United States (US) President Donald Trump signed Executive Orders¹ on 6 March 2025, amending the Executive Orders on "Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border" and "Imposing Duties to Address the Situation at Our Southern Border" originally signed on 1 February 2025.²

The new Executive Orders provide exemption from the 25% duty levied on all Mexican and Canadian imports that qualify under the United States-Mexico-Canada (USMCA) Free Trade Agreement. They also adjusted the import duty for nonqualifying potash from Canada and Mexico from 25% to 10%, leaving the 10% duty on nonqualifying Canadian energy products in effect as well.

On 6 March 2025, the White House also released a Fact Sheet, explaining that the adjustment in tariffs is intended to minimize the disruption to the automotive industry, recognizing the impact the duties have to the industry's supply chains.

US Customs also released two Cargo Service Messaging Service notes³ on 6 March 2025. These messages provide additional guidance on the appropriate use of the Harmonized Tariff System of the United States (HTSUS) to accurately reflect the duty rate and treatment in effect on or after 12:01 a.m. EST on 7 March 2025 for the imported products.

Actions for businesses

Immediate actions to consider for companies that have North American import and export operations, depending on their specific situations, include:

• Analyze both financial and physical flows for imports and exports into and out of North America, as well as the import duties paid, to assess the potential total landed cost.
• Evaluate product qualification under USMCA and analyze potential adjustments to sourcing to meet product Rules of Origin.
• Review contracts with suppliers and customers to clarify contractual liability for duties and taxes.
• Consider renegotiating supplier and customer pricing agreements and/or cost-splitting arrangements.
• Evaluate current domestic or alternative sourcing options for the impacted countries and consider country-of-origin planning to mitigate duties.
• Evaluate product Bill of Materials composition and evaluate alternate substitute materials.
• Assess operational impact of elimination of de minimis duty-free treatment for the impacted products.
• Consider valuation planning, such as bifurcating product and non-product costs and other country-specific planning, such as first sale for export in the US, to mitigate the increase in duty.
• Consider using the US Free Trade Zone (FTZ) program for duty deferral on long-lead-time inventory items to provide cash-flow benefits as well as to help mitigate duties to the extent the imported items are ultimately exported from the FTZ — either re-exported without any change or re-exported after being incorporated into other manufactured articles. Using the FTZ program requires applying special considerations on a case-by-case basis; being able to utilize the program may provide a reduced effective tax rate in certain circumstances.
• Identify potential approaches to leverage under Chapter 98 Special Classification Provisions to partially or fully mitigate duties for certain products based on their use or condition (e.g., goods returned after having been exported, goods being temporarily imported, goods imported for the use of certain nonprofit institutions).
• Flag related-party entries imported into the US for Reconciliation to account for potential retroactive reductions in transfer price to enable filing the adjustments and securing potential refunds.
• Review US-continuous-import-bond sufficiency.
• Consider aligning customs valuation with transfer pricing policies. US tax reform has resulted in companies' migrating intellectual property (IP) back to the US. With IP in the US, and in a direct-import model, customs value is decreased. For customs value, certain design and development cost must be added to value, but US research and development (R&D) can be excluded. For R&D-intensive companies with significant R&D in the US, value reduction can be significant
• Keep up with the latest news and developments in trade policies and stay adaptable to quickly respond to changes in trade regulations and tariff rates.