Timeline: U.S. Tariffs Flip-Flop (Mar 3-7, 2025) – 25% on Canada/Mexico, 10% to 20% on China, before sudden reversal. Let's discuss!
The U.S., Canada, and Mexico have a highly interconnected economic relationship, with billions of dollars in goods flowing across their borders daily. However, recent shifts in U.S. trade policy have disrupted this long-standing partnership. Between March 3-7, 2025, the U.S. unexpectedly imposed a 25% tariff on imports from Mexico and Canada, alongside a significant increase in tariffs on Chinese goods, from 10% to 20%. However, just 24 hours later, the tariffs on Mexico and Canada were lifted following stock market dips, protests from car manufacturers, and Canadian countermeasures that directly impacted U.S. businesses. This unprecedented flip-flop made for a tumultuous week that warrants careful analysis to fully understand the broader implications.
Turmultous Tuesday
Last Tuesday, 4 Mach 2024, the additional 25% tariffs were imposed on goods from Mexico and Canada, and the postponement of de minimis eligibility was confirmed. On the same date, 4th March 2025, countrywide tariffs on Chinese imports increased from 10% to 20%. It means the average effective tariff rate on imports from China now stands at roughly 34%, because taxes on some sectors - like electric vehicles and steel - stand at much higher rates.
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Read Our Blog: Mexico, Canada, China: 25%/10% Tariff Explainer
Trump's new tariffs on Mexican, Canadian, and Chinese goods have taken effect — what does this mean for businesses?
What we will answer in this blog entry:
What are the key points in a nutshell?
Which industries will be most affected by the new tariffs?
What are Canadian Retaliatory Tariffs?
What are the Mexican Retaliatory Tariffs?
What are the Chinese Retaliatory Tariffs?
What is the US consumer's and business impact of these tariffs?
What strategies can businesses adopt to minimize tariff-related costs?
Why are these tariffs imposed?
4 March 2025: Canada’s response
Canada announced retaliation measures on the same day.
The Canadian Prime Minister Justin Trudeau responded forcefully, calling them “unjustified” and imposing retaliatory tariffs. Trudeau accused Trump of trying to cripple Canada’s economy, escalating tensions between the two leaders.
Trudeau continued a confrontational stance, enacting tariffs on U.S. goods and accusing Trump of economic warfare. Trump later extended the waiver to Canada but maintained a hostile stance towards Trudeau, whom he has mocked and suggested annexing Canada as a U.S. state.
Then Canadian Prime Minister Justin Trudeau announced that day that Canada has allocated over billion Canadian dollars to enhance border security, asserting that there is no fentanyl crisis at the US-Canada border. Trudeau also declared that Ottawa will immediately implement 25% tariffs on C$30 billion ($20.7 billion) worth of US imports.
He previously mentioned that the targeted items would include American beer, wine, bourbon, home appliances, and Florida orange juice . If US tariffs persist for 21 days , Canada plans to extend its countermeasures to include an additional C$125 billion ($86.2 billion) of US goods. Trudeau remarked, “Tariffs will disrupt an incredibly successful trading relationship,” stressing that these actions breach the US-Mexico-Canada Agreement (USMCA) , which former President Trump signed during his first term.
“Canadiano”
In response to President Trump’s tariffs, Canadians began showing patriotism by boycotting American goods. Pubs replaced US products with local or non-US alternatives, and actor Jeff Douglas posted a viral video rejecting Canada as the “51st state.” Some businesses made symbolic gestures, renaming their Americano to Canadiano.
Travel to the US has dropped 40%, and Canadians are seeking alliances beyond the US as tensions rise.
Many Canadians are concerned about the economic impact, predicting job losses and a potential recession. Ontario Premier Doug Ford plans to impose tariffs on US-bound electricity exports. The uncertainty has also disrupted trade and investments.
4 March 2025: China’s Response
Besides the tariffs on Mexico and Canada, Trump revealed plans to raise the 10% tariff on China because of its involvement in producing chemicals for fentanyl. China responded by announcing additional tariffs of up to 15% on some US goods starting March 10 and limiting exports to 15 US companies.
Following the initial round of new US tariffs in February, China's countermeasures included increasing duties on specific US energy imports and adding two US companies to an unreliable entities list, potentially limiting their business operations in China. This response from China signifies a significant escalation in trade tensions, especially affecting US agricultural exports:
15% Tariff on Key Grains & Poultry – Chicken, wheat, corn, and cotton face higher costs for Chinese importers, which could shift demand to alternative suppliers.
10% Tariff on High-Value Agri-Products – Soybeans, pork, beef, seafood, fruits, vegetables, and dairy will increase barriers, potentially reducing US market share in China.
To be specific:
The Chinese Commission of Customs Tariff of the State Council has published an announcement regarding additional tariffs on specific imported goods originating in the United States. These tariffs are set to come into effect on March 10, 2025.
The following tariff rates apply:
15% Additional Tariff:
The following goods will be subject to a 15% additional tariff:
HS Code 0207.11: Gallus domesticus (Chicken), not cut in pieces, fresh or chilled
HS Code 0207.12: Gallus domesticus (Chicken), not cut in pieces, frozen
HS Code 0207.13: Gallus domesticus (Chicken), cuts and offal, fresh or chilled
HS Code 0207.14: Gallus domesticus (Chicken), cuts and offal, frozen
HS Code 1602.32: Other prepared or preserved meat of Gallus domesticus (Chicken)
HS Code 1001.11: Durum wheat, seed
HS Code 1001.19: Durum wheat, other
HS Code 1001.91: Other wheat and meslin, seed
HS Code 1001.99: Other wheat and meslin, other
HS Code 1101.00: Wheat or meslin flour
HS Code 1103.11: Cereal groats, meal, and pellets, of wheat
HS Code 1103.20: Cereal groats, meal, and pellets, pellets
HS Code 1005.10: Maize (corn), seed
HS Code 1005.90: Maize (corn), other
HS Code 1102.20: Cereal flours other than of wheat or meslin, maize (corn) flour
HS Code 1103.13: Cereal groats, meal, and pellets, of maize (corn)
HS Code 1104.23: Cereal grains otherwise worked, of maize (corn)
HS Code 5201.00: Cotton, not carded or combed
HS Code 5203.00: Cotton, carded or combed
10% Additional Tariff:
The following HS Chapters will be subject to a 10% additional tariff:
HS Chapter 02: Meat and edible meat offal
HS Chapter 03: Fish and crustaceans, molluscs, and other aquatic invertebrates
HS Chapter 04: Dairy produce; birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included
HS Chapter 05: Products of animal origin, not elsewhere specified or included
HS Chapter 07: Edible vegetables and certain roots and tubers
HS Chapter 08: Edible fruit and nuts; peel of citrus fruit or melons
HS Chapter 10: Grain sorghum
HS Chapter 11: Products of the milling industry; malt; starches; inulin; wheat gluten
HS Chapter 12: Soya beans, whether or not broken
HS Chapter 15: Fats and oils and their fractions, of fish or marine mammals, whether or not refined, but not chemically modified
HS Chapter 16: Preparations of meat, of fish, of crustaceans, molluscs or other aquatic invertebrates, or of insects
HS Chapter 20: Preparations of vegetables, fruit, nuts or other parts of plants
HS Chapter 21: Miscellaneous edible preparations
HS Chapter 35: Albuminoidal substances; modified starches; glues; enzymes
Tax Commission Announcement No. 2 of 2025