Imposition of Tariffs by the United States of America and Temporary Suspension
 

Galicia Abogados - On 1 February, the President of the United States of America (‘USA’) signed an executive order imposing the anticipated tariff measure on products that Mexico exports to the USA.

Context and measures adopted by the USA

Through this measure, the USA ordered the imposition of tariffs of 25% on all products from Mexico and Canada, specifying that energy resources from Canada will have a tariff of 10%. Likewise, this measure included an additional tariff of 10% for all products from China.

The justification for these tariff measures is based on a national emergency over migration and drug trafficking, a situation that grants the president extraordinary powers to regulate trade.

Mexico’s response and suspension of tariffs

The Mexican government expressed its disagreement and reiterated its commitment to fair trade and bilateral cooperation, announcing the possibility of imposing tariffs and non-tariff regulations and restrictions on certain US imports, as a retaliatory measure.

On 3 February 2025, the presidents of Mexico and the USA held negotiations that culminated in certain commitments from the Mexican government in exchange for the USA suspending the application of the aforementioned tariffs on Mexican exports.

The commitments made are as follows:

▪ Increased security deployment: the deployment of 10,000 members of the National Guard to the US border was announced, in order to strengthen surveillance and curb drug trafficking, especially fentanyl.

▪ Collaboration in the fight against arms trafficking: both countries agreed to redouble their efforts to prevent the flow of high-calibre weapons entering Mexico illegally from the US.

▪ Creation of bilateral working groups: dialogue tables will be established between the two governments to address security and trade issues and explore joint solutions to ensure that the measures implemented are effective and sustainable.

Response from Canada and suspension of tariffs

For its part, on 2 February Canada announced that it would impose tariffs of 25% to counter the actions imposed by the US, signalling a list of US products in two stages, the first of which would cover agricultural products, food, beverages, household appliances and certain industrial products and, as for the second stage, tariffs on products that will be subject to public consultation 21 days before their imposition, including passenger vehicles (including electric ones), steel, aluminium, beef, pork, fruits and vegetables.

After various rounds of negotiations, on 3 February Canada and the USA reached an agreement whereby the USA also agreed to suspend the application of tariffs imposed on Canadian products, based on the following commitments:

▪ Investment in security and strengthening of border control: Canada will allocate $1.3 billion to strengthen the agencies responsible for combating drug and arms trafficking with new technologies and tools.

▪ Toughening of measures against organised crime: Canada agreed to declare drug cartels as terrorist organisations.

▪ Appointment of a specialised manager: an official (czar) will be appointed to combat drug trafficking.

▪ New intelligence centre: $200 million will be invested to create a new intelligence directorate to investigate organised crime

▪ Joint cooperation: Canada and the United States agreed on a joint strike force to combat organised crime, fentanyl trafficking and money laundering.

In exchange for the aforementioned commitments, the US agreed to suspend the tariffs imposed on both Mexico and Canada for one month, thus allowing negotiations and cooperation between the three nations to continue.

China’s response

For its part, China adopted a similar stance, announcing on 2 February that it would apply a 10% tariff to certain US imports and tightening regulations on strategic products, which could affect key sectors such as technology and the automotive industry.

Among the products that China seeks to cover in its tariff measures is the imposition of a 15% import tax on coal and liquefied natural gas, in addition to a 10% tax on oil, agricultural machinery, trucks and luxury cars. These tariffs will come into force on Monday 10 February and will remain in force indefinitely.

In addition, China recently requested consultations with the US under the World Trade Organisation’s (WTO) dispute settlement procedure, which was circulated to WTO member countries on 5 February, claiming that the measures imposed are incompatible with the most favoured nation obligations of the United States under Article I.1 of the General Agreement on Tariffs and Trade (‘GATT’) 1994 and the tariff obligations of the United States under Article II.1(a) of GATT 1994.

These consultations will give the parties the opportunity to discuss the matter and find a satisfactory solution. After 60 days, if the consultations have not resolved the dispute, a panel may be set up to resolve it.


For more information related to the content of this update, please consult with the specialists in Galicia’s Customs and Foreign Trade department.

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