U.S. Tariffs on Canada and Mexico Paused

Trade Update • March 6, 2025

ollowing negotiations with Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum, the U.S. has announced a delay on tariffs for Canadian and Mexican goods that meet the requirements of the United States-Mexico-Canada Agreement (USMCA), the trilateral free trade pact. This pause, which includes automobiles and auto parts, aims to ease trade tensions while allowing further negotiations on border security and economic cooperation.

USMCA-Compliant Goods

The suspension on the 25% tariffs for goods covered under the USMCA affects approximately 38% of imports from Canada and 50% from Mexico, delaying the tariffs.

Automotive Industry Impact: Recognizing the integrated nature of the North American automotive industry, the administration has granted a one-month exemption for U.S. automakers importing vehicles from Canada and Mexico. This decision provides automakers with time to adjust their supply chains and mitigate potential disruptions.

Executive Orders Adjusting Tariffs

In response to concerns over economic stability and national security, the White House has issued amendments to previous executive orders concerning tariffs on Canadian and Mexican imports.

Northern Border: Adjustments to Tariffs on Canadian Imports

Executive Order Amendment: The administration has modified Executive Order 14193, which initially imposed duties to address the flow of illicit drugs across the northern border.

Key Provisions:

• Goods from Canada that qualify for duty-free entry under USMCA will not be subject to additional tariffs.
• The tariff on potash imports from Canada has been reduced from 25% to 10%.
• Changes take effect from March 7, 2025, at 12:01 a.m. EST.

Full Executive Order
CBP Guidance: Additional Duties on Imports from Canada – USMCA Qualifying Products and Potash
Federal Register Notice: Additional Duties on Products of Canada

Southern Border: Adjustments to Tariffs on Mexican Imports

Executive Order Amendment: The administration has modified Executive Order 14194, which initially imposed duties to address border security concerns.

Key Provisions:

• Goods from Mexico that qualify for duty-free entry under USMCA will not be subject to additional tariffs.
• The tariff on potash imports from Mexico has been reduced from 25% to 10%.
• Changes take effect from March 7, 2025, at 12:01 a.m. EST.

Full Executive Order
CBP Guidance: Additional Duties on Imports from Mexico – USMCA Qualifying Products and Potash
Federal Register Notice: Additional Duties on Products of Mexico

Policy Shift

These policy shifts have been influenced by various factors, including market reactions and diplomatic engagements:​

Market Reactions: The initial announcement of tariffs led to significant declines in major stock indices. The subsequent pauses and exemptions have been viewed as attempts to stabilize markets and address concerns from key industries. ​

Diplomatic Engagements: The decisions followed discussions between President Trump and leaders from Canada and Mexico, reflecting ongoing diplomatic efforts to address the underlying issues prompting the tariffs. ​

Looking ahead, the administration has indicated plans for additional tariffs targeting countries that impose duties on American exports, with measures estimated to be announced on April 2, 2025. ​

Steel and Aluminum Tariffs

The United States is still set to implement a 25% tariff on all steel and aluminum imports, effective March 12, 2025. This policy removes previous country exemptions, impacting major suppliers such as Canada, Mexico, Japan, South Korea, and the European Union.

U.S. Tariffs on Steel and Aluminum Imports In Effect March 12, 2025.

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.