Three days after the imposition of the 25% IEEPA tariffs on Canadian and Mexican goods, we have a major adjustment. The White House has announced that goods that qualify for the USMCA trade agreement will be exempted from these additional tariffs. This follows an announcement the day before that automobiles and parts used in the assembly of automobiles will, if eligible for duty-free importation under USMCA, be exempted temporarily.
The exemptions are effective on March 7, and new provisional numbers have been established for exempted products. There is some uncertainty over the length of the exemption, but it will be in effect until at least April 2. Separately, imports of potash from Canada and Mexico, which are not covered by USMCA, will be assessed a 10% tariff instead of the 25% tariff originally imposed. Other than potash, products that do not qualify under USMCA will continue to be covered by the 25% additional tariffs.
The exemption is not retroactive, so any goods imported during the 3-day period in which the tariffs were effective are subject to the tariffs, and refunds will not be available. Under the USMCA agreement, about 50% of goods from Mexico and nearly 40% of goods from Canada receive duty-free treatment and thus qualify for this exemption.
As mentioned before, more tariff actions are expected in April, so this is a very fluid situation. Hopefully, the Federal Register Notice will clarify these tariffs, but rapid changes are an issue for importers and brokers.
Best Regards,
Sam McClure, LCB
Director of Compliance & Customs Services