By Rosa M. Tumialán and Brielle Nguyen
On February 2, 2025, President Donald Trump signed an executive order targeting the United States’ largest trading partners—China, Mexico and Canada. The purpose of this action was to address what he states is a national security issue that the United States is currently facing. Trump is using the power of tariffs to reduce illegal immigration and fentanyl trafficking through the International Emergency Economic Powers Act (IEEPA). This act gives the President broad legal authority to regulate financial transactions during a national emergency and allows him to act promptly in imposing these tariffs. Many legal experts questioned the President’s use of the IEEPA in this manner. According to a Congressional Research Service report, no president has instilled tariffs on imported goods using this act. Although the executive order invokes national security, the economic implications may lead to challenges and conflict domestically and internationally.
Trump announced an intent to tax China’s imported goods at 10% while imposing a 25% tax on imports from Mexico and Canada. Energy imports from Canada will be taxed at 10%, which includes electricity, natural gas and oil. These tariffs were initially planned to begin on February 4, 2025, but are now stayed as to Mexico and Canada for 30 days following an agreement by both countries to address ongoing border security concerns. Despite threats to impose retaliatory tariffs, Mexico and Canada reached an agreement and negotiations continue. The goal of the tariffs was to put pressure on these countries to strengthen border security. This goal appears to have been achieved for now.
Canadian Prime Minister Justin Trudeau announced that Canada will allocate $1.3 billion to enhance border security. This includes investing in new technologies and hiring more personnel to monitor the border. Prime Minister Trudeau promised to appoint a “Fentanyl Czar” and committed $200 million on an intelligence program tackling organized crime and fentanyl trafficking.
Mexico’s President Claudia Sheinbaum plans to deploy 10,000 members of Mexico’s National Guard to secure their country’s northern border. The United States also agreed to help stop the flow of high-powered weapons into Mexico.
Trump implemented a 10% tariff on goods from China which went into effect on Tuesday, February 4, 2025. China retaliated, stating that it will enact a 15% tax on coal and liquefied natural gas products on the U.S. Further, there will be a 10% tariff on crude oil, large-engine cars, and agricultural machinery. China requested that the World Trade Organization (WTO) evaluate the Trump tariffs on China, claiming that the U.S. violated the regulations of the WTO. The WTO initiated a 60-day period for both countries to resolve the dispute. If both countries do not come to terms, a three-judge panel will assist with negotiations. China’s tariffs may have a small impact on U.S. exports. While the U.S. is the largest exporter of liquefied natural gas, it does not export much to China. China announced export controls on tungsten, tellurium, indium, molybdenum and bismuth which are critical rare earth minerals used for tech products. This could affect supply chains and impact the industries that rely on these minerals. Lastly, China announced it launched an investigation against Google, alleging violation of antitrust laws. It is unclear how this will affect Google. The company has been facing conflict with China about the Android operating system and its presence is limited in China due to Google’s refusal to comply with their censorship demands.
The proposed tariffs are predicted to have economic ramifications in the automotive, construction and plastics industries, all of which rely on imports from Mexico, Canada and China. The automotive industry relies on all three countries for manufacturing components, making it vulnerable to increased costs. The economic burden is predicted to hurt consumers due to the increased prices of everyday goods. U.S. farmers, who faced retaliatory tariffs in the past, will also be affected. The continued imposition of tariffs could result in inflation. Tariffs could also prompt an influx of companies moving production to the United States. If you have questions about how the imposition of these tariffs may impact your business operations, contact your Tressler attorney.
About Rosa M. Tumialán
Rosa M. Tumialán is a partner and Co-Chair of Tressler’s Insurance Practice Group, Chair of the Appellate Team and a member of the firm's national Diversity, Equity and Inclusion Committee. Rosa focuses her practice on insurance coverage and litigation. She is an accomplished defense attorney with more than twenty years of experience. Rosa’s insurer-related services include coverage opinion analysis and representing insurers in complex coverage disputes relating to personal and commercial lines, third party claims, surplus lines as well as claims handling practices and extracontractual liability. She has also litigated environmental coverage disputes throughout the Midwest for various insurers relating to superfund sites. Rosa assists with drafting coverage documents for insurance pools and counsels clients in the administration of same. Her practice also includes serving as national coordinating coverage counsel for insurance clients who rely on her to develop and implement strategies nationwide in response to pattern litigation. Rosa is an accomplished class action defense lawyer and appellate practitioner, having appeared and argued in both state and federal courts nationwide. Click here to read Rosa's full attorney bio.