Dear Valued Client,

We wanted to take an opportunity to clarify that IEEPA Drug/border tariffs (20% effective March 4, 2025 for China), and (25% effective March 4 for Canada and Mexico) are still in effect.  IEEPA Drug/border tariffs are distinctly different than the new IEEPA Reciprocal tariffs announced yesterday.  

China

- IEEPA Reciprocal tariffs from China (34%) apply effective April 9.

- If section 232, steel, aluminum, derivatives, autmobiles, and auto parts is applicable, then section 232 (25%) tariff supersedes the IEEPA Reciprocal tariffs at 34%.

- Section 301 for China still applies .

- IEEPA Drug/border tariffs from China (20%) still applies.

Canada/Mexico

- Goods from Canada and Mexico are exempt from the IEEPA Drug/border tariffs if qualifying for USCMA.

- If goods are not qualifying for USMCA, then IEEPA Drug/border tariffs apply (25%).

- If the IEEPA Drug/border tariff is terminated or suspended, USMCA qualifying goods will be exempt from IEEPA Reciprocal tariffs and non-USMCA goods will be subject to a 12% IEEPA reciprocal tariff.

- No dates have been provided at this time.

Additional updates will follow once they are available.

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All of the comments in this advisory are subject to change and based on our current interpretation.  The President issued executive orders yesterday, April 2.  

Section 321/de miminimis goods from China/Hong Kong will be elmininated.  All goods of China/Hong Kong which are shipped by any method other than the international postal network are ineligible for de minimus as of 12:01 am EDT May 5, 2025.  Entries must be made using formal or informal entry.

Goods shipping via international postal methods from China/Hong Kong will be subject to duty rates equal to either:

- 30% of the value as of May 2, 2025; or

- $25 per item (from May 2- May 31, 2025); or

- $50 per item from June 2, 2025.  

- These duties will be in lieu of most favored nation rates, IEEPA drug tariffs, and 301 tariffs.

Packages from Macau remain eligible for de minimis but there may be a recommendation to extend the prohibition to Macau within 90 days.

All other countries are exempt from this de minimis change until Commerce has established a system to collect the tariffs.

Additional updates will follow once they are available.

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All of the comments in this advisory are subject to change and based on our current interpretation.  The President issued executive orders yesterday, April 2.  The orders utilize International Economic Emergency Power Act (IEEPA) authority to impose a universal 10% tariff on all countries except some specific countries with greater rates.  Additionally, the list of products subject to section 232 tariffs on automobiles/auto parts has been released.  The Department of Commerce also added two new products to the section 232 derivative aluminum articles.

IEEPA reciprocal tariffs of 10% ad valorem will be added for all countries not listed in Annex I (linked below). These will be effective at 12:01 am EDT April 5, 2025.  Note that goods loaded onto a vessel at the port of lading in the final mode of transit prior to April 5, will not be subject to the IEEPA reciprocal tariffs.

IEEPA reciprocal tariffs with specifc rates (for countries listed in Annex I) will be effective at 12:01 am EDT on April 9, 2025.  Note that goods loaded onto a vessel at the port of lading in the final mode of transit prior to April 9, will not be subject to the IEEPA reciprocal country specific rate.  

There are published exceptions which define products that are excluded from the IEEPA reciprocal tariffs. Goods for personal use, donations, informational articles including publications, films and posters etc., under 50 USC 1702 are exempt.  

Steel, aluminum, and derivatives, automobiles and auto parts under existing section 232 tariffs are exempt from the IEEPA reciprocal tariffs (note all existing tariffs still apply). Additionally, goods listed in Annex II (linked below) of the order are exempt, which includes items such as copper, pharmaceuticals, semiconductors, lumber, certain critical minerals, and energy/energy products. We believe these items are going to be addressed separately.  The value of US content on any goods which have no less than 20% US value will be exempt from IEEPA reciprocal tariffs.

Section 232 for automobile and auto parts annex has been released.   Section 232 for automobile tariffs are effective 12:01 am EDT April 3, 2025 with 25% tariffs applicable.  Section 232 for auto parts tariffs are effective 12:01 am EDT May 3, 2025 with 25% tariffs applicable.  The full list of applicable HTS codes are linked below.

Goods from Canada and Mexico that currently qualify for USMCA are exempt from the IEEPA border tariffs.  However, upon termination/suspension of IEEPA border tariffs (25%), USMCA goods will be exempt from the IEEPA Reciprocal tariffs and non-USMCA goods will be subject to 12% IEEPA tariffs.  No dates have been provided at this time.

Finally, the Department of Commerce has added two items to the Aluminum Derivatives list which include aluminum cans (7612) and aluminum cans containing beer (2203).  These are effective 12:01 am EDT April 4, 2025 with 25% tariffs applicable.

Note that goods admitted to Foreign Trade Zones after 12:01 eastern on April 9 must be admitted in privileged foreign status.  It is noted that goods that are eligible for admission to an FTZ under domestic status will be exempt from the tariffs.

Unlike in previous IEEPA action, there is no express prohibition of claiming duty drawback on these tariffs.  It is very possible this was an oversight and may be corrected, but at this time the prohibition is not in the language.

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