NEW CANADA TARIFFS EXPLAINED: WHAT TARIFF LAWYERS KNOW ABOUT THE FEBRUARY 1 EXECUTIVE ORDER
The situation regarding tariffs on Canada, Mexico, and China continues to develop. On Saturday, February 1, 2025, President Trump signed an executive order imposing a tariff of 10% on Canadian origin energy resources, and 25% on all other Canadian origin goods. The essential elements are as follows:
The President previously signed Executive Order (“EO”) 10886, which declared a national emergency related to the southern border of the United States. The EO signed on February 1, expands the scope of EO 10886 to include the “public health crisis” created by illicit drugs originating in Canada. Under the International Emergency Economic Powers Act, the President has the authority to respond to national emergencies by applying tariffs.
The EO imposes an additional 25% tariff on “all articles that are products of Canada,” and alternatively an additional 10% on “energy resources.” The duty rates apply to all goods entered or withdrawn for consumption on or after 12:01 AM EST on February 4, 2025. However, all goods in transit on the final mode of transportation en route to the United States before 12:01 AM EST on February 1, 2025 are exempt from the tariff, if accompanied by a certificate from the importer. The EO also reserves the authority to increase the scope or amount of the tariffs in response to retaliation.
In addition to the tariffs themselves, the EO eliminates duty drawback for the tariffs as well as de minimis duty free treatment.
Canadian officials are scrambling to address these tariff measures. Canada has already threatened retaliatory tariffs. The Prime Minister of Canada met with President Trump in the morning on Monday, February 3, 2025, and again in the afternoon. The two countries have now reached an agreement whereby Canada has pledged to ramp up its border enforcement, including deploying around 10,000 troops to the border, and the United States has delayed the implementation of the new tariff for 30 days.
As new tariff regulations continue to evolve, navigating these changes requires experienced legal counsel. At Liang + Mooney, PLLC, our seasoned tariff lawyers can answer your questions and concerns with sophisticated legal solutions. If you seek strategic counsel and insight into how these changes could affect your operations, we invite you to contact us to schedule a consultation.