Trade tensions are rising as new tariffs reshape how goods move across borders. In February 2025, the Trump administration announced new tariffs on imports from China, Mexico, and Canada, marking a shift in U.S. trade policy. The 10 percent tariff on Chinese imports took effect on February 4, while the tariffs on Mexico and Canada were postponed until March 6 after negotiations. These tariffs are set to remain in place indefinitely and could increase if affected countries retaliate.
For businesses that rely on Chinese imports, this means higher costs, as the new 10 percent tariff stacks on top of existing duties under Section 301 of the Trade Act. While certain items such as humanitarian relief goods, informational materials, and personal-use products are exempt, most businesses will see added expenses as these tariffs take hold.
The situation with Mexico and Canada remains uncertain. If the tariffs take effect next month, they will add a 25 percent duty on most imports, disrupting the duty-free trade previously established under the U.S.-Mexico-Canada Agreement (USMCA). Canadian energy resources will face a 10 percent tariff instead of 25 percent, but nearly everything else would see a significant price increase. The delayed enforcement suggests that ongoing talks could lead to changes before they take full effect.
These tariffs stand out because they were issued under the International Emergency Economic Powers Act (IEEPA) instead of traditional trade laws like Sections 201 and 301 of the Trade Act. The administration justified the move by citing national security concerns related to fentanyl, drug trafficking, and illegal immigration. This is the first time IEEPA has been used to impose tariffs, marking a new approach to trade policy.
Beyond the immediate costs, businesses are facing new challenges. The duty-free import exception for goods under $800 has been removed, which is a major shift for e-commerce and retail. Duty drawback, a program that allowed businesses to recover tariff costs on re-exported goods, is also prohibited under these tariffs. Without these cost-saving options, companies that depend on international trade will need to adjust quickly.
Meanwhile, China has already announced retaliatory tariffs, and further escalation remains a possibility. The uncertainty does not stop there. The administration has hinted at potential new tariffs on the European Union and BRICS nations, as well as industry-specific tariffs on semiconductors, pharmaceuticals, oil, steel, aluminum, and copper.
With free trade agreements now in question and businesses bracing for the impact, the next few months will be critical. Whether these tariffs remain in place, increase, or are restructured through further negotiations will shape how companies and consumers experience trade in the years ahead. Tariffs and Global Trade
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