Upcoming Tariffs on Canada, Mexico, and China Set for March 4, New U.S. Copper Import Investigation, and Key Next Steps for Companies

Tariffs on Canada, Mexico, and China

On March 4, 2025, the United States will implement previously suspended tariffs on imports from Canada and Mexico, as well as new tariffs on Chinese imports, marking a significant escalation in trade tensions under the Trump administration. The 25% tariffs on Canadian and Mexican goods and an additional 10% tariff on Chinese imports (on top of the previously announced 10% tariff) are being imposed as part of the administration’s efforts to curb drug trafficking and illegal immigration. In a parallel move, President Trump has also initiated a Section 232 national security investigation into copper imports, which could lead to future tariffs or trade restrictions on raw and refined copper, alloys, scrap, and derivative products. The copper probe, announced via executive order on February 25, 2025, underscores the administration’s push to onshore materials and follows the expansion of steel and aluminum tariffs earlier this year.

• Canada: A 25% tariff will apply to all imports from Canada, with a lower 10% rate for “energy or energy resources,” including crude oil, natural gas, and critical minerals. However, President Trump has indicated that tariffs on Canadian energy may increase. The order does not specify covered HTSUS codes but suggests a broad application to all non-energy imports, with further details expected in a Federal Register notice. Canada has threatened tariff retaliation on a broad range of imports from the United States.
• Mexico: A 25% tariff will apply to all imports from Mexico, with no reduced rate for energy or energy-related products. Similar to Canada, the order does not provide a full list of affected HTSUS codes but implies coverage of all imported merchandise. Further details, including the new HTSUS chapter 99 special tariff number, will be published in a forthcoming Federal Register notice. As with Canada, Mexico has threatened tariff retaliation on a broad range of imports from the United States.
• China: A 10% supplemental tariff will apply to all imports from China, in addition to existing duties, creating an aggregate 20% tariff on all Chinese imports. The order does not provide a detailed list of affected HTSUS codes but suggests comprehensive coverage of all Chinese imports. The additional tariffs will apply only to products classified as originating from China (ISO Country Code CN) and will not extend to goods from Hong Kong (HK) or Macau (MO). Additional implementation details are expected in a future Federal Register notice. China, too, has threatened tariff retaliation on a broad range of imports from the United States.

Section 232 Investigation Into Copper Imports

On February 25, 2025, President Trump signed an executive order directing the Department of Commerce Bureau of Industry and Security (“BIS”) to investigate national security risks associated with copper imports. This investigation, to be conducted by BIS under Section 232 of the Trade Expansion Act of 1962, could lead to new tariffs or trade restrictions on copper imports.

• The investigation will assess whether copper imports “threaten to impair national security” and will cover all forms of copper, including raw mined copper, copper concentrates, refined copper, copper alloys, scrap copper, and certain derivative products.
• The United States imports about half of its copper consumption, primarily from Canada, Mexico, Chile, Peru, and Germany.
• The BIS investigation will take up to 270 days, including public comments and hearings.
• If BIS determines that copper imports threaten national security, President Trump could impose tariffs, export controls, or domestic production incentives, similar to the Section 232 tariffs on steel and aluminum.

Next Steps for Companies

Given the evolving trade landscape and the potential for new tariffs, regulatory measures, and retaliatory tariffs (as well as the possibility that tariffs could be quickly suspended or changed), companies should take proactive steps to mitigate risks and prepare for potential disruptions.

1. Assess Supply Chain Exposure

• Identify and analyze current reliance on imports from Canada, Mexico, China, and copper-exporting countries (e.g., Chile, Peru, Germany).
• Evaluate alternative sourcing strategies to reduce tariff exposure, such as domestic suppliers or suppliers from countries with free trade agreements.
• Consider adjusting procurement contracts to include tariff contingencies and renegotiation clauses.

2. Stay Engaged in the Regulatory Process

• Monitor BIS’ Section 232 investigation on copper and be prepared to submit public comments or participate in hearings.
• Work with trade associations, industry groups, and legal advisors to advocate for exemptions or reduced tariff impact.
• Track Federal Register notices for official government updates on investigation timelines and policy changes.

3. Evaluate Financial and Pricing Strategies

• Conduct a tariff impact analysis to determine how new duties may affect pricing, margins, and competitiveness.
• Explore options for duty drawback programs, tariff exclusions, or reclassification of goods to minimize cost increases.
• Consider hedging strategies for commodity price fluctuations, particularly for copper and other impacted raw materials.

4. Review Compliance and Trade Documentation

• Ensure proper classification of goods under the HTSUS to avoid unnecessary tariffs or penalties.
• Strengthen supplier documentation and record-keeping to support claims for exemptions, if applicable.
• Confirm adherence to customs regulations, especially if re-exporting affected materials or shifting supply chains.

5. Prepare for Possible Retaliatory Measures

• If additional tariffs are imposed, affected trading partners (e.g., China, Mexico, Canada) may impose countermeasures on U.S. exports.
• Companies exporting to these markets should assess potential retaliatory tariffs and adjust market strategies accordingly.

For further guidance on how these changes may impact your business, please contact AGG partners Allison Raley and Mike Burke. AGG will continue to monitor developments and will update as needed.