The U.S. implements additional tariffs on Mexican Products
The U.S. Customs and Border Protection (CBP) has issued a notice implementing additional duties on Mexican products, effective March 4, 2025. This action, pursuant to President Trump’s Executive Orders, aims to address irregular immigration and drug traffic into the United States. This post covers the key aspects of the new tariffs and their potential impacts.
Background and Authority
On January 20th, 2025, President Trump declared a national emergency at the southern border due to irregular immigration and traffic of drugs, particularly fentanyl (Proclamation 10886). On February 1st, 2025, the President expanded the scope of the emergency to include the public health crisis caused by fentanyl and other illicit drugs, and Mexico’s failure to address these issues (Executive Order 14194).
Regarding the legal authority for implementing the new tariffs, President Trump invoked the International Emergency Economic Powers Act (IEEPA), the National Emergencies Act (NEA), section 604 of the Trade Act of 1974, and 3 U.S.C. 301 to impose the additional duties.
Additional duties on Mexican products
The additional tariffs are implemented through the creation of a new tariff item 9903.01.01 of the Harmonized Tariff Schedule of the United States (HTSUS). This tariff item imposes an additional 25% ad valorem tariff on Mexican products.
It is noteworthy that the additional tariff applies in addition to all other applicable duties, taxes, fees, exactions, and charges. For example, Trump’s administration previously announced additional tariffs on steel and aluminum products under Section 232 of the Trade Expansion Act, as we discussed on a previous article. These tariffs are set to enter into force on March 12th, 2025. Accordingly, Mexican steel and aluminum products will be subject to an accumulative tariff of 50% as of that date.
Exemptions and special provisions
In addition to the new tariff item 9903.01.01, the new HTSUS headings 9903.01.02 and 9903.01.03 cover specific types of products from Mexico that are exempt from the additional 25% ad valorem tariff. Each heading comprises, among other things, the following:
- Heading 9903.01.02: This heading covers articles that are donations by persons subject to the jurisdiction of the United States, or articles intended to relieve human suffering. These are products donated for charitable purposes, such as:
- Food (e.g., canned goods, rice, flour)
- Clothing (e.g., shirts, pants, shoes)
- Medicine (e.g., prescription drugs, over-the-counter medications)
- Heading 9903.01.03: This heading covers informational materials from Mexico. These are products that primarily convey information or ideas, including:
- Publications (e.g., books, magazines, newspapers)
- Films (e.g., DVDs, Blu-rays, digital copies)
- Compact disks (CDs), CD ROMs, and digital storage devices)
- Artworks (e.g., paintings, sculptures, prints)
- News wire feeds (e.g., news articles, images, or videos distributed electronically)
Moreover, the administrative exemption from duty and certain taxes, namely de minimis exemption, continues to be available for articles covered by heading 9903.01.01. However, the exemption will cease upon notification by the Secretary of Commerce to the President that adequate systems are in place to fully and expediently process and collect tariff revenue applicable to such articles.
Potential impacts
Among the different implications of the tariff increase, the main trade concerns, in our opinion, are going to be as follows:
- US Importers of Mexican products should review their supply chains and assess the potential impact of the additional duties on their costs and pricing strategies.
- US Importers should ensure proper classification and declaration of their products to avoid penalties and interest charges.
- Mexican Exporters will face constrains and they are advised to thoroughly review their contracts due to trade uncertainty.
Next steps: Retaliations
Regarding the potential retaliations, Canada has already announced retaliatory measures on American products. Meanwhile, the Mexican Government has maintained a less proactive attitude:
- The Mexican president announced that the retaliation measures consisting of tariff and non-tariff measures will be informed on Sunday. However, there is not a detailed explanation nor an outline of Mexico’s measures.
Conclusion
The new tariffs on Mexican products present challenges for businesses, including increased costs, potential supply chain disruptions, and compliance complexities. By understanding the tariffs, reviewing their imports, and taking proactive steps to ensure compliance, businesses can mitigate these challenges and continue to operate successfully in the U.S. market.
The implementation of additional duties on Mexican products is a significant part in the U.S. trade policy, aimed at addressing the critical issues at the southern border. Unlike Canada, Mexico’s response has been mild, and this appears to be their strategy with the US administration to avoid escalation. Importers and other stakeholders should take immediate action to understand and comply with the new duties to avoid potential penalties and ensure continued smooth operations.
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VTZ is a Mexican Law Firm with 50 years of experience, specialized in International Trade with a strong focus on antidumping investigations. Contact our key members from the antidumping investigation team today:
Emilio Arteaga
Co-Author
Gilberto Mejia
Co-Author
