How Trump’s new policy affects global commerce and shipping

Following through on promises to increase US tariffs on Canada and Mexico as soon as possible, President Trump used the International Emergency Economic Powers Act (IEEPA) to apply 25% tariffs on all goods from Canada and Mexico – which accounted for nearly $900B and 28% of total US imports in 2023 – starting February 4th, with the exception of energy imports which will face a 10% tariff.

A 10% tariff will also be applied to all imports from China. President Trump cited the flow of illegal immigrants and drugs – especially fentanyl – as urgent threats to the nation and as the basis for enacting the IEEPA, which can only be used in response to a national emergency.

Becoming the first president to use the IEEPA to increase tariffs, the act allowed Trump to take immediate action by executive order as opposed to the various acts he used to increase tariffs during his first administration which activate federal agencies to research, review and make recommendations on tariffs first, and can take several months.

Beyond Increased Tariffs

The executive orders for tariffs on Canada and Mexico also go beyond just the tariffs:

● The orders disallow exemptions to the tariffs – despite intense lobbying by automotive and energy groups

● Aware of potential retaliation (more on that below), the orders also include clauses allowing the president to increase tariffs further if Canada or Mexico apply retaliatory tariffs

The de minimis exemption, which permits imports under $800 without duties, is also being eliminated for all goods from these two countries. Details of the new China tariff, including whether the White House is closing de minimis for Chinese imports, have not been released yet but changes to de minimis for Chinese goods seems likely at some 1 point soon in any case given the US Custom and Border Protection (CBP) January 17t…