How Is the New Tariff Applied?
The 25% tariff does not replace existing taxes but rather adds to the standard tariffs already paid by Mexican products entering the U.S. This new duty is identified under subheading 9903.01.01 of the U.S. Harmonized Tariff Schedule (HTSUS).
Key Steps in Applying the Tariff:
- Each product retains its original HTSUS code, which determines its base tariff.
- If the merchandise originates from Mexico, subheading 9903.01.01 is added, generating an additional 25% charge.
- Practical Example:
- A product that previously entered duty-free under the USMCA will now pay a 25% tariff.
- If a good already had a 3.6% tariff, its new rate will be 28.6% (3.6% + 25%).
Which Products Are Affected by This Tariff?
The new tax covers almost all imports from Mexico, except for certain exemptions established in U.S. regulations and HTSUS Chapter 98. There are two main categories of affected products:
Products Originating from Mexico
These are goods that meet the United States-Mexico-Canada Agreement (USMCA) rules of origin and previously entered duty-free. Now, regardless of their preferential origin, they will pay the additional 25%.
Non-Originating Products But Processed in Mexico
This includes goods that do not qualify as originating under the USMCA but were processed or assembled in Mexico before being exported to the U.S. Example: If a Chinese component is assembled in Mexico before being shipped to the U.S., it will also be subject to the 25% tariff.
Exemptions: Which Products Are Not Subject to the 25% Tariff?
Some goods are excluded from this tariff, including:
- Humanitarian donations such as food, clothing, and medicine (HTSUS 9903.01.02).
- Informational materials such as books, movies, records, and educational content (HTSUS 9903.01.03).
- Certain temporarily imported products under HTSUS Chapter 98, as long as they meet CBP requirements.
- Low-value shipments ("De Minimis"), which remain exempt from duties if their value does not exceed the permitted threshold.
Other Key Considerations for Importers
Foreign Trade Zones (FTZs)
Products entering Foreign Trade Zones in the U.S. must be classified under "privileged foreign status" and will be required to pay the 25% tariff when imported for consumptionAranceles MX.
No 25% Tariff Refund (Drawback)
Unlike other customs duties, this tariff is not eligible for refunds, even if the merchandise is later re-exported
Strict Reporting Rules
The U.S. Customs and Border Protection (CBP) will reject any entry that does not comply with this regulation. If an importer fails to properly submit their declaration with the required payment, they could face penalties or liquidated damages.
Cabrera Llamas Recommendations for Businesses
Faced with this new trade scenario, companies must adjust their strategies to minimize the impact of the 25% tariff on their operations. From accurate tariff classification to cost and logistics optimization, acting proactively is essential to avoid financial and competitive setbacks. Here are some recommended actions to handle this change efficiently:
- Analyze the tariff classification of your products in the HTSUS to determine the tariff impact.
- Recalculate costs and define strategies to mitigate tax increases.
- Explore logistical alternatives, such as leveraging Foreign Trade Zones in the U.S. or assessing changes in the supply chain.
- Consult with trade experts to identify possible alternatives and minimize the financial effects of this measure.
If your company in the United States imports products from Mexico and needs personalized advice to navigate this change, contact us at Cabrera Llamas. Our team is ready to support you with strategic solutions in international trade and customs compliance.
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