When the IEEPA fentanyl tariffs went into effect in February 2025, the headlines focused on China. But Canada and Mexico were hit too — with a 25% IEEPA tariff on all goods from both countries. For importers accustomed to duty-free treatment under USMCA (the United States-Mexico-Canada Agreement), this was a shock. Products that had moved across the border duty-free for decades were suddenly subject to a 25% surcharge.
The Supreme Court’s ruling in Learning Resources, Inc. v. Trump struck down all IEEPA tariffs, including the fentanyl tariffs on Canadian and Mexican goods. That means every dollar of the 25% surcharge paid between February 4, 2025, and February 24, 2026, is potentially refundable.
But Canadian and Mexican imports present unique recovery dynamics — USMCA interaction, cross-border manufacturing, automotive supply chains, energy sector implications, and the sheer frequency of entries created by proximity. This guide covers what importers of Canadian and Mexican goods need to know.
What Happened: IEEPA Fentanyl Tariffs on Canada and Mexico
On February 1, 2025, President Trump issued Executive Order 14195, declaring a national emergency related to fentanyl trafficking. The order imposed tariffs under IEEPA authority on imports from three countries:
- China: 10% (later increased to 20%)
- Canada: 25%
- Mexico: 25%
The tariffs took effect on February 4, 2025, and remained in effect until the Supreme Court struck them down on February 20, 2026. During that roughly 12-month period, every import from Canada and Mexico was assessed a 25% IEEPA surcharge — regardless of product type, HTS classification, or USMCA eligibility.
USMCA Did NOT Provide an Exemption
This was the most confusing aspect of the Canada/Mexico tariffs. USMCA is a free trade agreement that eliminates most tariffs on qualifying goods traded between the three countries. Many importers assumed that USMCA-eligible goods would be exempt from IEEPA tariffs.
They were not. The executive order explicitly applied to all goods from Canada and Mexico, regardless of USMCA status. Even goods with a valid USMCA certificate of origin, meeting all rules of origin requirements, were assessed the 25% IEEPA tariff.
This is important for the refund calculation: if you import USMCA-eligible goods, the IEEPA tariff is the entire additional duty above your normal rate (which was typically 0% under USMCA). The refund equals the full 25% IEEPA assessment.
The Scale of Canada/Mexico IEEPA Exposure
The United States imported approximately $420 billion from Canada and $500 billion from Mexico in the 12 months prior to the tariff imposition. Assuming similar volume during the IEEPA period, the total IEEPA tariff collected on Canadian and Mexican goods was approximately:
- Canada: $420B × 25% = approximately $105 billion
- Mexico: $500B × 25% = approximately $125 billion
- Combined: approximately $230 billion
These are rough estimates — actual collections vary based on exclusions, delayed shipments, and import volume changes — but the scale is enormous. Individual importers may have exposure ranging from thousands to hundreds of millions of dollars depending on their import volume.
Key Sectors Affected
Automotive (The Biggest Category)
The automotive sector is the largest single category of cross-border trade with both Canada and Mexico. Vehicles and auto parts move back and forth across the borders multiple times during manufacturing — a single car might cross the U.S.-Mexico border eight times during production.
The IEEPA tariff applied to each crossing. For automakers and tier-1 suppliers, this meant the 25% tariff was assessed every time a component or subassembly entered the United States from Canada or Mexico. The cumulative tariff burden on a single vehicle was staggering.
Auto parts (HTS Chapter 87): Parts and components crossing the border for manufacturing were assessed 25% at each entry. For a parts supplier shipping $50 million in components annually, the IEEPA assessment was approximately $12.5 million.
Complete vehicles (HTS 8703-8704): Vehicles assembled in Canada or Mexico and shipped to the U.S. were assessed 25% on the full vehicle value. A vehicle with a customs value of $30,000 carried a $7,500 IEEPA tariff.
Re-imports: Components manufactured in the U.S., shipped to Mexico or Canada for processing, and re-imported were also assessed the 25% tariff on the full customs value (not just the value added abroad). This was particularly painful for companies using cross-border manufacturing operations.
For automotive importers, the recovery potential is massive — but so is the data complexity. Multiple entries per week, multiple plants, multiple brokers, and the back-and-forth nature of automotive supply chains create a documentation challenge that requires systematic analysis.
Energy
Canada is the largest foreign supplier of energy products to the United States. Crude oil, natural gas, electricity, and refined petroleum products flow south across the border in enormous volumes.
Crude oil (HTS 2709): Canadian crude oil imports totaled approximately $120 billion during the IEEPA period. The 25% tariff on crude oil had immediate effects on gasoline prices. The refund potential for major oil importers runs into the billions.
Natural gas (HTS 2711): Pipeline natural gas from Canada was assessed the 25% IEEPA tariff on each entry. For utilities and industrial consumers who import gas directly, the refund is based on the volume and price at the time of entry.
Electricity (HTS 2716): Imported electricity from Canada was also subject to the tariff. This is a unique category because electricity doesn’t have a traditional customs entry — the assessment mechanism differed from physical goods.
Energy sector claims are among the largest individual claims in the entire IEEPA recovery landscape, but they typically involve a small number of very large importers with sophisticated trade compliance operations.
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Agricultural Products
Both Canada and Mexico are major agricultural suppliers to the United States:
From Canada: Lumber, canola/rapeseed oil, wheat, dairy, pork, potatoes, maple syrup, and processed foods.
From Mexico: Fresh produce (avocados, tomatoes, berries, peppers), beer, tequila, sugar, cattle, and processed foods.
Agricultural importers face a timing consideration unique to perishable goods: shipments are frequent (daily or weekly for fresh produce) and the documentation trail follows the product’s short shelf life. If you’re a produce importer bringing in $1 million in Mexican avocados per week, you generated roughly 52 entries during the IEEPA period, each one carrying a $250,000 IEEPA assessment.
Manufacturing Inputs
Thousands of U.S. manufacturers import raw materials, components, and intermediate goods from Canada and Mexico for use in domestic production:
- Steel and aluminum from Canada: Note that steel and aluminum were also subject to Section 232 tariffs (25% on steel, 10% on aluminum). Section 232 tariffs are NOT refundable. For these products, you need to separate the IEEPA tariff from the Section 232 tariff. If both applied to the same entry, only the IEEPA portion is recoverable.
- Aerospace components from Canada and Mexico: High-value, precisely classified parts with clean documentation.
- Chemical and pharmaceutical inputs from Mexico: Intermediate chemicals used in U.S. manufacturing.
- Lumber and building materials from Canada: Housing construction was significantly affected by the 25% tariff on Canadian lumber.
Proximity = More Entries = More to Recover
One characteristic that makes Canada/Mexico IEEPA claims different from claims on goods from Asia or Europe: proximity creates frequency.
When your supplier is 200 miles across the border instead of 8,000 miles across the ocean, you ship more often. A manufacturer sourcing from China might receive 4-6 ocean containers per month. The same manufacturer sourcing from Mexico might receive daily or weekly truck shipments. Each truck crossing is a separate customs entry.
This means that Canada/Mexico importers often have a much higher number of entries relative to their total import value compared to importers from more distant countries. More entries means more filings, more deadlines to track, and more opportunities for entries to slip through the cracks.
For high-frequency cross-border importers, the Impact Assessment is particularly valuable because it captures every entry — even the small ones that might not seem worth pursuing individually but add up to a substantial total.
The Protest Window Is Ticking
The earliest Canada/Mexico IEEPA entries (filed on or shortly after February 4, 2025) have been liquidating since approximately December 2025. The 180-day protest window for those earliest entries begins closing around June 2026.
If you import from Canada or Mexico and haven’t checked the liquidation status of your entries, this is urgent. Some of your entries may have protest deadlines approaching in the next 90 days. Once the 180-day window closes, the entry becomes final and the only remaining path is CIT litigation — which is slower, more expensive, and less certain.
Action items for Canada/Mexico importers:
- Pull entry data for all Canadian and Mexican imports between February 4, 2025, and February 24, 2026.
- Check liquidation dates for each entry.
- Calculate the 180-day protest deadline for liquidated entries.
- File protective protests immediately on any entry within 90 days of deadline expiration.
How the Refund Calculation Works for USMCA Goods
For goods that qualify under USMCA, the refund calculation is straightforward because the IEEPA tariff was the only additional duty:
USMCA-eligible goods:
- Normal duty rate under USMCA: 0%
- IEEPA tariff paid: 25%
- Refund: 25% of customs value
Non-USMCA goods (goods that don’t meet USMCA rules of origin):
- Normal duty rate: Column 1 General rate (varies by product)
- IEEPA tariff paid: 25%
- Refund: 25% of customs value (the IEEPA tariff is separate from and additional to the base duty)
In both cases, the IEEPA refund is 25% of the customs value. The distinction matters for your ongoing duty liability — USMCA goods return to 0% duty, while non-USMCA goods return to whatever their Column 1 rate is — but the refund amount is the same.
For a more detailed methodology, see the refund calculation guide.
Cross-Border Manufacturing: A Special Complexity
Companies with integrated cross-border manufacturing operations — particularly in the automotive, aerospace, and electronics sectors — face a unique challenge. The same component may have crossed the border multiple times, with the IEEPA tariff assessed at each crossing.
Example: A U.S. automaker ships a stamped steel body panel from Ohio to a welding plant in Monterrey, Mexico. After welding, the subassembly is shipped back to the U.S. for final assembly. The return shipment is assessed 25% IEEPA tariff on the full customs value of the subassembly — including the value of the original U.S.-origin steel.
For these multi-crossing scenarios, the refund claim covers each individual entry. If the same component generated three customs entries during its manufacturing journey, all three entries are potentially refundable.
However, make sure you’re not claiming refunds on entries that were subject to drawback or other duty refund mechanisms already. If you claimed duty drawback on an entry, the IEEPA refund would only cover the net duty paid after drawback.
Potash, Lumber, and Other Bulk Commodities
Canada and Mexico supply enormous volumes of raw materials and bulk commodities to U.S. industry. These categories deserve attention because the per-entry values are often very high and the import frequency is steady:
Canadian lumber (HTS 4407, 4418): The 25% IEEPA tariff on Canadian lumber came on top of existing softwood lumber duties that had been a source of trade friction for decades. The IEEPA tariff is refundable; the underlying softwood lumber duties are not. For homebuilders and lumber distributors, the IEEPA refund on lumber alone can be substantial. A distributor importing $50 million in Canadian lumber annually paid approximately $12.5 million in IEEPA tariffs.
Canadian potash (HTS 3104): Potash is a key agricultural input, and Canada is the world’s largest producer. The 25% IEEPA tariff increased costs for U.S. farmers who depend on Canadian potash. Importers in this space tend to have a small number of very high-value entries — a single vessel can carry $5-10 million in potash.
Mexican cement (HTS 2523): Mexican cement imports were already subject to antidumping duties in some cases. The IEEPA tariff was layered on top. Only the IEEPA portion is refundable.
Mexican beer (HTS 2203): The U.S. imports more beer from Mexico than from any other country, primarily Constellation Brands’ portfolio (Modelo, Corona). The 25% tariff on Mexican beer was passed through to consumers as price increases. The refund flows to the importers of record, not to retailers or consumers.
The Human Element: Workers Who Cross the Border
While goods are the focus of tariff recovery, it’s worth noting that the economic disruption of the Canada/Mexico tariffs extended beyond trade. Border communities that depend on cross-border commerce were hit particularly hard. The refunds won’t undo that economic damage, but they do represent a correction of an unconstitutional policy that never should have been implemented.
Financial Planning for Canada/Mexico Refunds
The financial planning considerations for Canada/Mexico refunds are somewhat different from China refunds because the tariff overlay is simpler:
No Section 301 complication. Unlike China, Canadian and Mexican goods were not subject to Section 301 tariffs. This means the IEEPA tariff is typically the only additional duty layer (above the base rate or USMCA rate), making the refund calculation cleaner.
Section 232 exception for steel and aluminum. If you import steel or aluminum from Canada or Mexico, those products were subject to Section 232 tariffs AND IEEPA tariffs. Section 232 is NOT refundable. You need to separate the two for those specific products.
USMCA duty recovery vs. IEEPA refund. If you import goods that qualify under USMCA but were assessed base duty rates because the USMCA certificate of origin wasn’t filed or wasn’t accepted, that’s a separate issue from the IEEPA refund. You may be able to recover base duties through a post-importation USMCA claim AND recover the IEEPA tariff through the refund process. These are two different recovery mechanisms that can be pursued simultaneously.
The CFO guide to IEEPA recovery covers the broader financial planning framework for companies evaluating their recovery strategy.
Recovery Paths for Canada/Mexico Importers
The four recovery paths apply to Canada/Mexico claims just as they do to China claims:
- Post-Summary Correction (PSC): For unliquidated entries. The fastest path.
- Formal Protest: For liquidated entries within the 180-day window. File immediately.
- CIT Litigation: For entries outside the protest window. Requires trade counsel.
- Immediate Capital: Claim assignment for importers who want payment now rather than waiting for CBP processing.
For Canada/Mexico importers with very high entry counts (daily truck shipments, for example), the sheer volume of protests required can be operationally challenging. Work with your customs broker to batch protests by shipment date and HTS code for efficiency.
The complete guide to IEEPA tariff refunds covers the full process, and the cost of waiting analysis quantifies what delayed recovery costs in terms of opportunity value.
