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 goods from Canada and Mexico until March 4, pending negotiations. In response, Canada also paused its planned retaliatory tariffs. After the new US tariffs took effect on March 4, the White House on March 5 announced that autos and auto parts from Canada and Mexico that meet the terms of the United States’ free trade agreement with those countries (USMCA) will be exempted from the new tariffs authorized by the February 1 EOs. The White House announced on March 6 that effective March 7, all goods from Mexico and Canada that qualify for USMCA preference will also be exempted from the 25% tariff under these EOs. On March 4, in response to the new US tariffs imposed on March 4, Canada implemented a first round of retaliatory tariffs on US goods shipped to Canada and threatened a larger round of retaliation after a public comment period ends. Canada has since stated that despite the March 5 and 6 amendments made by President Trump to the February 1 EOs, Canada will continue to impose its March 4 retaliatory measures but will pause its second round of retaliation.
The February 1 EO imposing 10% tariffs on all goods from China took effect on February 4, and China announced countermeasures effective February 10. On March 3, President Trump amended the February 1 EO to increase the tariff on all products from China from 10% to 20%, effective March 4. In response, China on March 4 announced additional retaliatory tariffs on US goods to take effect on March 10.
On February 10, President Trump signed two proclamations reinstating 25% tariffs on imports of steel and steel derivatives and increasing from 10% to 25% the tariff on imports of aluminum and aluminum derivatives. These 25% tariffs took effect on March 12. In response, Canada imposed further retaliatory tariffs on US goods. The European Union (EU) also announced retaliatory measures in response to the steel and aluminum tariffs but has delayed their implementation until mid-April.
On February 13, President Trump instructed the US government agencies responsible for trade to conduct a review and investigation to determine the appropriate “reciprocal” tariffs to apply to each trading partner that discriminates against US trading interests. He has said these new reciprocal tariff rates will be announced on April 2.
In Depth
US TARIFFS ON CHINA
Details
Under the February 1 EO, as amended by the March 3 EO, all US imports from China are currently subject to an additional 20% tariff. That 20% rate is on top of each entering good’s normal US tariff rate and all other applicable tariffs.
The 20% tariff is being applied over concerns about the adequacy of the measures being taken by China to control fentanyl exports and money laundering by transnational criminal gangs.
Retaliatory Measures by China
To date, China has issued two rounds of retaliatory tariffs. The first list of tariffs took effect on February 10, the second on March 10. China’s new retaliatory rates cover a wide array of US goods.
China has also responded by taking non-tariff punitive measures that impact US entities and US trade interests.
US TARIFFS ON CANADA AND MEXICO
Details
The February 1 EOs imposing 25% tariffs on goods from Mexico and all goods from Canada except for energy resources, which are subject to a 10% tariff, took effect on March 4. The White House announced on March 5 that no duties will be applied under these EOs on autos and auto parts from Mexico and Canada that qualify for USMCA preference. It announced on March 6 that effective March 7, no duties will be applied under these EOs on all goods from Mexico and Canada that qualify for USMCA preference. Its March 6 EO amendment provides, however, that goods that do not qualify for USMCA preference will continue to be subject to the 25% tariff under the EOs, except in the case of non-qualifying potash from both countries, which will be subject to a 10% rate, and non-qualifying energy resources from Canada, which will also be subject to a 10% rate.
The February 1 EO states that the new tariffs are being applied due to concerns that Mexico and Canada have failed to take sufficient action to stem cross-border migration and drug trade. President Trump has reiterated that justification following implementation of these new rates and encouraged companies producing in both countries to move their production to the United States to avoid the new tariffs.
Retaliatory Measures by Canada and Mexico
On March 4, following implementation of the February 1 EO, Canada imposed its first round of retaliatory tariffs on $21 billion of US goods and opened a comment period on a list of additional US targeted goods totaling $83 billion. After President Trump greatly scaled back the February 1 EO on March 5 and 6, Canada announced that it was retaining its March 4 retaliatory tariffs but pausing further action on its second round of retaliatory measures.
Mexico has said that for now it will not proceed with retaliation against US goods.
STEEL AND ALUMINUM TARIFFS
Details
On February 10, President Trump signed two proclamations closing existing loopholes and exemptions to the Section 232 tariffs on imports of steel and aluminum and derivatives. The proclamations terminated on March 12 the existing steel and aluminum “alternative arrangements” with Argentina, Australia, Brazil, Canada, the EU, Japan, Mexico, South Korea, Ukraine, and the United Kingdom. Effective March 12, all imports of steel products and covered derivatives once again became subject to the 25% Section 232 steel tariff originally authorized in 2018. Similarly, as of March 12, all imports of aluminum products and covered derivatives, regardless of whether they were covered by these alternative arrangements, became subject to a 25% rate. The 25% rate on aluminum imports materially increased the original 10% Section 232 aluminum tariff authorized in 2018.
Additionally, the proclamations terminated on March 12 the current steel and aluminum exclusions that had previously been granted under the Commerce Department’s exclusion procedures. The proclamations also terminated the steel and aluminum exclusion procedures previously administered by Commerce.
Responses from Impacted Trading Partners
After the new steel and aluminum tariffs took effect on March 12, Canada imposed a further round of retaliatory tariffs on an additional $21 billion worth of US goods. The EU also announced retaliatory tariffs on $28 billion worth of US goods but said on March 20 it would delay the implementation of those new rates until mid-April.
Mexico, the UK and other impacted trading partners have said they will await President Trump’s announcement of “reciprocal” tariffs before determining how to respond to the increased steel and aluminum tariffs.
“RECIPROCAL” TARIFFS
Details
President Trump’s new “reciprocal” tariff rates for each trading partner will be calculated based on each trading partner’s tariff and non-tariff measures, unfair subsidies, intellectual property violations, investment restrictions, regulatory restrictions, services restrictions, technical barriers to trade, and other structural and/or sector-specific barriers used by that trading partner that burden or restrict US trade interests.
President Trump has stated that the new reciprocal rates will be announced on April 2.
Responses from Potentially Impacted Trading Partners
No trading partner has yet formally announced countermeasures, but the EU and Canada have informally stated their intention to retaliate if reciprocal tariffs are imposed on their goods.
“INDUSTRY” TARIFFS
Details
In addition to the February 10 EO announcing new steel and aluminum tariffs, President Trump issued an EO on February 25 announcing a new Section 232 national security investigation on copper and derivative products. Public comments are due by April 1. This investigation is expected to lead to further US tariffs on copper and derivative products.
President Trump issued another EO on March 1 announcing a new Section 232 national security investigation on timber, lumber, and derivative products. Public comments are due by April 1. This investigation may lead to further tariffs on timber, lumber, and derivative products.
President Trump has also informally stated his intention to impose new tariffs on imports of autos, semiconductors, and pharmaceuticals but has not yet clarified how or when these new rates will be implemented.
Responses from Impacted Trading Partners
No trading partner has yet formally responded to these industry investigations and tariff threats.
COMMERCIAL IMPLICATIONS
Many clients engaged in global trade are incurring significantly increased costs, supply chain disruptions, and trade uncertainty.
TARIFF MITIGATION STEPS
McDermott lawyers are advising clients on the evolving tariff outlook and counseling on commercial strategies to mitigate the new tariff impacts. Reach out to the authors or your regular McDermott lawyer to stay informed and seek legal counsel on how best to navigate these wide-reaching tariff challenges.
