The US Launches a Trade War

After a one-month reprieve, the 25% tariffs on US imports from Mexico and Canada (except 10% on Canadian energy and critical minerals) came into effect this morning at midnight. These tariffs stem from the February 1 executive orders aimed at reducing fentanyl trafficking at the northern and southern borders and illegal immigration from Mexico. The only notable change from the original executive orders was the reinstatement of the exemption for de minimis imports (imports of US$800 or less). Here’s a quick overview:

• A 25% tariff has been added on all US imports of goods from Canada, excluding energy, where a 10% tariff applies. Energy is defined as crude oil, natural gas, liquefied natural gas, refined petroleum products, uranium, coal, biofuels, geothermal energy, hydroelectricity and critical minerals.
• A 25% tariff has been added on all imports of goods from Mexico.
• Regarding China, a 10% tariff was already added on February 4 on all imports of goods from that country. Noting that the Chinese government has not taken adequate measures to mitigate the fentanyl crisis, a new executive order signed on March 3 increased these tariffs to 20%.
• The de minimis tariff and tax exemptions (up to $800 of imports) that were already in effect remain applicable until adequate processing and collection systems are in place.