Tariff on Canada, Mexico paused; China De Minimis Rule changes
As reported two days ago, U.S. Canada and Mexican Tariffs are Paused
On February 3, 2025, The White House issued official notices of the “Progress on the Situation at the Northern and Southern Borders” confirming the delay of the tariff actions against Canada and Mexico for 30 days due to immediate actions taken by both countries.
Both notices confirm the 25 percent ad valorem rate of duty will not be effective until March 4, 2025. Discussions with each country are expected to continue to address migration and drug enforcement.
Rules for China and Hong Kong
Foreign Trade Zones (FTZ) Rules:
Articles that are products of China and Hong Kong admitted into a U.S. foreign trade zone on or after 12:01 a.m. EST on February 4, 2025, must be admitted as “privileged foreign status”. Upon entry for consumption, such articles are subject to the 10 percent tariff imposed by the Executive Order as well as the duty rates related to the product at the time of the admission into the zone.
De Minimis Rules:
Traditionally, goods valued at USD 800 or less have been eligible for duty free de minimis treatment under 19 U.S.C. 1321 upon entry into the United States. When cargo moves by truck, the De minimis goods are entered on the carrier manifest under Section 321 entry or by the customs broker as Entry Type 86. Shipments by air and ocean are also entered by the customs broker as an Entry Type 86 filing. Previously under Section 301, de minimis goods have avoided additional tariffs and have entered duty free to the U.S. The Executive Order issued this week clarifies that Chinese origin goods are no longer eligible for the de minimis exemption. Further, all de minimis cargo will be impacted by the additional 10 percent tariff on China and Hong Kong as well as the general duty rate and other applicable duties. On February 4, 2025, U.S. Customs and Border Protection (CBP) will begin rejecting ineligible entries. The customs broker and importer have the option to issue an informal or formal entry in lieu of a de minimis entry to calculate the duties. On February 3, 2025, CBP issued in Cargo Systems Messaging Service CSMS # 63992482 with additional guidance on the clearance of de minimis shipments with various types of messaging per mode that could be received by the customs broker upon attempting an entry.
Drawback Rules:
Drawback is not available on the additional 10 percent duties imposed by the Executive Order on China and Hong Kong. There have been no changes to the ability to claim drawback on general duty and 301 duties for products from China and Hong Kong to date.
