US Implements New Tariffs; USMCA-Compliant Products Are Exempt

April 2 marks a pivotal moment in global trade as the United States implements its long-anticipated tariffs under the "reciprocity model." This policy shift, promoted by US President Donald Trump, adjusts tariffs based on how US goods are treated abroad. "How you treat us is how we treat you," says US Secretary of Commerce Howard Lutnick.

Declaring a national economic emergency, Trump announced a universal 10% tariff on all imports starting April 5, with higher rates for certain countries—49% on Cambodia, 46% on Vietnam, 34% on China, and 20% on the EU. He framed the move as a step toward "economic independence," arguing that tariffs will boost domestic manufacturing and reduce reliance on income taxes. Additionally, a 25% tariff on all foreign-made automobiles will take effect at midnight.

Update: The existing fentanyl and migration-related IEEPA orders for Canada and Mexico remain in effect and are not affected by the new order. As a result, USMCA-compliant goods will remain tariff-free, while non-USMCA-compliant goods will face a 25% tariff. Non-USMCA-compliant energy and potash from Canada and Mexico will be subject to a 10% tariff. If the fentanyl/migration IEEPA orders are terminated, USMCA-compliant goods will still receive preferential treatment, while non-compliant goods will face a 12% reciprocal tariff, states the White House.

Trump stated that the higher, country-specific tariffs will take effect on April 9, suggesting that nations facing rates above 10% may still have an opportunity to negotiate. He backed these increased tariffs by pointing to additional trade barriers, including both "monetary" and "non-monetary" restrictions, which he argued unfairly disadvantage US goods beyond existing foreign tariffs.

The newly implemented tariffs target key industries, including automobiles, semiconductors, pharmaceuticals, steel, aluminum, copper, and lumber. The administration argues that these measures are essential to revitalizing domestic production. "We need to help our domestic industries grow and flourish," Lutnick previously mentioned.

The seeds of this policy shift were planted as early as Trump’s candidacy and subsequent inauguration, when he declared his intention to overhaul the US trade system. "Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens," said Trump. This stance materialized in February when Trump announced a 25% tariff on imports from Mexico and Canada, which was later delayed, with an additional 10% on Canadian energy imports and a 10% tariff on Chinese goods.

Economists warn that tariffs ultimately increase costs for consumers and businesses, potentially pushing the US into a recession. The move also risks alienating key allies and escalating trade tensions, with other nations likely to impose countermeasures. While Canada and Mexico remain exempt under the USMCA, the uncertainty surrounding global trade is expected to strain economic growth at a time when consumers are already dealing with inflation and high interest rates.

Reactions From Mexico and Canada

Mexican President Claudia Sheinbaum is expected to respond to the tariffs by proposing a collaborative approach rather than confrontation. Sheinbaum had previously rejected US accusations linking Mexico’s government to criminal organizations and countered with data from the US Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), showing that 74% of firearms used by organized crime in Mexico originate from the United States. Sheinbaum’s administration is expected to take defensive measures by directing Economy Minister Marcelo Ebrard to implement a set of retaliatory policies, including tariff and non-tariff measures.

Mexico had previously negotiated a temporary pause in the tariffs initially set for March 4, postponing them to April 2 to allow time for further discussions. During this period, Mexico ramped up security measures, deploying 10,000 troops to combat drug trafficking and human smuggling along the border.

Canada had previously voiced strong opposition to the US tariffs. Former Prime Minister Justin Trudeau had previously condemned the tariffs as "unjustified" and announced immediate retaliatory measures. Canada imposed 25% tariffs on US$155 billion worth of US goods, starting with an initial US$30 billion and phasing in the rest over three weeks. Trudeau insisted that Canada’s commitment to fighting fentanyl trafficking was evident, noting a 97% drop in fentanyl seizures from Canada between December 2024 and January 2025.

China and the Global Fallout

The tariffs are expected to spark significant backlash from China. On March 10, Beijing responded with its own retaliatory tariffs ranging from 10% to 15% on US agricultural products, including chicken, wheat, corn, cotton, sorghum, soybeans, pork, and dairy. Chinese Foreign Ministry spokesperson Lin Jian had previously denounced the US actions as "a flimsy excuse to raise tariffs on Chinese imports," warning that China was prepared to escalate the trade dispute if necessary, as previously reported by MBN.

Impact and Temporary Relief for E-Commerce 

While protectionist policies may benefit some domestic industries in the short term, concerns persist about inflationary pressures and supply chain disruptions. For example, Trump’s move to impose new agricultural tariffs on imports, set to take effect on April 2, has raised alarms about potential food price hikes in an already inflation-stricken economy.

A notable exemption to the new tariff regime is the continuation of the US de minimis rule, which allows imports valued under US$800 to enter duty-free from Canada and Mexico. Initially scheduled for removal, Trump revised the order on March 31, citing the need for additional infrastructure to efficiently collect tariff revenue.

Steel and Aluminum Tariffs

On March 12, 2025, the United States officially reinstated tariffs of up to 25% on steel and aluminum imports from key trade partners, including Canada, Mexico, the European Union, Japan, South Korea, the United Kingdom, Australia, Argentina, and Brazil. The move follows President Donald Trump’s decision to terminate alternative agreements with these countries, citing their inability to address the perceived threat of excess steel capacity and distorted pricing to US national security.

New Automotive Tariffs

Additionally, March 27, Trump announced that on April 3, new auto-related tariffs are set to be implemented, specifically targeting EVs and automotive components. The move is expected to affect major automotive exporters, including Mexico, Canada, Japan, South Korea, and Germany, which collectively exported US$474 billion in vehicles to the United States in 2024. These measures are aimed at addressing concerns over market imbalances and the impact of foreign competition on domestic production, MBN reported. 

Sheinbaum had previously announced that she will be providing a comprehensive response on what Mexico will do in the face of tariffs, “that does not mean that the doors to working with the United States are closing,” states Sheibaum.