U.S. Supply Chains Gain Clarity Amid New Tariff Measures

After months of speculation and verbal threats, U.S. supply chains now have a clearer picture of the tariff landscape.

On February 1, 2025, the White House released a Fact Sheet and an Executive Order outlining President Trump’s new trade policies affecting Mexico, Canada, and China. While the Fact Sheet addresses all three nations, the Executive Order specifically targets trade with Canada.

Key Provisions of the Tariffs

Tariff Rates:

• All products imported from Canada and Mexico will face a 25% duty upon entry into the U.S.
• Energy and energy resources from Canada will be subject to a 10% duty. All imports from China will bear an additional 10% duty.

Implementation & Exemptions:

• The tariffs will take effect on February 4, 2025.
• Goods already in transit before February 1, 2025, and select operational exceptions are exempt.

Restrictions & Retaliation Measures:

• No De Minimis exemptions for low-value shipments covered by these tariffs.
• No exclusion process for domestic importers.
• No drawback options for duties paid.
• Any retaliatory actions by trade partners will be countered with higher duties or expanded tariffs at the President’s discretion.

Legal Justification & National Emergency Declarations

President Trump has justified these actions under the International Emergency Economic

Powers Act (IEEPA), citing a national emergency related to illegal drug trafficking and immigration. These declarations reinforce the administration’s authority to impose tariffs under emergency economic measures. This marks the first formal written directive following the America First Trade Policy memorandum signed on Inauguration Day.

China Supply Chain Impact

For years, U.S. importers have adapted to increased tariffs on Chinese goods, first under Trump’s initial administration and later expanded by Biden. Many companies responded by diversifying sourcing strategies across Southeast Asia and beyond, mitigating risks tied to single-source suppliers.

While some importers successfully negotiated cost stability amid ongoing tariff changes, others have pivoted towards "friendshoring" and "nearshoring" to North America. However, with these new tariffs, North America now faces heightened geopolitical risk, similar to China.

Canada & Mexico Supply Chain Impact

The USMCA (formerly NAFTA) was a key achievement of Trump’s first administration, ensuring continuity in North American trade. Scheduled for review in 2026, the agreement’s stability is now in question.

Both Canada and Mexico have pledged retaliatory tariffs in response:

• Canada plans to impose 25% tariffs on U.S. imports.
• Mexico is preparing a “Plan B” retaliation strategy, with details forthcoming.

Transmodal will provide additional information as it becomes available.