Implications of the Trump Administration’s Tariff Executive Orders for U.S. Importers

Importers that rely on goods produced in Canada, China, and Mexico face a changing import duty landscape. The Trump Administration issued executive orders imposing large tariffs on Canada, China, and Mexico, though currently only the China tariffs are in effect. On February 1, President Trump announced that he would impose 25% tariffs on all goods imported from Canada and Mexico (with a 10% rate on Canadian energy products) in response to threats posed by the “influx of illegal aliens and illicit drugs.” The President also announced a 10% tariff on all goods imported from China to address the threat posed by the “synthetic opioid supply chain.”

All three sets of tariffs were set to become effective on February 4. Following discussions between President Trump and the leadership of Canada and Mexico, however, the tariffs on those two countries were postponed until March 4. The tariffs on China went into effect as scheduled, and China immediately imposed retaliatory tariffs on certain U.S. goods.

These measures are unique. Unlike prior tariffs imposed by Republican and Democratic presidents, including the first Trump Administration, which were issued under trade and tariff laws, these new tariffs were issued under the authority of the International Emergency Economic Powers Act (“IEEPA”). IEEPA grants the President broad authorities to regulate economic and financial transactions upon the declaration of a national emergency, and has traditionally been used as the authority for imposing economic sanctions. This singular use of IEEPA to impose tariffs may prompt court challenges.

China Tariffs

The immediate impact of these tariffs is not on Chinese exporters, but on U.S. importers. Importers are responsible for the payment of all duties on goods entered into the United States. The new tariffs on China impose a 10% duty on all goods imported from China, including Hong Kong, supplementing any duties that may already be applicable to such goods.

Importers should be aware of the following features of the new China tariffs:

• The duties will be imposed on all goods entering the United States that are made in China, even if they are being sourced from a different location (such as a warehouse in Mexico).
• As yet, no categories of goods are exempt. As imports from China averaged $36.5 billion per month by value in 2024, covering thousands of products, the impact on importers and their customers will be significant. For example, smartphones imported from China will go from no duty to 10%.
• The tariffs will not apply to any products that were already loaded onto a vessel at a port of loading or in transit on the final mode of transport to the United States prior to 12:00 AM Eastern time on February 1, as long as they enter the United States by March 7.
• The new tariffs apply to imports typically eligible for the so-called “de minimis” exemption because they are valued at under $800. As a result, Customs and Border Protection has announced that all shipments arriving by mail from China, including goods purchased from online retailers, will need to go through the customs clearance process, which will add time and cost to U.S. consumers ordering products from China.
• IEEPA does not authorize the President to regulate transactions involving “informational materials.” Therefore, the new China tariffs do not apply to books, films, pictures, and other similar materials.

Broader Implications

Companies that rely on U.S. imports or that export should take into account the following key consequences of the Trump Administration’s emerging trade strategy:

• Barring a successful court challenge to the use of IEEPA to impose tariffs, the Trump Administration’s selection of that statute grants it very broad authority to continue using tariffs to further its foreign policy, national security, and economic goals. As such, importers should expect this strategy to continue. President Trump has already indicated that the European Union is a target for future tariff actions.
• The announcement of a tariff action does not mean it will be immediately or ultimately implemented. As shown last month vis-à-vis the brief disagreement with Colombia over the repatriation of migrants, President Trump is using the threat of tariffs to achieve policy aims. However, as in the case of China, there are times when the threat is carried through. Canada and Mexico may yet also become subject to the tariffs in March or at a later time.
• Targets of tariff actions can retaliate. Canada and Mexico threatened to respond with their own tariffs, and China imposed retaliatory tariffs of 15% on U.S.-origin LNG and coal, and 10% tariffs on crude oil. China also announced non-tariff actions in response to the U.S. tariffs, including a reported antitrust investigation into Google and controls on the export of certain rare minerals to the United States.
• To address the uncertainty surrounding tariffs, U.S. importers are considering addressing tariff risks in their contracts with vendors and suppliers through price escalation clauses and other measures.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Greta L. Nightingale, an O’Melveny partner licensed to practice law in the District of Columbia; David J. Ribner, an O’Melveny partner licensed to practice law in the District of Columbia and New York; Jim Bowman, an O'Melveny partner licensed to practice law in California; Mark A. Racanelli, an O'Melveny partner licensed to practice law in New York; Pamela A. Miller, an O'Melveny partner licensed to practice law in New York; Steven J. Olson, an O'Melveny partner licensed to practice law in California; Jennifer B. Sokoler, an O'Melveny partner licensed to practice law in New York; Meaghan VerGow, an O'Melveny partner licensed to practice law in the District of Columbia and New York; and Hannah V.L. George, an O'Melveny associate licensed to practice law in the District of Columbia, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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