As the (Customs and Trade) World Turns: February 2025

We are navigating an unpredictable and fast changing trade landscape and what we are reporting today may change by tomorrow (or in the next hour). However, our team is regularly issuing reports and alerts to help our clients and friends stay up to date. Sign up here for regular updates and to receive this newsletter each month. In addition, our Trump 2.0 Tariff Tracker can be found here and information regarding navigating the new tariffs can be found here.

This edition provides essential insights for sectors including International Trade, Fashion & Retail, Automotive, Electric Mobility, Aluminum and Steel Industries, E-commerce, and Compliance, as well as for in-house counsel, importers, and compliance professionals. 

In this February 2025 edition, we cover:

1. IEEPA Tariffs: New and Threatened Additional Import Duties on China, Canada, and Mexico.
2. Expansion of Section 232 Tariffs on Steel and Aluminum Imports — No more Exceptions, Quotas or Exemptions!
3. Reciprocal Tariffs: Reshaping Global Trade Dynamics. Tit for Tat?
4. Section 321 Program Changes: Implications for De Minimis Shipments.
5. USMCA Interim Final Rule: Key Updates for Textile, Apparel, and Automotive Imports.
6. US-Colombia Trade Promotion Agreement: Recent Developments.

1. IEEPA Tariffs on China, Canada, and Mexico: Bracing for More Tariff Turbulence

On February 3, the president declared a “national emergency” and invoked his authority under the International Emergency Economic Powers Act (IEEPA) to impose a 10% tariff on all imports from China starting on February 4. The IEEPA tariffs are in addition to other special duties, such as Section 301 or antidumping/countervailing duties (AD/CVD) tariffs on Chinese goods. China retaliated with multiple measures including tariffs, export controls on critical minerals, and entity list additions. It also challenged the tariffs at the World Trade Organization (WTO) and promptly requested consultations with the United States under WTO rules, although that may not mean much.

The president also used the IEEPA to declare tariffs of 25% on imports from Canada and Mexico, but those tariffs were averted at the last minute to allow for continued negotiations. For now, the IEEPA tariffs on Canadian and Mexican goods have been delayed until March 4. For Mexico and Canada, the pause in US tariffs in return for concessions on border and crime enforcement created momentum for more dialogue on trade. For its part, Mexico agreed to negotiations on supply chains, foreign investment traceability, and the upcoming United States-Mexico-Canada Agreement (USMCA) review. Mexico made another notable concession by repealing a ban on genetically engineered corn, which came after a USMCA bilateral panel ruling in favor of the United States.

The president may activate the IEEPA upon a declaration of a national emergency related to foreign country actions. Trump cited the influx of fentanyl and migrants to support these actions. While IEEPA does not specifically provide for tariffs, the president’s powers under IEEPA are broad.

And the Fox Says…: This is not the first time that President Trump invoked IEEPA with respect to imports from Mexico. In 2019, he announced his intention to use IEEPA to impose a 5% tariff on all goods imported from Mexico until “the illegal migration crisis is alleviated through effective actions taken by Mexico.” The tariff was scheduled to take effect in June 2019, but was indefinitely suspended days later. Whether March 4 will mark more turbulence or continued pause is anyone’s guess, but tariffs on our closest trading allies are sure to affect many multi-national companies.

Contributors: Diana Dimitriuc Quaia, James Kim, Mario A. Torrico, Angela M. Santos

2. Metal Mayhem: Trump’s 25% Tariff Blitz on Steel and Aluminum Imports

On February 10, President Trump announced significant changes to the Section 232 tariffs on steel and aluminum imports, originally implemented in 2018. These changes include a 25% tariff on both steel and aluminum imports from all countries, an increase from the previous 10% on aluminum. The changes will take effect on March 12 for most covered products.

The Proclamations terminate all existing special tariff arrangements, quotas, and exemptions with countries like Australia, Argentina, Brazil, Canada, the European Union, Japan, Mexico, South Korea, Ukraine, and the United Kingdom. This includes ending the tariff exclusion request process managed by the Bureau of Industry and Security. All pending exclusions are deemed denied. Generally Approved Exclusions will expire on March 12, while previously granted product specific exclusions will remain valid until their expiration or until the specified volume is imported.

The Section 232 tariffs will also cover an expanded list of downstream derivative products that were not previously subject to these tariffs. This list is expected to be published in a forthcoming annex. Additionally, the Proclamation instructs the US Secretary of Commerce to establish a process for including more derivative articles by May 11. This process will allow producers or industry associations to request coverage under Section 232 tariffs, with a 60-day deadline for determinations.

Since this newsletter was originally published, unpublished versions of the federal register notices listing the HTS codes of derivative steel and aluminum articles covered by Section 232 tariffs were issued. These notices are scheduled to be published on February 18. The AFS team will issue a separate alert discussing these notices.

And the Fox Says…: The recently imposed tariffs on steel, aluminum, and their downstream products are extensive and will have widespread effects. Only a very limited carveout from the tariffs will apply for steel and aluminum that undergoes specific early-stage processing in the United States. Although there is a period before they are implemented, businesses should start planning strategies to manage these new tariffs. The AFS team has extensive experience with Section 232 tariffs.

Contributors: Mario A. Torrico, Antonio J. Rivera, Angela M. Santos

3. Trump’s Reciprocal Tariffs: Reshaping Global Trade and Prioritizing US Economic Interests

In a significant move that could reshape global trade dynamics, President Trump has signed a Presidential Memorandum introducing a “Fair and Reciprocal Plan” directing certain agencies and advisors to submit reports detailing proposed remedies tailored to each foreign trading partner, based on the tariffs the nation imposes on US products, “unfair” taxes imposed, and cost to US businesses and consumers from another country’s policies, exchange rates, and any other practices his advisors deem to be unfair. This development is part of his broader strategy to address trade imbalances and prioritize US economic interests, as outlined in his “America First Trade Policy” memorandum. While details including countries, rates, and products covered have yet to be decided, the reciprocal tariffs propose to create a more balanced trade environment. The Plan was announced just days after Trump signed executive orders implementing 25% tariffs on all steel and aluminum imported into the United States.

The use of reciprocal tariffs to address what he calls “unfair trade practices” is consistent with Trump’s longstanding trade priorities and comes on the heels of similar legislative efforts in US Congress. Recently, West Virginia Representative Riley Moore (R) introduced the United States Reciprocal Trade Act in the US House of Representatives. Co-sponsored by eight other House members, this bill seeks to empower the president to negotiate with foreign nations to lower tariffs on American goods or impose reciprocal tariffs on foreign goods entering the United States. These actions may also prompt trading partners to implement their own tariffs against the United States, potentially escalating trade tensions.

And the Fox Says…: For businesses that rely on imports, these developments could have significant implications. Measures through a “Reciprocal Tariff Act” and potential additional executive actions may lead to increased tariffs on imports from countries with high duties on US products. These actions underscore the ongoing emphasis by this Administration and Congress of protecting perceived American economic interests.

Contributors: Joy Marie Virga, Mario A. Torrico, Antonio J. Rivera

4. De Minimis Disruption: What’s New With the Section 321 Program?

Recent announcements by US Customs and Border Protection (CBP) and the Trump Administration could significantly impact the Section 321 de minimis program. 

We previously reported on CBP’s first notice of proposed rulemaking (NPRM) on the Entry of Low-Value Shipments (ELVS) rule, intended to increase the efficiency and security of processing de minimis shipments in response to the substantial growth of e-commerce. Following the ELVS NPRM, CBP issued a second NPRM aimed at limiting the products eligible for duty-free entry under de minimis. Under this proposed rule, products subject to tariffs under Section 232, Section 201, and Section 301 would be excluded from the de minimis exemption. Interested parties can submit comments until March 24.

As discussed above in our update on the IEEPA tariffs, additional tariffs on products of China took effect on February 4. The executive order announcing these tariffs aimed to exclude all covered products from duty-free treatment under the de minimis program. However, after the rollout of the restriction led to confusion surrounding tariff collection, President Trump temporarily reinstated the program for covered products until “adequate systems are in place” to process and collect tariffs.

And the Fox Says…: As President Trump is expected to make more tariff announcements in the coming days and weeks, it is likely that he will continue to impose restrictions on the merchandise eligible for duty-free treatment under the de minimis program. Once the temporary reinstatement of duty-free de minimis treatment for products of China is lifted, low-value shipments from e-commerce retailers may face significant duties.

Companies that use this program, particularly for China origin products, should explore alternative import strategies. Companies should also be aware of other compliance implications, such as the potential need to increase their customs bonds.

Contributors: Lucas A. Rock, Angela M. Santos

5. What the Apparel, Textile, and Automotive Industries Need to Know about the USMCA Interim Final Rule

On January 17, CBP issued an Interim Final Rule (IFR) on additional regulations implementing the USMCA, introducing significant regulatory updates for textile, apparel, and automotive imports.

For textile and apparel goods, the IFR covers, in part, tariff preference level (TPL) provisions and verification site visit provisions for textile and apparel goods. Under the IFR, TPLs will now require a certificate of eligibility, rather than a certificate of origin, to track allocation and use. The IFR also permits CBP to conduct a site visit at the premises of the exporter or producer of textile or apparel goods in Mexico or Canada for two purposes: (1) to verify qualification for preferential tariff treatment or (2) to determine the customs offenses that are occurring or have occurred at the facility. CBP is not required to notify the exporter/producer of the site visit; the agency, however, must notify the member country’s (i.e., MX) customs administration.

For automotive goods, the IFR provides clarity on the requirements related to the completion and submission of the Labor Value Content and steel and aluminum purchasing certifications that apply to vehicle producers. The IFR outlines specific data elements that must be included in each certification, the timeline for submission, and the process related to the government’s review of the certifications to confirm that they contain no omissions or errors. In addition, the IFR also contains provisions related to vehicle averaging elections, averaging for automotive parts, year-end reconciliation submissions, and certifications for vehicle producers making use of the alternative staging regime.

And the Fox Says…: These rule changes are set to take effect on March 18 (except the vehicle certification regulations, which will have a 120-day delayed compliance date). Comments are being solicited on the IFR until the effective date. In the meantime, companies in the textile, apparel, and automotive sectors should review their supply chains, certification processes, and compliance strategies to ensure continued USMCA benefits.

Contributors: Natalie Tantisirirat, Lucas A. Rock, James Kim, Antonio J. Rivera

6. Key Takeaways From Decision No. 9 (on Investment) of the Free Trade Commission on the US-Colombia Trade Promotion Agreement

On January 29, the Free Trade Commission of the United States-Colombia Trade Promotion Agreement issued Decision No. 9 providing an interpretation of Article 10 of the Agreement on investment. These interpretations are essential for investors and legal practitioners involved in cross-border trade between the United States and Colombia.

The Free Trade Commission entered into force on May 15, 2012, and is a comprehensive free trade agreement providing the elimination of tariffs and removal of barriers on US services.

Most notably, the Free Trade Commission interpreted that customary international law refers to the general and consistent practice of states. Such state practice includes relevant national court decisions or domestic legislation dealing with the particular issue and official declarations by the relevant State actors. The Free Trade Commission further interpreted that decisions of international courts and arbitral tribunals do not develop customary international law. Finally, the Free Trade Commission interpreted that the obligation “not to deny justice in a criminal, civil, or administrative adjudicatory proceeding,” does not empower an arbitral tribunal to review the merits of a domestic court’s application of domestic law.

As the US government has indicated, the Free Trade Commission decision “reflects the longstanding U.S. understanding of the standards of investment protection under the TPA.”

And the Fox Says…: Given President Trump’s recent threats (and then retracted threats) to impose tariffs onto Colombia, the fate of the US-Colombia Trade Promotion Agreement remains in flux. ArentFox Schiff will continue monitoring developments relating to US-Colombia relations.

Contributors: Maya S. Cohen, Jodi Tai, Maxime Jeanpierre