US Trade Policy Updates: Tariffs, De Minimis, Duty Drawbacks... 🇺🇸

TRADE NEWS

US Trade Policy Updates

President Donald Trump's recent tariff policies, effective from February 4th, 2025, have introduced significant changes to US trade with Canada, Mexico, and China, affecting tariffs, de minimis exemptions, and duty drawbacks:

Tariffs on Canada and Mexico: A 25% tariff has been imposed on all goods imported from Canada and Mexico, diverging from the previous tariff-free movement under the USMCA. Canadian energy exports, including oil, natural gas, and electricity, are subject to a lower 10% tariff. This increase targets issues like immigration and drug trafficking, with the tariffs set to remain until these concerns are addressed.

Tariffs on China: An additional 10% tariff has been levied on Chinese imports, adding to the existing Section 301 tariffs, potentially increasing the total tariff rate on some goods to 35%. This move is part of Trump's "America First" strategy, aiming to reduce trade deficits and address national security issues.

De Minimis Changes: The de minimis exemption, allowing duty-free entry for shipments valued under $800, has been suspended for products subject to the additional tariffs. This means even small-value items from these countries will now face tariffs, impacting e-commerce operations that utilized this loophole for cost savings. The policy aims to curb the entry of illicit substances like fentanyl, with Trump citing the public health crisis as a reason for this change.

Duty Drawbacks: Previously businesses could reclaim duties paid on imported goods that were later re-exported or destroyed under U.S. Customs supervision. However, under the newly imposed tariffs, duty drawbacks are no longer allowed, meaning businesses cannot recover these additional costs.

These changes mark a significant shift in US trade policy, impacting businesses, importers, and consumers alike. While this article provides a high-level overview, it is essential for stakeholders to seek the most accurate and up-to-date information directly from the U.S. Customs and Border Protection (CBP). Regulations and enforcement measures can evolve, and CBP remains the authoritative source for compliance details. For official guidance, visit the CBP website.

Whitehouse full factsheet can be seen here

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TRADE NEWS

Canada Imposes Retaliatory Tariffs on US Goods

In response to recent US tariff hikes, Canada has announced new trade measures, effective February 4, 2025. These actions aim to counterbalance economic impacts and protect Canadian industries from disruptions caused by increased U.S. import duties.

Retaliatory Tariffs on U.S. Goods
Canada has imposed a 25% tariff on $30 billion worth of US imports, targeting key sectors such as agriculture, consumer goods, and industrial materials. The selected products align with a strategy to apply economic pressure while minimizing adverse effects on Canadian consumers.

Support for Canadian Businesses
To assist affected industries, the Canadian government has introduced a relief package that includes financial support, competitiveness measures, and export diversification strategies. The goal is to cushion the blow to businesses that rely on US trade while encouraging expansion into new markets.

Provincial Responses
Certain provincial governments are also implementing countermeasures. In Ontario, directives have been issued to suspend the sale of specific American alcohol products. Other provinces are reviewing procurement policies to prioritize local suppliers over US businesses.

These actions signal a significant escalation in trade tensions between Canada and the United States. While the Canadian government remains open to diplomatic solutions, it has made it clear that it will take decisive action to safeguard national economic interests. Businesses affected by these changes should closely monitor developments and adjust their strategies accordingly.

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