Tariffs and Trade

Trump Imposes Sweeping Tariffs on Canada, Mexico and China

On Saturday, Feb. 1, 2025, President Trump issued three executive orders imposing tariffs on imports from Canada, Mexico, and China. The tariffs were implemented under the International Emergency Economic Powers Act (IEEPA), citing a national emergency related to illegal immigration and flow of illicit drugs like fentanyl into the U.S.

Bill Hanvey, president and CEO, Auto Care Association, emphasized the serious impact the proposed tariffs would have on the automotive aftermarket industry, U.S. consumers, and businesses:

“ We understand the importance of national security and the need to address critical challenges, but these tariffs will have a direct and negative impact on American businesses and consumers. Canada and Mexico are our largest trading partners, and together, we make the automotive aftermarket industry more competitive. Our industry relies on highly integrated supply chains that benefit the economies of all three countries, ensuring the availability of affordable vehicle repairs for millions of consumers. These supply chains also create jobs on both sides of the border, supporting a strong and resilient workforce.”

"Tariffs and disruptions to these supply chains create inefficiencies, increase costs and weaken our industry's ability to compete globally. These tariffs will drive up costs for hardworking American families who depend on reasonably priced parts to repair and maintain their vehicles. Tariffs are not paid by our trading partners; they are paid by businesses and consumers here at home. Higher prices and supply chain disruptions will mean delays in essential vehicle repairs, ultimately impacting road safety. We urge all parties to come to the table and negotiate a solution that keeps our industry strong, protects American jobs and ensures American consumers aren’t left paying the price.”

Bill Hanvey, President and CEO, Auto Care Association

Key Details of the Executive Order

International Emergency Economic Powers Act (IEEPA)

IEEPA is a federal law granting the President authority to counter unusual and extraordinary threats to national security without requiring congressional approval or extensive agency review. While historically, IEEPA has been used to impose economic sanctions, this is the first time IEEPA is being used to impose tariffs.

IEEPA requires the president to “consult” with Congress “in every possible instance” before taking action. While the president can act unilaterally, they must provide regular reports to Congress on the actions taken.

Tariff Rates and Products

The Executive Orders do not list specific products subject to the tariffs but states that the tariff applies to all goods which are “products of” these countries. The new tariff rates below apply “in addition to any other duties, fees, exactions or charges” applicable to imported products. In other words, these tariffs will be applied on top of any existing import duties or tariffs already in effect.

• Canada: 25% tariff applies to imports from Canada, with energy products subject to a reduced 10% tariff. **Update: As of Feb. 3, 2025, tariffs on Canada are on hold for one month.**
• Mexico: 25% tariff applies to imports from Mexico. **Update: As of Feb. 3, 2025, tariffs on Mexico are on hold for one month.**
• China: 10% tariff applies to imports from China.

Implementation Date

The tariffs apply to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. Eastern Time on Feb. 4, 2025.

Goods loaded onto vessels at the port of loading or in transit on the final mode of transportation prior to entry into the United States before 12:01 a.m. Eastern Time on Feb. 1, 2025, are not subject to the additional duty, subject to certification requirements with U.S. Customs and Border Protection (CBP).

Exemptions

The Executive Orders do not outline any exceptions nor establish an exemption process. The Executive Order also states that the tariffs will remain in effect until the President determines that the countries have taken “sufficient action to alleviate the crisis.”

Retaliation Clause

The executive order states that if Canada, Mexico and/or China retaliate against the United States, President Trump may increase or expand the scope of the duties imposed under this order.

Drawback

Drawback (duty refunds) will not be available.

De Minimis Treatment

Duty-free de minimis treatment will not be available.

Responses from Affected Countries

Canada

Prime Minister Justin Trudeau announced that Canada will impose retaliatory tariffs of 25% on $155 billion U.S. goods. Tariffs on $30 billion will take effect on Tuesday, Feb. 4. Tariffs on the remaining $125 billion will take effect in 21 days.

Tariffs will apply to a range of U.S. exports, including alcoholic beverages, agricultural products, clothing, sports equipment and household appliances. The list of products subject to the initial $30 billion in tariffs can be found here.

Mexico

Mexican President Claudia Sheinbaum shared that Mexico will implement tariff and non-tariff measures in response to the tariffs. Sheinbaum emphasized the need for bilateral cooperation and called for discussions on trade policy.

China

The Chinese government denounced the new 10% tariff. China stated that it will file a complaint with the World Trade Organization and is preparing additional countermeasures