Customs & Regulations, International Import and Export Regulations, US-Mexico Trade & Agreements

USA and Mexico international trade

 

The global trade environment is shifting again, and businesses across North America feel the ripple effects. The recent imposition of tariffs by the Trump administration on Mexico and Canada has sparked widespread discussion and concern among industry leaders, supply chain professionals, and trade experts. At The ILS Company, we understand the critical importance of staying ahead of these changes to ensure seamless logistics and trade operations for our clients.

In this blog post, we’ll break down the current situation, explore its implications for U.S.-Mexico trade, and provide actionable insights to help your business adapt and thrive in this evolving landscape.

Table of Contents:

 


A Quick Recap: What’s Happening with Trump’s Tariffs?

In a move that has sent shockwaves through the North American trade community, the Trump administration has reinstated tariffs on steel and aluminum imports from Mexico and Canada. These tariffs, initially implemented in 2018 under Section 232 of the Trade Expansion Act, were temporarily lifted during the renegotiation of the United States-Mexico-Canada Agreement (USMCA). However, with the USMCA now in effect, the tariffs have made a surprising comeback, raising questions about the future of trade relations in the region.

The tariffs—25% on steel and 10% on aluminum—are designed to protect U.S. industries from what the administration perceives as unfair trade practices. However, critics argue that these measures could disrupt supply chains, increase costs for manufacturers, and strain diplomatic relationships with two of the United States’ largest trading partners.

 

What Does This Mean for U.S.-Mexico Trade?

Mexico is one of the United States’ most vital trade partners, with bilateral trade totaling over $600 billion annually. The two countries share deeply integrated supply chains, particularly in industries like automotive, electronics, and agriculture. The reinstatement of tariffs threatens to disrupt these supply chains, leading to increased costs and delays for businesses on both sides of the border.

 

USA - Mexico border checkpoint

USA – Mexico border checkpoint

Here’s what you need to know:

  1. Higher Costs: A 25% tariff on Mexican imports will significantly increase costs for U.S. manufacturers and consumers, particularly in industries reliant on Mexican steel, aluminum, and other raw materials.
  2. Supply Chain Disruptions: Businesses may face delays as they scramble to adjust sourcing strategies or find alternative suppliers.
  3. Retaliation Risks: Mexico’s “Plan B” retaliation strategy could lead to higher tariffs on U.S. exports, further complicating trade relations.
  4. Erosion of USMCA Benefits: The United States-Mexico-Canada Agreement (USMCA), designed to strengthen North American trade, is now under strain, raising questions about its future.

 

How Are Businesses Responding?

In anticipation of these changes, many companies have already begun diversifying their supply chains. For example:

  • China Sourcing Shifts: Importers have been reducing reliance on Chinese suppliers since the Trump and Biden administrations imposed tariffs, turning to Southeast Asia and other regions.
  • Nearshoring Trends: Mexico and Canada had previously benefited from “friendshoring” and “nearshoring” strategies, but the new tariffs may reverse this trend.
  • Supplier Diversity: Businesses are increasingly sourcing from multiple regions to mitigate risks and reduce dependency on any single market.

 

ILS helps small and medium businesses move their merchandise between Mexico and the USA every day.

 

Important Tariff Update Feb 4, 2025: Changes Impacting US Imports

Key Takeaways:

  • Canada & Mexico Tariff Increase Delayed: The recent announcement of a 25% tariff increase on imports from Canada and Mexico has been temporarily delayed by 30 days.
  • China Tariff Increase Effective Today: A 10% additional duty is now in effect on goods imported from China, on top of existing tariffs.
  • No More eCommerce Duty-Free Exemptions: The “de minimis” exemption for low-value goods from China is eliminated. This means even small shipments from China will now be subject to duties.

What This Means for You:

  • Increased Costs: These tariff changes will likely lead to higher costs for businesses importing goods from China, Canada, and Mexico.
  • Supply Chain Disruptions: The uncertainty surrounding tariffs can create supply chain disruptions and impact your ability to meet customer demands.
  • Increased Compliance: Navigating these complex tariff regulations requires careful planning and compliance.

 

Conclusion

While tariffs have been temporarily suspended, the possibility of their reimplementation remains. Therefore, it is crucial for importers to be proactive and review their financing, duty payment, and bond arrangements, as well as other relevant regulatory aspects such as valuation, deferral programs, and country of origin determinations. This will help prevent complications in their operations.

At The ILS Company, we’re committed to helping our clients navigate these changes with confidence. Whether you’re looking to optimize your supply chain, explore new markets, or simply stay informed, our team of experts is here to support you every step of the way. Together, we can turn challenges into opportunities and build a stronger, more resilient future for North American trade.