
Chips, drugs, and steel — how to prepare for Trump tariffs
Last updated on Thursday, February 13, 2025, at 3:15 p.m. ET. We’re updating this blog post as new information becomes available.
On January 31, 2025, White House Press Secretary Karoline Leavitt confirmed that President Donald Trump would implement new 25% tariffs on Mexico, 25% tariffs on Canada, and 10% tariffs on China starting February 1, 2025.
On February 1, we learned the new tariffs would take effect on February 4. On February 3, the tariffs on Canada and Mexico were paused. On Friday, February 7, some of the tariffs on China were paused.
On February 10, President Trump issued a proclamation imposing a 25% ad valorem tariff on steel and aluminum articles from most countries. They’re set to take effect March 12, 2025 — unless he decides to revisit the determination.
On February 13, President Trump signed a presidential memorandum ordering his administration to pursue reciprocal tariffs on U.S. trading partners.
Keeping track of changing tariff requirements and being prepared to implement — and undo — them on a dime is challenging for businesses. Fortunately, automating compliance can help.
Here’s what we know about the tariff changes today.
What are the tariff changes?
25% tariffs on imports from Mexico ordered then paused
On February 1, 2025, the White House issued an executive order imposing an additional 25% ad valorem rate of duty on all products of Mexico, effective 12:01 a.m. ET on February 4, 2025. The U.S. also eliminated the $800 de minimis exemption for Mexico.
Then, on the morning of February 3, 2025, President Trump delayed the tariffs on imports from Mexico. According to his post on Truth Social, the U.S. is immediately pausing the anticipated tariffs for one month to allow time for the two countries to negotiate a deal to stop the flow of fentanyl and illegal migrants into the U.S.
The president’s post didn’t mention the de minimis exemption. However, with the pausing of the tariff changes, low-value imports from Mexico remain duty free.
Most products traded between Mexico and the U.S. have been free from tariffs under the United States-Mexico-Canada Agreement (USMCA), which President Trump spearheaded during his first term in office. Top U.S. imports from Mexico include cars and trucks, car parts, computers, crude oil, medical instruments, phones, and televisions. Mexico is also the largest single source of U.S. horticultural imports, according to the U.S. Department of Agriculture.
25% tariffs on imports from Canada ordered then paused
On February 1, 2025, the White House issued an executive order imposing an additional 25% ad valorem rate of duty on all products of Canada, effective 12:01 a.m. ET on February 4, 2025. The 25% tariffs would be in addition to any other applicable duties, fees, exactions, or charges. The only exceptions would be for energy and energy resources imported from Canada, which would be subject to an additional 10% ad valorem rate of duty effective 12:01 a.m. ET on February 4, 2025.
Additionally, products subject to the new tariffs would no longer be eligible for duty-free treatment under de minimis provisions.
Then, around 4:30 p.m. ET on February 3, Canadian Prime Minister Justin Trudeau announced that after a “good call with President Trump,” the “proposed tariffs will be paused for at least 30 days.”
For now, at least, the U.S. is still providing the de minimis exemption for imports from Canada.
The tariff changes for Canadian imports would represent a significant policy change. As with Mexico, most products traded between Canada and the U.S. are free from tariffs under USMCA. Top U.S. imports from Canada include cars, delivery trucks, motor vehicle parts, and petroleum products, as well as lumber.
Retaliatory tariffs on U.S. exports to Canada ordered then paused
Before Trump and Trudeau’s phone call, the Canadian government responded with a “set of countermeasures designed to apply economic pressure on the U.S. to remove the tariffs as soon as possible.”
Canada said it would impose retaliatory tariffs on $30 billion in goods imported from the U.S. effective February 4, 2025. Affected products include apparel, appliances, beer, coffee, cosmetics, footwear, motorcycles, orange juice, peanut butter, pulp and paper, spirits, and wine.
Additionally, Canada said it would implement new tariffs on $125 billion worth of U.S. imports at a future date.
On February 3, the Canadian government announced that Canada and the United States had agreed to delay the imposition of our respective tariffs on imported goods.
Over the weekend, several Canadian provinces responded to President Trump’s tariff changes by pulling U.S. products off the shelves. At least one province, Ontario, paused its retaliatory measures after the tariff updates were delayed.
10% tariff on Chinese imports ordered
Per a White House executive order dated February 1, 2025, all articles produced by the People’s Republic of China are subject to an additional 10% ad valorem rate of duty effective 12:01 a.m. ET on February 4, 2025.
The additional duty will not apply to goods “that were loaded onto a vessel at the port of loading or in transit on the final mode of transport prior to entry into the United States before 12:01 a.m. ET on February 1, 2025,” provided the importer certifies to U.S. Customs and Border Protection (CBP) as specified in a Federal Register notice.
The de minimis exemption for China was also suspended. However, on February 7, President Trump signed an executive order temporarily reinstating duty-free de minimis treatment for the People’s Republic of China until “adequate systems are in place to fully and expediently process and collect tariff revenue.”
Duty-free de minimis exemption suspended for China, then reinstated
With the February 7 executive order, imports from China valued $800 or less remain duty-free and eligible for an expedited entry process, like low-value imports from other countries.
Once CBP can effectively process and enforce tariffs on low-value shipments, the U.S. will likely eliminate the de minimis exemption for products made in or shipped from China.
At that time, any articles of China subject to the additional 10% duty (i.e., articles covered by heading 9903.01.20) will no longer be eligible for the administrative exemption from duty and certain taxes provided by 19 U.S.C. 1321(a)(2)(C). This change will likely affect all shipments containing one or more goods made in China or shipped by mail from China.
The Federal Register notice reminds that “products of China” include products of Hong Kong.
If and when de minimis is eliminated, a new entry process will be required for low-value products made in China or Hong Kong or shipped from China or Hong Kong. You can read about what that will look like here.
The U.S. is inundated with low-value (de minimis) imports, and not just imports originating in China. In fact, in September 2024, the Biden administration announced a plan to “stop the abuse of the de minimis exemption,” and CBP began scrutinizing de minimis imports.
What’s challenging about the current situation — for businesses as well as CBP — is that tariff policy changes are happening practically overnight.
Retaliatory tariffs on U.S. exports to China ordered
On the afternoon of February 3, the New York Times reported that China’s ambassador to the United Nations was filing a complaint with the World Trade Organization over President Trump’s tariffs.
On the morning of February 4, China announced counter tariffs: a 15% tariff on coal and liquefied natural gas products and a 10% tariff on crude oil, agricultural machinery, and large-engine cars. According to AP News, the tariffs will take effect Monday, February 10, 2025.
25% tariff on steel and aluminum announced
On February 11, 2025, the White House issued a fact sheet restoring a true 25% tariff on most steel imports and increasing the tariff on aluminum imports from 10% to 25%, effective 12:01 a.m. ET on March 12, 2025.
Alternative agreements that reduced or eliminated aluminum and steel tariffs for the following trading partners are revoked:
- Argentina
- Australia
- Brazil
- Canada
- Japan
- Mexico
- South Korea
- The European Union
- Ukraine
- The United Kingdom
A 25% tariff will also apply to certain derivative steel and aluminum articles. Details will be provided in a forthcoming Federal Register notice.
Additionally, the product-specific exclusion process for steel and aluminum is terminated effective 11:50 p.m. ET on February 10, 2025.
The White House says the new tariffs on steel and aluminum are necessary for national security. Domestic production of steel and aluminum has declined in recent years, and the United States “does not want to be in a position where it would be unable to meet demand for national defense and critical infrastructure in a national emergency.”
That said, “the United States will monitor the implementation and effectiveness of these actions in addressing our national security needs.” Per President Trump’s February 10 proclamation, he “may revisit this determination, as appropriate.”
Avalara is ready to help businesses comply with these tariffs and any retaliatory tariffs impacted countries may implement.
Other tariffs
In addition to Canada, China, and Mexico, President Trump has threatened to impose tariffs on imports from Colombia, Denmark, and the EU. Steel and aluminum tariffs and new tariffs on chips, copper, pharmaceuticals, semiconductors, and things needed for the military are all on the docket.
We know from the first Trump administration that more tariffs are likely — and likely to change on a dime. The first Trump trade war gave us whiplash, and we’ve had a taste of that already this term with the proposed then discarded 25% emergency tariffs on Colombian imports (and Colombia’s proposed and discarded retaliatory tariffs), and now with the Canada and Mexico tariff changes.
We also know changing tariff policies will challenge businesses that import affected goods into the United States. Companies exporting goods into countries with retaliatory tariffs on U.S. exports will also face new hurdles.
Developing a proactive cross-border trade strategy and tax compliance plan is the best way for businesses to prepare for whatever new tariffs the future holds.
How can businesses prepare for tariff updates?
While the current uncertainty over tariffs may be unsettling, the truth is that businesses deal with changing tariffs all the time. In 2023 alone, there were 337 international rate updates and 6,779 international taxability updates.
The key to handling all this change and streamlining international trade compliance is customs duty automation.
For businesses engaged in international trade that are having trouble assessing and adapting to the changing dynamics of cross-border duties and tariffs, Avalara is here to help. Avalara Cross-Border connects all pieces of the global tax and tariff puzzle by delivering real-time calculation of customs duties and import taxes, and by automating tariff code classification. We stay on top of regulatory changes worldwide, so businesses don’t have to. It’s the ideal trade solution for online sellers seeking to establish a modular, best-of-breed platform to power their cross-border needs.
“Avalara’s suite of compliance services can help you stay on top of this rapidly changing environment, giving you peace of mind that you are keeping pace with the changes,” says Craig Reed, General Manager of Cross-Border at Avalara.
Let us help you stay ahead of change and continue to grow globally. Contact us today to learn more.
This post was first published on January 31, 2025.

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