03-06-2025

Amendment to Duties To Address the Situation at Our Southern Border

Executive OrderView the Original .pdf
View the Original .pdf

The 1-Minute Brief

What: Executive Order 14227, issued on March 2, 2025, modifies a previous order concerning tariffs on goods from Mexico. It temporarily allows small, low-value shipments (under the de minimis threshold) to continue entering the U.S. duty-free, even if they are part of a broader group of products targeted for new tariffs. This exemption will end once the Secretary of Commerce confirms that systems are ready to collect these new tariffs on small packages.

Money: The order directly addresses the collection of a 25% ad valorem tariff on certain Mexican goods, as established by Executive Order 14194. By temporarily maintaining the duty-free status for low-value shipments, it delays the collection of this new tariff revenue on a significant volume of e-commerce and small-package trade. The de minimis threshold in the U.S. is $800.

Your Impact: If you buy products directly from Mexico online, this order means you won't have to pay a new 25% tariff on your small-value packages for a while longer. However, once the exemption is lifted, prices for these goods could increase.

Status: This Executive Order was signed by the President and published in the Federal Register on March 6, 2025.

What's Actually in the Bill

This executive order is a narrow amendment to a broader trade policy. Its core function is to clarify the application of new tariffs on Mexican goods, specifically concerning low-value shipments that normally receive duty-free treatment under a rule known as "de minimis."

Core Provisions:

  • The order amends Executive Order 14194, which imposed new duties on products from Mexico to address a declared national emergency at the southern border.
  • It explicitly states that duty-free treatment under 19 U.S.C. 1321 (the "de minimis" rule) remains available for otherwise eligible products from Mexico.
  • This duty-free status for small packages is temporary. It will cease once the Secretary of Commerce certifies to the President that systems are in place to effectively process and collect the new tariffs on these low-value items.
  • The de minimis threshold allows goods with a retail value of up to $800 to enter the U.S. without being subject to duties or taxes.

Stated Purpose (from the Sponsors):

The order is designed to manage the implementation of tariffs announced in Executive Order 14194. The stated purpose of the original order was to compel Mexico to take stronger action against drug trafficking and illegal immigration by imposing economic pressure through tariffs. This amendment provides a grace period for the collection of those tariffs on small shipments, likely to allow time for customs systems and logistics carriers to adapt.

Key Facts:

Affected Sectors: E-commerce, Logistics & Shipping, Retail, Manufacturing (especially industries with supply chains in Mexico).
Timeline: The order took effect upon its signing on March 2, 2025. The suspension of de minimis treatment will occur at an unspecified future date, pending notification from the Secretary of Commerce.
Scope: The order applies to low-value goods imported from Mexico that would otherwise be subject to the new tariffs.

The Backstory: How We Got Here

Timeline of Events:

The Rise of De Minimis and E-Commerce (2016-2024):

The modern debate is rooted in the Trade Facilitation and Trade Enforcement Act of 2015, which raised the U.S. de minimis threshold from $200 to $800. This change supercharged the growth of international e-commerce, allowing companies to ship products directly to American consumers without incurring tariffs. The volume of de minimis shipments exploded from around 150 million in 2016 to over 1 billion in 2023. This led to concerns from U.S. manufacturers about unfair competition and from law enforcement about the difficulty of screening vast numbers of small packages for illicit goods like fentanyl.

Executive Action and Border Security (2025):

On February 1, 2025, President Donald J. Trump issued Executive Order 14194, declaring a national emergency and imposing a 25% ad valorem duty on all products from Mexico. This action was taken under the International Emergency Economic Powers Act (IEEPA), citing Mexico's alleged failure to curb drug trafficking and illegal immigration as an "unusual and extraordinary threat" to the United States. Just days later, on February 3, 2025, Executive Order 14198 paused the implementation of these tariffs until March 4, 2025, acknowledging that Mexico had begun taking cooperative actions.

Why Now? The Political Calculus:

  • Implementation Challenges: The original tariff order created immediate confusion about its application to the massive volume of de minimis e-commerce shipments. Applying tariffs to millions of small, individual packages is a logistical nightmare for U.S. Customs and Border Protection (CBP) and private carriers.
  • Economic Pressure vs. Consumer Impact: This amendment represents a tactical adjustment. It keeps the threat of broad tariffs on the table as leverage while avoiding, for now, the immediate price hikes and shipping delays that would affect American consumers who shop online.
  • Addressing a Perceived Loophole: The broader context is a growing bipartisan concern that the de minimis rule has become a loophole exploited by foreign companies, particularly from China, to evade U.S. tariffs and undercut domestic producers. This order is a step in the administration's effort to close such perceived loopholes.

Your Real-World Impact

The Direct Answer: This directly affects Americans who buy low-cost goods online from Mexico and the U.S. businesses that facilitate this trade.

What Could Change for You:

Potential Benefits:

  • Temporary Price Stability: For a short period, the cost of goods you order from Mexico valued under $800 will not increase due to new tariffs.
  • Continued Access: You can continue to order items from Mexican sellers without interruption or new customs fees for the time being.

Possible Disruptions or Costs:

Short-term (Upon lifting of the exemption):

  • Increased Prices: Once the exemption is lifted, a 25% tariff could be added to the cost of products from Mexico, making them more expensive for consumers.
  • Shipping Delays: The implementation of a new tariff collection system for small packages could lead to processing delays at the border.

Long-term:

  • Permanent Higher Costs: If the tariffs remain in place, the cost of many goods produced or sold from Mexico could be permanently higher.
  • Reduced Product Availability: Some smaller Mexican businesses may stop selling to the U.S. market if the tariff and compliance costs become too burdensome.

Who's Most Affected:

Primary Groups:

  • U.S. consumers of e-commerce products from Mexico.
  • U.S.-based small businesses that import materials or finished goods from Mexico.
  • Logistics and shipping companies (e.g., FedEx, UPS, DHL) that handle cross-border package delivery.

Secondary Groups:

  • U.S. domestic manufacturers and retailers who compete with Mexican imports.
  • Border communities whose economies are tightly linked to cross-border trade.

Regional Impact: States with strong economic ties to Mexico, such as Texas, Arizona, and California, will feel the effects most acutely.

Bottom Line: For now, nothing changes for online shoppers, but this order signals that future price hikes on goods from Mexico are likely once a new collection system is ready.

Where the Parties Stand

Republican Position: "Secure the Border, Protect American Industry"

Core Stance: Generally supports using tariffs as a tool to achieve foreign policy objectives and protect domestic industries, while also expressing concern over the economic impact of broad tariffs.

Their Arguments:

  • ✓ Supporters of tariffs argue they are a necessary leverage to compel other countries to change their behavior on issues like security and trade.
  • ✓ Many in the party believe the de minimis loophole needs to be closed to stop unfair competition, particularly from China.
  • ⚠️ Some Republicans are wary of broad tariffs, fearing they raise costs for American consumers and businesses and invite retaliation against U.S. exports.

Legislative Strategy: The use of executive orders for tariffs is a key strategy, bypassing direct congressional approval. Within Congress, members are pushing legislation to reform the de minimis rule, such as the Import Security and Fairness Act.

Democratic Position: "Targeted Enforcement, Not Trade Wars"

Core Stance: Generally critical of broad-based tariffs, preferring targeted sanctions and international cooperation, but there is growing bipartisan agreement on reforming the de minimis rule.

Their Arguments:

  • ✓ Many Democrats agree that the de minimis system is being abused and creates an unfair playing field for U.S. workers and businesses.
  • ⚠️ The party generally opposes the use of broad tariffs, arguing they function as a tax on American consumers and disrupt critical supply chains.
  • ✗ Critics argue that using tariffs to address non-trade issues like immigration is an inappropriate and ineffective use of economic policy.

Legislative Strategy: Focus on legislative reform of customs rules and enforcement rather than broad executive tariffs. Democrats have also introduced bills aimed at closing the de minimis loophole and increasing screening for forced labor in supply chains.

Constitutional Check

The Verdict: ⚠️ Questionable

Basis of Authority:

The Executive Order cites the International Emergency Economic Powers Act (IEEPA) as its primary legal authority. IEEPA grants the President the power to regulate international commerce after declaring a national emergency in response to an "unusual and extraordinary threat" that originates substantially outside the United States.

Relevant Portion of the Constitution: Article II of the Constitution grants the President executive power, while Article I grants Congress the power "To regulate Commerce with foreign Nations." IEEPA is a delegation of this commerce power from Congress to the President for emergency situations.

Constitutional Implications:

[Delegation of Powers]: The use of IEEPA to impose tariffs is legally controversial. Critics argue it is an overreach of executive authority and that Congress, which has the constitutional power to set tariffs, has delegated too much of its authority to the President.
[Precedent]: Presidents from both parties have used IEEPA to impose sanctions and freeze assets. However, its use to impose broad tariffs on a major trading partner as a response to non-commercial issues like immigration is a more aggressive and legally contested application of the act.
[Federalism]: This action operates at the federal level of international trade and does not directly overstep powers reserved for the states.

Potential Legal Challenges:

The original tariff order (EO 14194) is already facing legal challenges from businesses arguing that the situation at the border does not meet the IEEPA definition of a national emergency that justifies the imposition of tariffs. They argue the President has exceeded the authority granted by Congress and is infringing on Congress's primary role in regulating trade. This amending order would be subject to the same legal challenges as the underlying order it modifies.

Your Action Options

TO SUPPORT THIS POLICY

5-Minute Actions:

  • Call Your Rep/Senators: Capitol Switchboard: (202) 224-3121. "I'm a constituent from [Your City/Town] and I support the President's use of tariffs to address the border crisis. I urge [Rep./Sen. Name] to support closing the de minimis loophole."

30-Minute Deep Dive:

  • Write a Detailed Email: Contact members of the House Ways and Means Committee and Senate Finance Committee, which oversee trade policy.
  • Join an Organization: Groups like the Coalition for a Prosperous America advocate for stronger tariffs and the protection of domestic industries.

TO OPPOSE THIS POLICY

5-Minute Actions:

  • Call Your Rep/Senators: Capitol Switchboard: (202) 224-3121. "I'm a constituent from [Your City/Town] and I urge [Rep./Sen. Name] to oppose broad tariffs that raise costs for American families and businesses. Congress should be setting trade policy, not the President through emergency powers."

30-Minute Deep Dive:

  • Write a Letter to the Editor: Submit a letter to your local newspaper explaining how tariffs on everyday goods will impact your community.
  • Join an Organization: Coalitions like Americans for Free Trade represent businesses and consumers who oppose broad tariffs. Organizations like the Fair Trade Federation advocate for equitable trade policies.