Following the inauguration of the new administration on January 20th, 2025, there has been significant movement in both statements and confirmed actions that have an impact on trade.

As of the date this is being published (February 5^th), we’ve seen:

1. The imposition of an additional 10% tariffs on China and Hong Kong originating goods using the International Emergency Economic Powers Act (IEEPA).
2. Reciprocal 15% tariffs from China on energy, agricultural machinery, and other products, as well as investigations and blacklisting of certain American companies.
3. Planned imposition of an additional 25% tariffs on Canada and Mexico originating goods that is on pause until early March and is contingent on each country making investments in border security.
4. Planned and paused retaliation from Canada and Mexico as a reaction to these tariffs.
5. Planned and retracted imposition of 25% duties on Colombia-origin goods
6. A freeze on implementing new federal regulations on Export Controls until a review period is completed to highlight loopholes, propose regulatory changes, and enhance enforcement.

As trade compliance practitioners, we’re all remembering the frenzy of 2018 and 2019 as we grappled with the complexity and impact of Section 232 duties that were imposed on Steel and Aluminum products, as well as 301 duties that were imposed on China-origin merchandise. However, what we have seen in 2025 so far is a departure from previous trade remedy actions.

What’s the same and what’s different?

As an industry, we’ve learned from and educated our colleagues in supply chain and finance on the compliance nuts and bolts that can drive both compliance outcomes and mitigation strategies for trade remedies. Companies today are entering a period of trade uncertainty with more familiarity of the mechanics and impacts.

What’s different? Plenty. The speed of proposed and enacted tariff increases is much faster today given the use of IEEPA for these tariffs. Tariffs under IEEPA can be implemented following declaration of a national emergency and the rules being published in the Federal Register. These changes to date have also had less flexibility. Notably, Federal Register notices for Canada, Mexico, and China have excluded these affected products from drawback, de minimis treatments, comment periods, and exclusion requests.

What strategies can we take to prepare?

Regardless of the regulatory instrument used to impose tariffs or changes to export controls, forecasting and compliance with regulations in force will help drive access to mitigation strategies if and when they become available.

• HS Classification – Review product databases to ensure all parts are assigned proper HTS codes, check for any tariff engineering opportunities.
• Country of Origin – Confirm origins are correct in your database, ensure any applicable FTAs are being leveraged, and that substantial transformation analyses are accurate. Focus on country of origin traceability and recordkeeping through your ERP and documentation.
• Valuation – First Sale – Evaluate your valuation methodology to determine if a First Sale program could be of benefit for your company when using multi-tiered transactions.
• Drawback and Duty Mitigation – Consider whether drawback or other post entry programs to recover duty may be appropriate for your company. With de minimis from China winding down, goods may move and be cleared via a formal entry, forcing payment of normal and 301 duties and making drawback available.
• FTZ or Bonded Warehouse – Look into entering your products into an FTZ under privileged foreign status, or opting for a Bonded Warehouse
• Strategic Alternative Sourcing – Expand your manufacturing footprint to other countries where possible.
• Export Controls – Review exported products to ensure that they are classified for both Schedule B and ECCN appropriately. Review export license requirements Conduct restricted party screening.

This is a developing situation that will unveil itself over the first few months of 2025 and beyond. In addition to the above, trade compliance practitioners must keep their fingers on the pulse of change and understand how this impacts compliance programs and supply chains. Tradewin will continue to push out regulatory updates as they are published and our consultants are here to support your company in the face of whatever 2025 may bring. Reach out to Tradewin today for more information.