Overview
NOTE: This situation is fluid. Continue watching this page for updates.
On February 1, 2025, using authority under the International Emergency Economic Powers Act (IEEPA) and other legal provisions, President Donald Trump signed three executive orders (EOs) imposing new tariffs on all goods from Canada, Mexico, and China effective February 4.
On February 3, the administration paused the planned tariffs on all goods from both Canada and Mexico until March 4, pending negotiations. In response, Canada also paused its planned retaliatory tariffs.
The EO imposing 10% tariffs on all goods from China has taken effect. China announced countermeasures effective February 10.
On February 10, President Trump signed two proclamations ensuring that all steel imports are subject to a 25% tariff and increasing aluminum tariffs from 10% to 25%.
On February 13, President Trump announced that US government agencies responsible for trade will conduct a review and investigation that will help his administration determine “reciprocal tariffs” customized for each trading country that discriminates against US goods.
In Depth
US TARIFFS ON CHINA
Details
Under the February 1 EO, all US imports from China are currently subject to an additional 10% tariff. That 10% rate is on top of each entering good’s normal US tariff rate and other applicable tariffs under Section 301 of the Trade Act of 1974, Section 232 of the Trade Expansion Act of 1962, US trade remedy laws, and other authorities.
Although the EO suspended the de minimis exemption for Chinese goods valued at less than $800, the president on February 5 restored the exemption until “adequate systems” are put in place to administer the suspension.
The additional tariff measures entered into force at 12:01 am EST on February 4, but exclude goods entered after that time that were loaded on vessels at ports of loading or in transit on the final mode of transport before 12:01 am EST on February 1.
President Trump’s February 1 EO contains a retaliation clause stating that, should China retaliate, the president “may increase or expand in scope the duties imposed under the order to ensure the efficacy of [the actions taken].”
Rationale for New Rates
The Trump administration cited concerns over fentanyl distribution and money laundering by transnational criminal gangs as its reason for imposing the additional 10% tariff on China.
CHINA’S RETALIATORY MEASURES
On February 4, the Chinese government announced retaliatory tariffs, which took effect on February 10. These tariffs include 15% tariffs on coal and liquefied natural gas and 10% tariffs on crude oil, a wide range of agricultural machinery, large displacement cars, and pickup trucks.
In addition, China reportedly has taken non-tariff measures, including additional export controls on rare earth minerals and various punitive actions against certain US entities.
30-DAY PAUSE IN NEW TARIFFS FOR CANADA AND MEXICO
On February 3, President Trump signed two new EOs pausing the tariffs on Canada and Mexico after each of those countries pledged to take certain further actions to help stem cross-border migration and drug trade. The new EOs preserve President Trump’s authority to reinstate the added duties at his discretion before March 4.
The bilateral talks underway with Mexico and Canada over the next 30 days are being led on the US side by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and Secretary of State Marco Rubio. In addition to covering border issues, the talks could cover economic issues, including certain issues relating to the United States-Mexico-Canada Agreement (USMCA).
STEEL AND ALUMINUM TARIFFS
On February 10, President Trump signed two proclamations closing existing loopholes and exemptions to the Section 232 tariffs on steel and aluminum. The proclamations ensure that all steel imports are subject to a 25% tariff and increase the aluminum tariff from 10% to 25%.
Effective March 12, the administration will terminate the existing steel and aluminum “alternative arrangements” with Argentina, Australia, Brazil, Canada, the European Union, Japan, Mexico, South Korea, Ukraine, and the United Kingdom. As of that date, all imports of steel products and covered derivatives under these arrangements will be subject to the 25% Section 232 steel tariff authorized in 2018. Similarly, all imports of aluminum products and covered derivatives, regardless of whether they were covered by these alternative arrangements, will be subject to a 25% rate, materially increasing the original 10% Section 232 aluminum tariff authorized in 2018.
Additionally, the proclamations terminate, effective March 12, the current steel and aluminum exclusions granted under the Commerce Department’s exclusion procedures. The proclamations also immediately terminate the steel and aluminum exclusion procedures run by Commerce.
Responses From Impacted Countries
As of February 12, no impacted supplying country has posted countermeasures.
“RECIPROCAL” TARIFFS
President Trump’s country-specific “reciprocal” tariff calculations will take into account each country’s tariff rates and its non-tariff barriers, unfair subsidies, intellectual property violations, investment restrictions, regulatory restrictions, services restrictions, technical barriers to trade, and any other structural and/or sector-specific barriers used by that country.
At this stage, it is unclear if or when these tariffs will be imposed, or whether the new country-specific rates will be used for negotiating leverage or revenue-raising purposes.
COMMERCIAL IMPLICATIONS
Clients engaged in global trade should be prepared for increased costs, as well as potential disruptions and modifications to supply chains.
WHAT’S NEXT
President Trump has stated that he intends to announce in the near future tariffs on goods in certain other industry sectors (semiconductors, pharmaceuticals, medical devices, and possibly lumber).
McDermott lawyers are advising clients on the evolving tariff outlook and counseling on commercial strategies to mitigate the impacts of any new tariffs. Reach out to the authors or your regular McDermott lawyer to stay informed and seek legal counsel to navigate these challenges effectively.
