Tariffs Hit Mexican Imports to Pressure Border Drug Crackdown
Published Date: 3/6/2025
Notice
Summary
Starting March 4, 2025, the U.S. is adding extra taxes on certain products from Mexico to tackle border security and drug trafficking issues. This move affects businesses importing goods from Mexico and aims to pressure Mexico to take stronger action against illegal activities. The new duties come from the President’s emergency orders addressing the serious problems at our southern border.
Analyzed Economic Effects
7 provisions identified: 1 benefits, 5 costs, 1 mixed.
25% Additional Duty on Mexican Imports
Starting March 4, 2025, most articles that are products of Mexico will be subject to an additional 25% ad valorem duty under new HTSUS heading 9903.01.01. This additional duty is applied on top of any other applicable duties, taxes, fees, or charges.
De Minimis Duty Exemption May End
Articles of Mexico that otherwise qualify for the de minimis (duty-free) exemption may continue to claim that exemption until the Secretary of Commerce notifies the President that systems exist to collect the new tariffs; after that notification, de minimis treatment for those articles will cease. The notice ties continued de minimis duty-free treatment to a future notification by the Secretary of Commerce in consultation with Treasury.
No Drawback for the New Duties
No drawback (i.e., refund) will be available for the additional ad valorem duties imposed under the Executive Orders. Importers cannot reclaim these specific additional duties under drawback rules.
Additional Duty Also Applies with Special Tariffs
The 25% additional duty applies even to products of Mexico that qualify for special tariff treatment under general note 3(c)(i), temporary duty exemptions or reductions under subchapter II to chapter 99, and to goods with special USMCA treatment. The Annex instructs how the additional duty is applied with those provisions.
Foreign Trade Zone Admission Rules Changed
Products of Mexico admitted into a U.S. foreign trade zone on or after 12:01 a.m. eastern standard time on March 4, 2025 must be admitted as 'privileged foreign status' and will be subject to the additional duties when entered for consumption. This affects the treatment of Mexican-origin goods placed in FTZs after that date.
Chapter 98 Entry Exceptions and Limits
The additional 25% duty does not apply to goods properly entered under chapter 98 provisions when CBP agrees such entry is appropriate, except for certain entries: heading 9802.00.80 and subheadings 9802.00.40, 9802.00.50, and 9802.00.60. For those exceptions, the additional duty applies to the value of repairs, alterations, processing performed in Mexico, or the assembled value abroad less U.S. content as described.
Donations and Informational Materials Excluded
Certain donated goods (food, clothing, medicine) intended to relieve human suffering and informational materials from Mexico are not subject to the 25% additional duty and are covered by new HTSUS headings 9903.01.02 and 9903.01.03. These shipments still must be declared and entered under the new headings as applicable.
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Starting March 4, 2025, the U.S. is adding extra taxes on certain Canadian products to fight illegal drugs crossing our northern border. This move affects businesses importing goods from Canada and aims to pressure Canada to step up against drug trafficking. The new duties will impact the cost of these imports and help protect American communities from dangerous drugs like fentanyl.
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