The Trade War has begun

President Trump released Executive Orders on Sunday enacting additional duties on all imports from Mexico, Canada, and China under IEEPA (the International Emergency Economic Powers Act).

The duties announced are as follows:

• 25% ad valorem duties on all imported products from Canada and Mexico, with the only exception on Canadian “energy or energy resources”. The category of energy will be hit with a 10% duty
• 10% ad valorem duties on all imported products from China
• No duty drawback allowed with respect to the duties imposed by this order

Effective date: 12:01 am February 4, 2025, on all goods entered for consumption or withdrawn from a bonded warehouse.

Exception: Goods already in transit as of 12:01 am on February 1, 2025. This is an area where we need to get further clarification on the definition of in transit and what is needed to certify the in-transit move. More to follow.

The duties currently levied may be increased if Canada, Mexico or China retaliates. As this is now in play, we will see if the tariffs escalate further.  At this point, there is no process for applying for exclusions, but this could change should the tariffs remain in effect for an extended period. Members of the wine and spirits community are working diligently on requesting exclusions and keeping this in the forefront of the administration’s attention.

Retaliation from our top trading partners has already started. The Government of Canada quickly announced that retaliatory tariffs will also be imposed, with two tranches of 25% tariffs on US origin products. The first trance will match the USA tariff date on Tuesday February 4, and the second wave will go into effect in 21 days. Goods in transit prior to February 4, 2025 will be exempt. A list of the products included in the first tranche can be found here. The products include beverage alcohol, juices, water, food and agriculture products, clothing, tires, wood and paper products, appliances and many other products. Beer, wine, and spirits are all targeted. Unlike the USA, Canada has announced a process where importers can seek relief from the tariffs based on specific circumstances. The list of goods for the second wave of tariffs has not yet been released. The amount of volume affected is estimated to be one-third of the annual US Exports to Canada. The LCBO (Liquor Control Board of Ontario) announced that they will remove all USA products from their stores. The LCBO reportedly sells about $1 billion of American wine, spirits, beer and seltzers.

Mexico has also announced that retaliatory tariffs will be imposed and we are awaiting further details.

In terms of the technical aspect of the process for importers in the USA, CBP/US Customs and Border Protection, sent out a CSMS message on Sunday advising that the Federal Register Notice (FRN) will be coming out shortly which will provide more specifics, including the relevant update to the Harmonized Tariff Schedule. We expect the upcoming FRN to clarify certain details and will be watching for this notice as well as additional CSMS messages. 

We will be updating daily on this issue as the situation unfolds.

*photo: DP World