Request for Consultations – U.S. IEEPA (International Emergency Economic Powers Act) import duties related to the flow of illicit drugs

March 4, 2025

Mr. Jamieson Greer
United States Trade Representative
600 17th St NW
Washington, DC 20006
United States of America

Dear Ambassador Greer,

The Government of Canada hereby requests consultations with the Government of the United States pursuant to Article 31.4 (Consultations) of the Canada-United States-Mexico Agreement (CUSMA) with respect to measures adopted by the United States that impose a 25 percent ad valorem import duty on Canadian non-energy goods and a 10 percent ad valorem import duty on Canadian energy goods entering the United States as of March 4, 2025. These import duties are in addition to any import duties imposed by the United States pursuant to its Schedule to Annex 2-B (Tariff Commitments) of CUSMA.

The legal instruments through which the United States imposes and administers these measures include the following, operating separately or in combination:

• the International Emergency Economic Powers Act of 1977, 50 U.S.C 1701 et seq;
• the National Emergencies Act, 50 U.S.C. 1601 et seq;
• Section 604 of the Trade Act of 1974, 19 U.S.C. 2483;
• Presidential Executive Order No. 14193, dated February 1, 2025;
• Presidential Executive Order No. 14197, dated February 3, 2025;
• The Presidential Executive Order entitled Amendment to Duties to Address the Flow of Illicit Drugs Across Our Northern Border, dated March 2, 2025 (March 2 Executive Order);
• The Federal Register Notice entitled Notice of Implementation of Additional Duties on Products of Canada Pursuant to the President’s Executive Order 14193, Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border (FR Document 2025-03664), filed on March 3, 2025 and scheduled to be published on March 6, 2025 (March 3 Notice);

as well as any amendments, replacements, renewals, extensions, implementing measures, exemptions, or other related measures or instruments thereto, including any subsequent measures that increase the rate or scope of the tariffs.

The measures at issue include:

• Subsection 2(a) of Executive Order No. 14193, as amended by Executive Order No. 14197, provides, in relevant part, that “[a]ll articles that are products of Canada as defined by the [March 3 Notice]…and except for those products described in subsection (b) of this section, shall be, consistent with law, subject to an additional 25 percent ad valorem rate of duty. Such rate of duty shall apply…on or after…March 4, 2025… .”
• Subsection 2(b) of Executive Order No. 14193, as amended by Executive Order 14197, provides, in relevant part, that, “[w]ith respect to energy or energy resources, as defined in section 8 of Executive Order 14156 of January 20, 2025^{Footnote 1} and as otherwise included in the [March 3 Notice], such articles that are products of Canada as defined by the [March 3 Notice] shall be, consistent with law, subject to an additional 10 percent ad valorem rate of duty. Such rate of duty shall apply…on or after…March 4, 2025… .”
• Subsection 2(d) of Executive Order No. 14193, permits the President to “increase or expand in scope the duties imposed” under the Executive Order if Canada retaliates against the United States in response to the U.S. duties by imposing import duties on U.S. exports to Canada or similar measures.
• Subsection 2(h) of Executive Order No. 14193, as amended by the March 2 Executive Order, provides that, “[d]uty-free de minimis treatment under 19 U.S.C. 1321 is available for otherwise eligible covered articles described in subsection (a) and subsection (b) of this section.  Such duty free de minimis treatment shall cease to be available for such otherwise eligible covered articles upon notification by the Secretary of Commerce to the President that adequate systems are in place to fully and expeditiously process and collect tariff revenue applicable pursuant to subsection (a) and subsection (b) of this section for covered articles otherwise eligible for de minimis treatment.”

The Government of Canada considers that the above measures appear to be inconsistent with the United States' obligations under the following CUSMA provisions:

1. Article 2.4.1, as the measures at issue increase an existing customs duty or adopt an additional customs duty on originating goods of Canada.
2. Article 2.4.2 and Annex 2-B, as the measures at issue fail to apply customs duties on originating goods of Canada in accordance with the United States’ Schedule to Annex 2-B (Tariff Commitments).
3. Article 2.7.1, as the measures at issue fail to grant duty-free temporary admission for the types of goods listed in sub-paragraphs 2.7.1.(a) - (d).
4. Article 2.8.1, as the measures at issue apply a customs duty to goods, regardless of their origin, that have re-entered the United States after having been exported from the United States to Canada for repair or alteration.
5. Article 2.8.3, as the measures at issue apply a customs duty to goods that have temporarily entered the United States from Canada for repair or alteration.
6. Article 2.9, as the measures at issue apply a customs duty to commercial samples of negligible value or to printed advertising materials imported from Canada.
7. Article 2.10.1, as the measures at issue fail to accord most-favoured-nation duty-free treatment to the goods provided for under the tariff provisions set out in Tables 2.10.1, 2.10.2 and 2.10.3.
8. Article 7.8.1(f), as the measures at issue fail to maintain specific expedited customs procedures for express shipments, under normal circumstances, by assessing an import duty, or by requiring formal entry procedures, at the time or point of importation on express shipments of Canada valued at or below US$800.

The United States' measures described above, whether or not they are inconsistent with CUSMA, nullify or impair benefits accruing to Canada directly or indirectly under that Agreement.

The Government of Canada reserves the right to address additional measures, as well as any additional factual and legal claims, in the course of consultations and in any future request for panel establishment.

As some of the products subject to the above-referenced import duties are classified as agricultural products under chapters 1-24 of the Harmonized Tariff System of the United States 2025, the Government of Canada considers that this consultation request concerns a matter relating, inter alia, to perishable goods.  Consequently, the Government of Canada requests that, in accordance with Article 31.4.5 of CUSMA, the consultations be held within 15 days of the date of delivery of this request.

The Government of Canada looks forward to receiving the Government of the United States' reply to this request and to determining a mutually convenient date and place for the consultations.

Sincerely,

The Honourable Mary Ng, P.C., M.P.

c.c. His Excellency Luis Marcelo Ebrard Casaubon
Secretary of Economy
Mexico

CUSMA Secretariat national sections