or reductions.
Restrictions on Section 321 for China and Hong Kong
Shipments from China and Hong Kong are no longer eligible for duty-free entry under Section 321 (de minimis rule for goods under $800). Instead, these goods require a formal or informal entry. Additionally, any goods arriving via international mail must go through formal entry procedures.
No duty drawback is available for the 10% tariff, though standard duty drawbacks may apply to other eligible duties.
Exemptions from the 10% Tariff
Certain categories of goods are not subject to the additional tariff, including:
- Personal use items
- Select Chapter 98 HTSUS entries, including U.S. goods returned and certain repaired or processed items – 9802.00.40, 9802.00.50, 9802.00.60, 9802.00.80, 9801 – Note: Does not apply to goods classified in Chapter 98, EXCEPT for goods repaired/altered/processed/assembled in Canada – duty will apply to the value of repair/alterations/processing done in Canada, or the value of the article assembled in Canada less the cost or value of such products of the United States.
- Humanitarian donations, such as food, clothing, and medicine (HTSUS 9903.01.21)
- Informational materials (HTSUS 9903.01.22)
Transit Exemption Until March 7, 2025
Goods that were already in transit before February 1, 2025, at 12:01 a.m. ET are exempt from the additional tariff until March 7, 2025. After that date, the 10% duty will apply. Importers must use HTSUS 9903.01.23 to claim this exemption.
Foreign Trade Zone (FTZ) Treatment
Imports from China and Hong Kong admitted to an FTZ after February 4, 2025, at 12:01 a.m. ET must be in privileged foreign status, meaning they will be subject to the tariff rate in effect at the time of FTZ admission. However, goods eligible for domestic status upon FTZ admission are exempt from the additional duty.
This tariff adjustment introduces new cost considerations for importers, particularly those handling goods from China and Hong Kong. Businesses should review tariff classifications and exemptions to optimize compliance and minimize costs.
How GHY Can Help?
Navigating the complex changes introduced by the USMCA Interim Final Rule can be challenging, but we are here to help. GHY provides comprehensive support, including ensuring compliance with USMCA requirements, streamlining certification submissions for Labor Value Content (LVC), steel, and aluminum, managing unique identifiers for entry documents, and assisting with Tariff Preference Level (TPL) requirements for textiles.
Additionally, GHY offers guidance on filing protests, maximizing duty deferral programs, and tailoring solutions to your specific trade needs. With decades of expertise, GHY is your partner in achieving seamless compliance and navigating today’s regulatory landscape.
Contact Us Today! gts@ghy.com, or call +1 (800) 667-0771.
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