In an Executive Order (EO) issued on April 9th, the White House addressed the tariff stacking issue on certain products from Canada and Mexico. Additional tariffs of 25% were imposed on goods from Canada and Mexico on March 4th; this was later amended to exempt goods that are allowed duty-free treatment under USMCA. These tariffs were imposed under the International Economic Emergency Powers Act and have been called the IEEPA/Fentanyl tariffs or IEEPA border tariffs.
On March 12th, an expanded list of derivative products was placed under the existing 25% Section 232 tariffs, and these tariffs do not have the USMCA exemption. To make matters worse, these tariffs were allowed to “stack”, meaning that products being imported from Canada or Mexico could, in some cases, be assessed both of the tariffs at a combined 50% rate. Under the new EO, these tariffs will no longer stack. If a product falls under the Section 232 tariff, it will no longer be subject to the IEEPA/Fentanyl tariff.
Products that are not subject to the Section 232 tariffs will continue to be assessed the 25% IEEPA/Fentanyl tariff unless they meet the USMCA exemption. Note that new Section 232 tariffs imposed on certain automobiles and parts are treated in the same manner. The actions covered in this order are retroactive to March 4th. The EO does not affect any other tariffs or tariff actions taken on other countries. Note that there is a 20% IEEPA/fentanyl tariff for goods from China, which is not affected by this order.
Tariff actions continue to be imposed and changed at a frenetic pace. In addition to new or amended tariffs, we are seeing changes in CBP guidance for processing entries and the associated tariff actions.
Best Regards,
Sam McClure, LCB
Director of Compliance & Customs Services