On March 23, 2018, President Trump imposed additional duties of 25 percent for steel and 10 percent for aluminum goods but exempted Mexico and Canada from these tariffs. However, the U.S. announced on May 31, 2018 that it would suspend the exemptions on steel and aluminum goods granted previously to Mexico and Canada, effective June 1, 2018. In reprisal, Canada and Mexico both proposed similar tariffs on U.S. origin goods.
Because of these announcements, we recommend that companies conducting business transactions with Mexico and Canada review their supply chains and manufacturing processes for affected tariff implications.
Canada proposed a dollar-for-dollar measure against U.S. imports of steel, aluminum and many finished goods, which is scheduled to take effect on July 1, 2018, unless the U.S. exempts Canada from its tariffs. Similar to the U.S. tariffs, Canada is proposing a 25-percent tariff on certain iron and steel products and a 10-percent tariff on aluminum products and a range of finished goods such as foods, hygiene products, household appliances and recreational goods. These tariffs would apply to U.S.-origin goods and would not affect non-U.S.-origin goods transiting through the U.S. to Canada. Click here for a complete list of U.S. goods subject to the Canadian tariffs.
Mexico proposed a similar retaliatory measure by publishing a list of products that would be subject to additional tariffs – effective June 5, 2018. The tariffs would continue to apply until the U.S. suspends its tariffs on Mexican steel and aluminum. The published list of U.S. goods subject to the retaliatory duties includes steel products, pork, cheese, apples and bourbon. The tariffs range from 7 percent to 25 percent. Click here for a complete list of U.S goods subject to the Mexican tariffs.
Many of these tariffs and counter-measures are still under negotiation amongst the U.S., Mexico and Canada and are subject to change. Given the current instability in the international trade environment, importers/exporters and manufacturers across all industries that engage in cross-border transactions with Mexico and Canada should evaluate their supply chains and material sourcing origins.
We will continue to keep you updated as further developments become available. If you have any questions regarding the above information and its implications, please contact the Green Hasson Janks Tax Team.