Canada, Mexico Duties Delayed: What Do the Actual Tariffs Say?

A lot of articles are being written about the President’s tariff threats. It continues to be a wild ride. As I am writing this, it has been reported that Mexico and Canada have agreed to increase border security, and the President has agreed to a 30-day suspension of the tariffs on Mexico and Canada. There does not yet seem to be a deal to delay the China tariff. You can see copies of the executive orders linked in the “Resources” section, below.

The actual tariffs are important – they are the written expositions of what is subject to duty and how much duty will apply. They answer the questions of whether the tariffs will apply to your specific transaction. Unlike the Executive Orders, which leave open questions, the tariffs are typically more precise and often address questions that are likely to arise.

As discussed in our earlier article, there are many aircraft and engine articles manufactured in other countries that could be imported into the U.S. and thus could be subject to the new ‘additional duty’ provisions.

The tariffs are scheduled to be published on February 5, 2025 in the Federal Register. As they are drafted, the ‘additional duty’ provisions set out in the tariffs will be effective with respect to articles of Canada and the People’s Republic of China, if those articles are entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. eastern standard time on February 4, 2025 (e.g. any time starting on Tuesday the 4th). This generally includes aircraft parts imported as products of these jursidictions. So this means that the tariffs that are scheduled to be published will be (would be?) effective in a matter of a few hours from now.

Based on the reported White House announcements (about the 30-day suspensions), it seems likely that the U.S. government will file a subsequent amendment suspending application of the new tariffs for thirty days (consistent with today’s Executive Order).

Either way, there is a distinct possibility that sooner or later, we will need to know the specifics of the tariffs as they apply to the aviation community.

Table of New Tariffs (Summary)

Tariff #	What is Subject to the Tariff?	Duty for most articles
9903.01.10	“All products of Canada,” except for certain donations, certain informational products, certain oil, gas, minerals and energy products, baggage, and things that were in transit when the tariff was published.	25%
9903.01.20	“All products of China,” except for certain donations, certain informational products, certain oil, gas, minerals and energy products, baggage, and things that were in transit when the tariff was published.	10% [in addition to already existing tariffs for a selection of goods]

Special Notes

SCOPE:

In plain English, most aircraft parts will fall within the scope clauses of the Canadian and Chinese tariffs as they have been drafted. As discussed below, this will also include repairs performed in Canada or China.

CHINA:

It is important to recognize that there is an existing list of products of China that are already subject to a 25% ‘additional duty’ provision. This is described under subheading 9903.88.01 and the description can be found under U.S. note 20(b) to subchapter III of chapter 99 of the US Harmonized Tariff System. Many aircraft parts are subject to a 25% duty under this provision, including those under (for example) headings 8409, 8411, and 8807. This means that the additional 10% duty of tariff 9903.01.20 brings the import duty on those aircraft parts to 35% (assuming they would have been otherwise subject to a zero-duty entry, but-for the ‘additional duty’ provisions, e.g. aircraft parts under headings 8409, 8411, or 8807).

MEXICO:

You might note that I have not mentioned the new tariff for products from Mexico. That is because the new tariff for products from Mexico has not yet been made a part of the Federal Register’s records. It is possible that a tariff for products from Mexico will be published a day later, on February 6, 2025. It is possible that the Mexico tariff is more complicated and thus is simply not yet ready to be published. IT is also possible that the Mexican ‘deal’ was struck early enough that the Tariff publication could be delayed, while the Canadian ‘deal’ may have come too late to forestall submission of the tariff to the federal Register.

REPAIRS:

The Chinese and Canadian ‘additional duty’ provisions specifically state that they apply to the value of repairs.

What about articles sent to Canada for repair? Typically, U.S. articles repaired abroad and then returned to the United States (or articles for which a duty was previously paid that are subsequently sent to Canada for repair) are charged a duty based on the added value associated with the repair. This added value is typically equal to the cost of the repair (unless it is a no-charge repair, in which case it is based on the fair market value fo the repair). This is covered under chapter 98 tariff subheadings like 9802.00.40 (for warranty repairs) or 9802.00.50 (for non-warranty repairs). The goods would be subject to a basic duty based on the repair value times the rate that applies to the underlying good. For example, if the repair cost was $20,000 and the underlying aircraft part was subject to heading 8807, then the rate of duty would be zero percent so the duty would be zero dollars. Under the new tariffs, though, if the repair cost was $20,000 and the tariff is at a 25% rate, then the U.S. importer to whom the repaired part is returned (from Canada) would need to pay an import duty of $5,000. This requirement appears to be suspended with the remainder of the Canadian tariff, but if the Canadian tariffs go into effect in March, then the application to repairs will still apply.

Obviously, anything sent to China for repair will be subject to the applicable tariffs as applied to the value of the repair; the tariffs for imports of goods and repairs from China have not been suspended.

Resources

• Executive Order Announcing Tariffs on Canadian Goods
• Inspection Copy of the Canada Tariff
• Executive Order Delaying Tariffs on Canadian Goods Until March 4, 2025

• Executive Order Announcing Tariffs on Chinese Goods
• Inspection Copy of the China Tariff

• Executive Order Announcing Tariffs on Mexican Goods
• Mexican Tariff (not yet available)
• Executive Order Delaying Tariffs on Mexican Goods Until March 4, 2025