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There’s been much discussion about whether or not the incoming president of the United States will place tariffs against Canadian and Mexican imports. The suggested tariff rate of 25% has been received with severe concern in both countries and their business communities. How well prepared is your business to deal with the practicalities of tariffs? Take our 10-question quiz to test your knowledge of the most monumental issue facing the business world in 2025.
The 2025 Tariff Quiz
trade disruption
False
B
True
A
True or False: The implementation of tariffs would require Congressional approval and with some Republican lawmakers reticent about putting tariffs against America’s largest trading partners, it will likely be months before any tariffs are imposed, if ever?
Question 1 of 10
Next question
The President has three mechanisms he can use to impose tariffs against Canada and Mexico without any Congressional approval required. Section 301 of the Trade Act of 1974 allows the president to impose tariffs against countries he believes is engaging in harmful or unfair trade practices that work against the economic interests of the United States. Section 232 of the Trade Expansion Act gives the president authority to impose tariffs on the grounds of national security. The International Economic Emergency Powers Act empowers (IEEPA) the president to manage imports in the event of a national emergency. Given that neither Canada nor Mexico are engaging in unfair trade practices and that the tariffs are anticipated to be applied broadly, it’s unlikely the tariffs will be imposed through Section 301 or Section 232. A more plausible scenario would be using the IEEPA to declare a national emergency in the form of a border crisis. Once the executive order is made, the application of tariffs will be a matter of days, rather than weeks or months.
The correct answer is B.
Nope!
Correct!
True or False: Businesses involved in international trade should check the global directory of restricted parties on quarterly basis to ensure they aren’t directly or indirectly transacting with a restricted party?
Question 3 of 4
There is no global directory of restricted parties. Each country maintains its own list of restricted parties and lists can change on a weekly basis, making it prohibitively difficult for businesses to manually monitor restricted parties.
None of the above.
D
Pay duties after the goods have been received by the U.S. importer.
C
Pay duties to CBP at the time goods reach the border.
Calculate the value of their exports before shipment and pay the associated duties to U.S. Customs and Border Protection (CBP) before they reach the border.
When U.S. tariffs are imposed, Canadian and Mexican businesses exporting to the U.S. are required to:
Question 2 of 10
Canadian and Mexican exporters will not be required to pay the customs duties associated with the new U.S. tariffs. These will be paid by the U.S. importers purchasing the goods from Canadian and Mexican exporters. However, the added cost of the tariffs will reduce the price competitiveness of Canadian and Mexican imports, potentially resulting in a loss of business for those exporters.
The correct answer is D.
True or False: Given that trade between the U.S., Canada and Mexico is governed by the United States-Mexico-Canada Agreement (USMCA), a free trade agreement, tariffs will only apply to those goods that are not included in the trade agreement. Goods that are included within the agreement will continue to be traded with duty-free status.
Question 3 of 10
Almost all goods traded between the three countries are governed by the USMCA, but the tariffs imposed through executive order will override the USMCA and require duties to be paid for all tariffed goods.
True or False: Since the tariffs are being imposed by Washington against Canadian and Mexican imports, it is only Canadian and Mexican exporters that are impacted; the countries’ importers won’t be impacted by a trade war?
Question 4 of 10
Tariffs imposed by Washington will almost certainly be met with reciprocal tariffs on U.S. goods by Canada and Mexico. While these tariffs may not be applied universally, they will impact Canadian and Mexican importers of the products on which tariffs are applied.
Valuing the goods below what they’re actually worth in customs documentation.
Applying to have their products exempted from the tariffs.
Using a different classification code when compiling customs documentation.
U.S. importers can mitigate the impact of tariffs by:
Question 5 of 10
The imposition of tariffs will likely create a higher level of vigilance amongst customs officers. Improperly classifying or valuing goods can result in subsequent fines and penalties and could result in goods being held at the border until more accurate documentation is in received by customs authorities. Exemptions are a possible, but not guaranteed, form of recourse for U.S. importers that will ultimately depend on what legal mechanism the president uses to impose the tariffs.
Transship product through countries with lower tariff barriers (e.g., move Mexican goods into the U.S. via Nicaragua or Guatemala).
Arrange with customs authorities to make payments in installments.
Shift production through free trade zones (FTZs) to avoid paying import duties until time of export.
Delay paying duties and taxes to customs authorities for 90 days.
To improve cashflow when tariffs are applied to imports, businesses can:
Question 6 of 10
Delays in paying customs duties will result in interest charges and customs authorities do not allow for payment in installments. Transshipment is a possibly strategy but would require substantial transformation of the product within the jurisdiction through which the goods are being transported in order for them to qualify as being originating from that jurisdiction. Free Trade Zones on the other hand allow importers to bring product in from other countries into tariff-free manufacturing hubs in the U.S., Canada or Mexico, manufacture those goods (either in whole or in part) and then export them to the next destination. Duties aren’t applied to the goods until they enter the formal commerce of the country. This allows companies to retain capital for investment or other purposes while goods are being produced. There are over 230 FTZs in the U.S., 16 in Canada and 13 in Mexico.
Do nothing because the bond need only cover the duty outlay associated with the value of the imported product, not the outlay associated with the tariffs.
Pay interest on the amounts exceeding the value of the bond upon entry into the country.
Get a more substantial customs bond to account for the increased duty outlay.
Customs bonds are required by customs agencies to insure the duty outlay for goods moving into a country. In the event tariffs regularly push duty outlays beyond the value of a customs bond, importers would have to:
Question 7 of 10
Customs bonds must account for the total value of duty outlay, which is based on the percentage tariff placed against those imports. Insufficient surety could result in goods being held at the border until duties are paid. Importers whose bonds are of insufficient value to insure the additional duty outlay associated with tariffs will require a more substantial bond.
The correct answer is A.
True or False - Since tariffs are being applied anyway, there’s no longer any need to compile the necessary data and documentation for the USMCA, such as origin-verification documentation.
Question 8 of 10
Given the disparate application of tariffs against imports from America’s largest trading partners, origin verification will still be required even for goods not being imported under the USMCA. A product manufactured in Mexico using components sourced from China might face Section 301 tariffs as high as 60% because the product is considered originating in China instead of Mexico unless there is verifiable documentation to prove otherwise.
Submitting an application for new classification codes to be introduced with lower tariff rates that apply to a specific import.
Altering the nature of the product so that it will fall under a lower-tariffed classification.
Altering the nature of the import while retaining the same classification regime.
Using classification codes for lower-tariffed goods without altering the nature of the import.
Tariff engineering is a potential way for importers to avoid or reduce duties against certain imports by doing which of the following?
Question 9 of 10
In the event tariffs aren’t universally applied, products that fall into tariffed categories can sometimes avoid tariffs if they enter the country under a different stage of manufacturing (e.g., a piece of foam and a vinyl strap could be imported separately under different classifications, rather than manufactured together as a flipflop, or vice versa).
The correct answer is C.
The tariffs are a breach of the USMCA and the agreement’s review panel will eventually prevent the application of tariffs.
It will serve as a catalyst for the renegotiation of the USMCA in 2026.
It will lead to an immediate dissolution of the United States-Mexico-Canada Agreement (USMCA).
What is the most likely impact the imposition of tariffs against Canadian and Mexican imports will have on the United States-Canada-Mexico Agreement (USMCA)?
Question 10 of 10
End Quiz
The tariffs are widely viewed as a precursor to what will be an effort by the Trump administration to secure more favorable terms for the U.S. under the USMCA.
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