The U.S. Customs and Border Protection (CBP) has recently announced new tariffs on products imported from Mexico. This alert provides a detailed summary of the key aspects of these tariffs, their potential impacts on businesses, and the next steps for Mexican businesses.
Background
On March 4, 2025, the U.S. implemented additional duties on products of Mexico pursuant to President Trump’s Executive Order 14194, as amended. The order aims to address the national emergency at the southern border, including the influx of illegal aliens and drugs, particularly fentanyl. This is briefly discussed in our previous post:
Trump Imposes Tariffs on Mexican Imports; Mexico’s President Responds, and Both Nations Agree to Suspend Tariffs
On February 1, 2025, President Trump signed an executive order imposing tariffs on Mexican products. This action was suspended.
New Tariffs: An Overview
Additional Ad Valorem Duty
- A 25% ad valorem duty will be imposed on all imports that are products of Mexico, excluding those encompassed by 50 U.S.C. 1702(b), which are namely personal luggage and communications with no transaction value.
- This additional duty applies in addition to all other applicable duties, taxes, fees, exactions, and charges.
Exceptions
- Products for personal use included in accompanied baggage of persons arriving in the United States are excluded.
- Products donated to relieve human suffering and informational materials are also exempt, subject to certain conditions.
Effective Date
- The duties are effective for products entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on March 4, 2025.
Impact on Business
Increased Costs
- Businesses importing products from Mexico will face higher costs due to the additional duties.
Supply Chain Disruptions
- The tariffs may cause supply chain disruptions as businesses seek alternative sources for their products.
Compliance Challenges
- Companies must ensure their imported products are correctly classified and that they pay the appropriate duties.
Mexican Retaliation to Trump Tariffs
- The Mexican president shared that the retaliation measures will be announced on Sunday, the 9th of March, 2025.
Compliance in US-Mexico Trade
- Review your contracts with suppliers to understand their obligations regarding the additional duties.
- Consider renegotiating terms if necessary, especially if you are a Mexican importer of final or consumer good products.
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.