USA: An introduction to International Trade: Customs
What to Expect in 2025 in USA International Trade: Customs
As President Trump moves back into the White House, significant shifts in international trade policy are underway. The new administration has already begun embracing tariffs to protect domestic industries, enhance national security, and gain geopolitical leverage. On February 1, 2025 President Trump issued three Executive Orders imposing tariffs on China, Canada, and Mexico to curb the flow of drugs and illegal migration into the USA (see https://www.whitehouse.gov/presidential-actions/2025/02/imposing-duties-to-address-the-flow-of-illicit-drugs-across-our-national-border/). The International Emergency Economic Powers Act (IEEPA) affords the President with the authority “to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat.” The Executive Orders expand on the National Emergency at the Southern Border declared on 20 January 2025.
A 10% tariff was imposed on all products from China, unlike the Section 301 tariffs imposed during Trump’s first term which only applied to specific goods depending on their tariff classification. Shortly after US tariffs on Chinese goods took effect, China unveiled a series of retaliatory measures against the USA including additional tariffs of 15% on coal and liquefied natural gas and 10% higher duties on American crude oil, agricultural machinery and certain cars, starting 10 February 2025.
A 10% tariff was issued on energy resources from Canada, a 25% tariff on all other products from Canada, and a 25% tariff on all products from Mexico. In response, Canada announced retaliatory tariffs of 25% against USD155 billion of US goods. These tariffs will be tailored to specific products including beer, wine, bourbon, fruits, and fruit juices, vegetables, perfume, clothing, household appliances, lumber and more. Mexico imposed a “carousel,” where products are drawn from all sectors and cycle on and off the list at set periods. Both countries are also considering non-tariff measures.
However, shortly after the tariff threats, Canada and Mexico agreed to take initiative to address President Trump’s concerns about drug trafficking and border security. Accordingly, these proposed tariffs are on pause for at least thirty days as the countries work together to reach an agreement.
In additional to the IEEPA tariffs, President Trump has signed proclamations reinstating the full 25% tariff on steel imports and increasing tariffs on aluminum imports to 25% under Section 232 of the Trade Expansion Act of 1962 to protect our national security (seeAdjusting Imports of Steel into The United States The White House.pdf ). These tariffs will take effect on 12 March 2025. With the tariffs, all alternative agreements and general approved exclusions for Argentina, Australia, Brazil, Canada, Japan, Mexico, South Korea, the European Union, Ukraine, and the United Kingdom are terminated. Additional reforms include applying strict “melted and poured” standards, expanding tariffs to include key downstream products, and cracking down on tariff misclassification and duty evasion schemes.
As of the day this article was written, 12 February 2025, the trade war is just beginning. The next wave of expected trade actions includes potential oil and gas, semiconductors, pharmaceuticals and other sectoral tariffs. These tariffs will significantly impact US businesses’ profit margins and operational efficiency. Companies should design and implement tariff mitigation strategies, including product classification analysis, alternative sourcing, and tariff engineering, as quickly as possible. Most products affected by the tariff threats are required to enter under “foreign privileged status,” which prevents the inversion of duties within the Foreign Trade Zones (FTZs), thereby reducing (but not eliminating) some of its usefulness as a tariff mitigation technique. Businesses should stay alert as legal questions may arise regarding the use of IEEPA to impose tariffs as IEEPA typically is used to impose sanctions and seizures.
Before the tariffs, President Trump released his memorandum on America First Trade Policy. This policy offers insight into the new administration’s trade priorities and calls for a review of current trade-related policies. President Trump says his goal is “to establish a robust and reinvigorated trade policy that promotes investment and productivity, enhances our Nation’s industrial and technological advantages, defends our economic and national security, and — above all — benefits American workers, manufacturers, farmers, ranchers, entrepreneurs, and businesses.” For a complete transcript of the memorandum, see https://www.whitehouse.gov/presidential-actions/2025/01/america-first-trade-policy/.
As expected, President Trump plans to review existing trade agreements and pursue new agreements that prioritize the United States’ interests. The administration will review the current U.S.-China Economic and Trade Agreement to assess China’s adherence to the agreement. Additionally, the Secretary of Commerce will evaluate the status of U.S. intellectual property rights upon China to guarantee fair and reciprocal treatment.
Further, the memorandum orders the Secretary of Commerce and the United States Trade Representative (USTR) to assess legislative proposals regarding Permanent Normal Trade Relations (PNTR) with China. In response to the memorandum, bipartisan legislation was introduced to the House revoking China’s PNTR status (see https://selectcommitteeontheccp.house.gov/media/press-releases/moolenaar-introduces-first-bipartisan-bill-revoke-chinas-permanent-normal#:~:text=WASHINGTON%2C%20D.C.%2D%2D%20Today%2C%20Chairman,Normal%20Trade%20Relations%20(PNTR).). This would subject Chinese imports to significantly higher general duty rates than those applied to products from other countries.
In addition, forced labor continues to be a priority in trade relations with China. The Uyghur Forced Labor Prevention Act (UFLPA) aims to ensure that goods produced wholly or in part with forced labor do not enter the US market and assumes that goods made in the Xinjiang Uyghur Autonomous Region (XUARE) of China are made with forced labor. Consistent with Trump’s advocacy for trade policies against China, increased enforcement of the UFLPA is expected under the new administration. To comply, U.S. businesses must trace the entire supply chain to understand where their products are made. These regulations are especially difficult for companies with complex supply chains who may have to trace dozens of different suppliers.
Economic and trade relations with China is not Trump’s only focus. With the US-Mexico-Canada Agreement’s (USMCA) joint review process set to begin in July 2026, the Trump administration will have the opportunity to decide the agreement’s fate. The USMCA was one of Trump’s biggest achievements in his first term. The agreement restructured the North American Free Trade Agreement (NAFTA) by tightening rules of origin for the auto industry, adding unprecedented labor obligations, and allowing more access into Canada’s dairy market. The President has asked the USTR to assess the impact of the USMCA on American workers, farmers, ranchers, service providers, and other businesses in preparation for the July 2026 review.
Along with a detailed review of China, Mexico, and Canada, President Trump intends to review antidumping and countervailing duty (AD/CVD) measures to tackle unfair and unbalanced trade. Antidumping duties are in place for when a foreign producer or exporter sells a product in the US at a price that is below “normal value.” Countervailing duties are in place to offset subsidies given by an exporting country’s government. To support these measures, the memorandum suggests the possibility of implementing an External Revenue Service (ERS) to collect tariffs, duties, and other foreign trade-related revenues which is currently handled by Commerce Department and the U.S. Customs and Border Protection.
Another focus area for Trump’s administration is the growing demand to do something about the de minimis shipments under 321 of the Tariff Act. As a result of e-commerce, the use of 321 entries has dramatically increased in recent years from 139 million shipments per year to over one billion a year over the last ten years (seeCBP Proposes New Rule to Strengthen Enforcement and Limit Duty Exemption for Low-Value Shipments | U.S. Customs and Border Protection). This exemption has served as a loophole through which dangerous goods, trademark and copyright violations, health and safety risks and other non-compliant goods can enter the USA. On 1 February 2025, President Trump eliminated the 321 exemption for products from China. The exemption will also be unavailable for products from Canada or Mexico if no agreement is reached before the thirty-day tariff pause is over. This action will particularly impact e-commerce retailers, fast fashion and warehouse and third-party logistics providers that have large presences in border regions.
Beyond tariffs and duties, the new administration has already begun efforts to enhance national security through other trade policies. The USTR plans to review the U.S. industrial and manufacturing base to investigate national security threats. Additionally, Trump has proposed export controls as a potential mechanism to maintain our Nation’s technological superiority. In response, the Department of Commerce published an interim final rule (IFR) on 15 January 2025 that introduces new export controls on advanced computing items and controls on artificial intelligence (AI) model weights to address national security risks related to biotechnology (see Commerce Implements New Controls to Address National Security Risks Related to Biotechnology | Bureau of Industry and Security).
2025 will be a year of drastic change in international trade policies. The tariffs announced are just beginning. The new administration has made it clear that it will review existing trade agreements and continue to implement measures to correct unfair and unbalanced trade. Companies should carefully monitor these actions and consider proactive strategies to mitigate trade remedy impacts. I urge businesses to stay on top of any new developments and remain adaptable as “America First” policies return.