Tariffs on Mexico To Fix Southern Border Drug Mess?
Published Date: 3/11/2025
Notice
Summary
Starting March 7, 2025, the U.S. is changing the extra taxes (duties) on certain products coming from Mexico to help tackle illegal drug and human trafficking at the southern border. These new rules affect businesses importing Mexican goods and aim to pressure Mexico to act against drug cartels. If you import from Mexico, expect updated fees that could impact costs and timing.
Analyzed Economic Effects
7 provisions identified: 3 benefits, 4 costs, 0 mixed.
New extra tariffs on Mexico imports
Starting March 7, 2025, most imported products that are "products of Mexico" will face an additional ad valorem rate of duty. The Executive Orders impose an additional 25 percent ad valorem duty on such products unless an exception applies.
USMCA-origin goods exempted from extra duty
Articles entered free of duty as originating in Mexico under general note 11 to the HTSUS (including certain USMCA treatments and related HTSUS subchapters) will NOT be subject to the additional ad valorem duty starting March 7, 2025. The change was made to minimize disruption to automotive and other USMCA supply chains.
Potash from Mexico taxed at reduced 10%
Potash that is a product of Mexico and does not qualify for duty-free USMCA treatment will be subject to an additional 10 percent ad valorem duty (reduced from 25%) on entries made on or after March 7, 2025. This reduced rate is set out in HTSUS heading 9903.01.05.
No drawback allowed on new additional duties
No drawback (duty refund) will be available for the additional ad valorem duties imposed under these Executive Orders. Importers and firms exporting goods that used Mexican inputs cannot obtain drawback refunds for the extra duties described in this notice.
Foreign trade zone admissions change status
Products of Mexico (excluding 50 U.S.C. 1702(b) items) 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, upon entry for consumption, to the additional duties and the rates in effect at the time of admission. That means FTZ users may face the extra duties when the goods later enter U.S. commerce.
Postal and low‑value imports can still use de minimis
The "de minimis" administrative exemption (19 U.S.C. 1321) remains available for articles of Mexico covered by the new headings (9903.01.04 and 9903.01.05) until the Secretary of Commerce notifies the President that systems are ready to collect the tariffs. Small-value postal or low-value shipments from Mexico may therefore continue de minimis entry and clearance for now.
Certain statutory exceptions remain exempt
Imported products of Mexico that fall within the categories excluded by 50 U.S.C. 1702(b) are not subject to the additional ad valorem duty, but they must still be declared and entered under the specific HTSUS headings 9903.01.02 or 9903.01.03 as applicable. Products for personal use in accompanied baggage remain excluded as noted.
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Key Dates
Department and Agencies
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