UNITED STATES ANNOUNCED TARIFFS ON CANADA, MEXICO AND CHINA
On Saturday, President Trump signed Executive Orders imposing new tariffs on imports into the United States from Canada, Mexico and China beginning today, Tuesday, 4February at 12:01am EDT. The new tariffs on U.S. imports from Canada and Mexico will be delayed for 30 days. Tariffs on imports from China went into effect today, and President Trump indicated the level of tariffs on imports from China are the “opening salvo”.
Level of tariffs:
- 10% increased tariffs on imports from China,
- 25% new tariffs on imports from Canada and Mexico, and
- 10% new tariffs on oil from Canada
The EOs did not indicate if there would be a tariff exclusion request process. If countries retaliate, additional tariffs may be applied. Tariffs will remain in place until President Trump is satisfied that “sufficient action to alleviate the [fentanyl and immigration] crisis” has been taken by each of the three countries.
In addition, the ability to “drawback” (or get refunds for) tariffs paid on imported inputs that are used in the manufacture of US goods that are then exported from the United States is not allowed on these new tariffs. This has cost implications for US manufacturers importing inputs for integration into US-made machinery and equipment that is destined for export.
Finally, tariffs will also be imposed on de minimis shipments (e.g., low-value shipments imported typically imported via FedEx, UPS, etc.).
Please see the attached Excel sheet with estimated potential annual tariff cost impact should Canada and Mexico tariffs be applied in a month, as well as the estimated annual tariff cost increase for imports from China given tariffs went into effect today.
RESPONSEBY TRADING PARTNERS
In Canada, Prime Minister Justin Trudeau responded with 25% retaliatory tariffs on $125 B USD of US goods. Targeting $20 B worth of US goods starting Tuesday, and USD $105 B worth of imports in 21 days to allow Canadians to seek and find non-US alternatives. Retaliatory tariffs have been suspended by Canada.
There are no PMMI-related products impacted by the first tranche of retaliatory tariffs based on the retaliatory tariffs list from Canada.
In Mexico, President Claudia Sheinbaum, instructed her Minister of Economia to implement a plan that includes tariff and non-tariff measures against the United States to defend Mexico’s interests. The WSJ reported Mexico may consider so-called “carousel” retaliation to rotate scope of U.S. products subject to retaliatory tariffs which typically generates even more uncertainty for U.S. exporters. No list of retaliatory tariffs or other measures has been released by the Government of Mexico. Trump and Sheinbaum agreed to a delay on implementation of U.S. tariffs and any Mexican counteractions given promise to deploy 10,000 Mexican troops to the U.S. border to stem the flow of immigrants and fentanyl.
In China, the Ministry of Commerce issued a statement on Sunday saying that China will file a legal case against the United States at the World Trade Organization. The ministry also said China “will take corresponding countermeasures to firmly safeguard its rights and interests.”
China’s retaliation list, published last night, hits agriculture machinery at 10% additional duty, and includes one PMMI tariff code: 8438.60 - Machinery for the industrial preparation of fruits, nuts or vegetables (excluding cooking and other heating appliances, refrigerating or freezing equipment and machinery for the sorting or grading of fruit and vegetables). In 2023, U.S. exports of8438.60 totaled $6.3 M, and YTD 2024 thru November, U.S. exports totaled $3.3M. As such, we estimate that annual tariff-cost impact on U.S. machinery of 8438.60 could range from $330K to $620K.
We will continue to monitor for all updates on tariff action that could impact PMMI members.
PMMI-related tariff codes for easy-reference
- 8422.20 - Machinery for cleaning or drying bottles or other containers
- 8422.30 - Machinery for filling, closing, sealing, capsuling or labeling bottles, cans, boxes or other containers; machinery for aerating beverages
- 8422.40 - Packing or wrapping machinery(including heat-shrink wrapping machinery)
- 8422.90 - Parts for machines for dishwashing, cleaning, filling, etc.; containers and parts for packing and wrapping; parts of machines for aerating beverages
- 8438.10 - Bakery machinery and machinery for the industrial preparation or manufacture of macaroni, spaghetti or similar products (excluding ovens, macaroni drying machines and dough rollers)
- 8438.20 - Machinery for the industrial preparation or manufacture of confectionery, cocoa or chocolate (excluding centrifuges and filtering, heating or refrigerating equipment)
- 8438.30 - Machinery for sugar manufacture(excluding centrifuges and filtering, heating or refrigerating equipment)
- 8438.40 - Brewery machinery (excluding centrifuges and filtering, heating or refrigerating equipment)
- 8438.50 - Machinery for the industrial preparation of meat or poultry (excluding cooking and other heating appliances and refrigerating or freezing equipment)
- 8438.60 - Machinery for the industrial preparation of fruits, nuts or vegetables (excluding cooking and other heating appliances, refrigerating or freezing equipment and machinery for the sorting or grading of fruit and vegetables)
- 8438.80 - Machinery for the industrial preparation or manufacture of food or drink, not elsewhere specified
- 8438.90 - Parts of machinery for the industrial preparation or manufacture of food or drink, not elsewhere specified
