Tariffs Are Coming, What Now?

UPDATE: At 10:41 this morning President Trump posted on Truth Social announcing that the tariffs with respect to Mexico will be delayed by one month.

“I just spoke with President Claudia Sheinbaum of Mexico. It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican Soldiers on the Border separating Mexico and the United States. These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our Country. We further agreed to immediately pause the anticipated tariffs for a one month period during which we will have negotiations headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico. I look forward to participating in those negotiations, with President Sheinbaum, as we attempt to achieve a “deal” between our two Countries.”

As new tariffs loom, many businesses will find themselves in uncharted territory. Clark Hill can help you to understand and navigate these changes.

How much are the tariffs?

On Feb. 1, President Trump used emergency powers under the International Emergency Economic Powers Act (“IEEPA”) to order an additional 25% tariff on imports from Canada and Mexico and an additional 10% tariff on imports from China. However, “energy resources” from Canada will be subject to only an additional 10% tariff, rather than the 25% rate for other products from Canada. U.S. importers will be responsible for paying these emergency tariffs, or IEEPA tariffs, in addition to all other tariffs, duties, and fees owed for any given import.

For example, an import from China may be subject to its regular duty rate under the Harmonized Tariff Schedule (“HTS”), plus a 25% tariff pursuant to Section 301 (first imposed in 2018 or 2019), plus the new IEEPA tariff of 10% for China. Any other duty or tariff that applies to particular products, such as antidumping and countervailing duties or Section 232 (national security) tariffs, would likewise apply cumulatively to the total tariff rate for an import.

When do the tariffs start?

The emergency tariffs will apply to goods that enter U.S. Customs territory on or after Feb. 4, according to the Executive Order that formally announced these tariffs. Merchandise that was shipped and in transit to the United States before Feb. 1 may be exempt from the additional tariffs if importers provide certifications to Customs and Border Protection, as prescribed in the corresponding Federal Register notice. U.S. importers should take immediate action to assess their tariff exposure and apply for certifications for goods already in transit.

Are there exclusions or exemptions?

Currently (9 a.m. Feb. 3), only energy resources from Canada have been announced to receive a lower additional tariff rate of 10%. However, no outright exemption or exclusion from the emergency tariffs has been announced.

How can I prepare my business?

Whether you are a U.S. importer, a U.S. manufacturer, or a foreign business, new tariffs and escalating trade tensions will impact your operations. As witnessed last week, the tariff news changes quickly and may involve competing reports about the details. Distinguishing fact from speculation is the key to preparing your business. Contact Clark Hill’s international trade and government affairs professionals to understand the breaking news in trade policy and develop a comprehensive strategy to lead your business with confidence.

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