Welcome to our Expeditors webinar series today. The topic that we'll be presenting and inviting a panelist speaker will be U.S. tariff impact on global supply chain, which is a very hot topic. You probably have seen some of the communication the Expeditors team has reached out to all our dear customers, and we are very happy today that we managed to get a large amount of audience that is coming from Asia, not just China, but also South Asia, and we see Korea, Japan, different countries, as well as our Americas team is also on the call today, but since we have a lot of content to cover, we're just going to get started, and we want to be respectful of everyone's time, so again, if you're joining us, we're talking about the U.S. tariff impact on global supply chain today.
Gabe, if I can get your help to move on to the next slide. Thank you. So today's content, we're trying to cover all the key materials in 45 minutes. If you do have any questions, we encourage you to submit these questions in the Q&A box over there. And we will be able to address them at the end of the webinar. And my name again is Wang Ping. I'm the Director of Account Management for North Asia at Expeditors. And you asked, if you were going to receive the slides, what we will do is that at the end of the webinar, all the participants will be receiving a short survey. And upon completion, you are able to download those slides from the survey.
If you do need additional information in the future webinar, we encourage all of you to subscribe and receive all our webinar invites through the QR codes over there. All right, with that, the next page, I'm going to do a quick introduction on who we have. First and foremost, I would like to introduce Madeleine Veigel. She's our Senior Customs Director for the Americas. And we also have Brenda Smith, Global Director for Government Outreach, Ted Henderson, our Senior Advisor in Customs, and of course, our Director of Customs for North Asia, Alex Chen. With that, just one more thing to highlight before we get started. Turn to the next slide, maybe. Okay, just some disclaimer. The content of this presentation I make available for information purposes. And it should not be relied upon for any legal, business, or financial decision.
Expeditors does not guarantee, represent, or warrant any of this content of this presentation, and the content is based on information domiciled in the public domain. The content of the presentation was prepared for the best of our knowledge and research. However, the information contained herein may not reflect the most current regulatory or industry's development, so in short, we will not be held liable for the losses that arise in any way due to the reliance and outreach of the content that is presented in this presentation. Information in the presentation is intended for the recipients to whom it may be presented, and any reproductions or redistribution of the content is not permitted without the consent of Expeditors, so we just wanted to call out that we took a lot of time to bring this together with you.
Aside from our global customs teams on the forum and in our panelists, we also have our Tradewin group. So in the next moment, I'm just going to quickly turn over to Ted to start the agenda. If you do have any questions, we welcome you to drop it in the chat box. Aside from that, we have also received a huge number of questions that are coming to us when you sign up for this webinar. We will have some time at the end of the session to make sure that we cover some of those. Thank you. And with that, I turn over to Ted.
Thank you, Wang Ping, and thank you to everyone once again for joining us, for most of you this morning. We're very excited here in the United States. It's only yesterday. It's last night here. So we're looking forward to what's happening already in the world, in your world today. Just a couple of things we'd like to remind you. If you do have questions, please drop them in the Q&A box. You are welcome to type in questions to the course of this discussion today, and we will do our best to answer those questions, as well as some of the other questions that have come in previously as you signed up for this, so again, thanks again for taking time from your very busy day today. Spend some time with us, and we'll try to share our wisdom on the current U.S. and global trade environment with you.
Let's take a quick look at the items on the agenda, the things we're going to talk about. We're going to lead off with the most recent trade actions that's across the globe: United States, China, Canada, Mexico, things along that line. I think that you'll appreciate seeing some of that. And then we're going to spend some time really talking about the tariff and trade actions and some potential future actions that we see out on the horizon. Just again, a reminder that the information we are speaking to is really based on public announcements. And those are announcements from U.S. President Trump or government agencies in the United States or China or Canada or Mexico. We try not to offer our opinions or speculate here. We just really want to focus on the facts that are in front of us.
I guarantee you, we also are not going to speak any political issues. So today's discussion is hosted by our Expeditors teams in Asia and America, just to ensure that you do get some expert understanding from our folks in these regions. Do know that this is part of an ongoing series of webinars that we do. So please watch out for more of these that we do in different time zones around the globe. And please feel free to join any of those as they go. So again, please make sure and drop questions in the Q&A box as we're going. And we will try to keep an eye on these as we're going and answer them as we go. We may not get to all the questions. There are a lot of you on the call today, so thank you for that. But we'll do our best.
If we don't, we respectfully ask that you please just reach out to your local Expeditors contact, and hopefully they can help with those questions and maybe get to some of the really specific product questions that you might have or specific country questions. Once again, these slides will be provided for you. You don't have to screen print. There's just a follow-up that will come after this webinar is over, and we will provide the presentation to you. All right, with that, let's go ahead and get started on what's going on in the first view of the timeline here. We put together this timeline really based around actions taken in the United States starting from January. Then we're also looking out farther through the rest of the year in 2025 and a little bit into 2026.
As you can see by all the little bubbles on the left side, we had a whole lot of activity that started off the year and really kind of a whiplash effect for us as one announcement came out after another was amended, was followed by another announcement, and on and on it's gone for the last several weeks. So we'll talk in depth about the activities that are related to China, Canada, Mexico, the new tariffs coming for steel and aluminum. We'll get to that in detail. A couple of things I do want to touch on for you as it goes that some of you are familiar that the United States has a free trade agreement with Mexico and Canada. And that is up for renewal this year. It's a mandatory review of the USMCA agreement, U.S.-Mexico-Canada Agreement. So that'll be kicking off.
And we know that will create some more tension in the trade environment as the United States, Mexico, and Canada do get involved in the discussions and negotiations as that agreement gets worked on along with all the other trade remedy agreements that are going. Keep in mind, we did have a new round of Section 301 tariffs kick off this new year, and there are more scheduled for January 2026. These aren't from President Trump's administration. These are actually from President Biden's administration. So we'll see that. And then there are some other existing Section 301 trade remedy actions that were suspended around large civil aircraft. So this primarily involves the U.S. and Europe with Airbus and Boeing. But we've got that to look forward to as well. Outside of the things that we're looking at on this timeline, we just want to call out some things that U.S.
Customs and Border Protection are really focused on, have been focused on from an enforcement perspective: forced labor, anti-dumping, countervailing duty enforcement. If you're not familiar with that, that's around goods that are being sold at less than fair value, and then also the de minimis, the low-value shipment environment that exists in the United States. We're going to talk about that a little bit more in depth, but these three areas have been major areas of enforcement within U.S. Customs and Border Protection, Department of Homeland Security, and other federal agencies in the United States. We anticipate that that will continue as we go forward in the year, so we want to start with just an overview of some significant U.S. trade law, and I promise you, we are not going to go into detail into the weeds and the depth of U.S. law.
We want to highlight some laws that maybe you've heard of, referenced in the news, or certain key words, either currently or maybe in the previous Trump administration, President Trump's first administration, or under President Biden. One of the common phrases that comes around is talking about sections. The top three boxes on this slide talk about three different sections of two laws: Section 201, Section 232, and Section 301. Oftentimes in the news, you'll hear somebody talk about the Section 301 tariffs or Section 232 tariffs for steel. These, again, are specific areas of U.S. law. A section is really just a part. It's a paragraph typically in the U.S. law. And it gives certain authority to the president to take action. Under President Trump's administration, we typically saw actions under his first administration from Section 201, Section 232, Section 301 of two different laws.
One of the things that we want to really call out under the new administration is the use of a statute, a law that's been on the books since 1977, but it's never really been used for enforcing trade actions. And that's the International Emergency Economic Powers Act. It's also known as IEEPA by its acronym. This act is different from the other laws that you see on this page in that there really is no requirement for public comment. There's not a delayed implementation period. If the president finds that there is an emergency that justifies taking action on imports of goods, the president is authorized under this act to take immediate action. And we are seeing things happening already under IEEPA. So let's look at the pertinent activity that deals with U.S. imports from China.
So, like I talked about, there was quite a bit of activity in the beginning of February. One of the things that we saw right away, there were three executive orders with tariff actions that were announced immediately, really very quickly under President Trump right after recently after his inauguration. They were related to imports into the United States from goods from China or goods from Canada or goods from Mexico. We're going to talk about all three. I'm going to start with China right now. It's not important that you really dig into the executive orders and all that goes along with it. They're very similar in the way they're constructed.
The key point is that President Trump followed through on his commitment when he was running for office that he would impose tariffs on several countries due to a national emergency and a public health crisis that he declared here in the United States related to the flow of fentanyl and other illicit drugs like opioids that flow into the U.S. from several countries. By virtue of his declaration of a national emergency, that gives him the authority, again under IEEPA, the International Emergency Economic Powers Act, to take certain action on imports. He did specifically in this case where we're talking about China. Under this executive order that became effective on the February 4th, there is a 10% ad valorem additional tariff on all products from China and Hong Kong. This is in addition to any other duties, fees, tariffs, anything else.
Goods may have an additional Section 301 tariff of 25%. They may have a standard tariff. But this 10% gets added on top of the other tariffs that would apply to those goods. For us in the United States, as customs brokers, we have additional harmonized tariff numbers that we have to declare as part of this order. There's additional work we have to take. But just understand that's more of a formality on our side here in the U.S. So if you do see unusual tariff numbers being brought up by your customs broker here in the United States, that's what this relates to.
If you're not familiar with this idea of drawback, many countries have a standard that if you import goods into their country, but then you export them as they are, sometimes you might be running a fulfillment center in a certain country or something like that, you may draw back the duties that you paid on those products, and that is common in the United States for many types of duty. However, this specific duty, this additional 10% tariff, cannot drawback, cannot be claimed on those goods. We'll talk a little bit more about de minimis shipments in a second, but originally, this order did exclude products of China and Hong Kong from being used and being imported under the low-value de minimis exemption that's typically used for e-commerce goods.
The other thing I want to point out is part of this announcement, President Trump stated that this 10% tariff may not be the final rate. Tariff rates may go up from the 10% that are taken under this current order. So please pay attention as things progress. For those of us who were involved in international trade during President Trump's first administration, we saw an escalation between the U.S. and China and the U.S. and several other countries. As one country took action, another country took action. So pay attention to things that are going on and watch what happens because, again, this 10% may change at some point in the future. And again, this is an additional tariff that adds on to anything else for goods that are imported into the U.S. from China or Hong Kong.
So other trade remedy actions, other tariff actions like under Section 301 or anti-dumping orders or whatever, all of those duties and actions will continue to apply. And the other thing I want to emphasize for those of us on the call who maybe don't get really involved in trade compliance or customs, this is based on country of origin, not country of export. So goods that are of China origin or Hong Kong origin are subject to this tariff. So this is about standard ideas of how a good meets the origin requirements for a certain country. But again, keep in mind, this is based on country of origin, not country of export. All right. So as I said, we're going to talk a little bit about de minimis imports as well.
U.S. law does allow for certain types of goods that are valued less than $800 to be entered into the U.S. by a person without paying duty or having any other formal entry declaration. So $800, one person, one day. This exemption was not recently created. It's been around since 1930. 1930 is really this was put into effect to basically give U.S. Customs the opportunity to not have to process low-value goods where there was a low duty recovery possibility. So if there just wasn't a lot of revenue coming in for the U.S. government, the exemption could be put in place and the formal processes could be waived and moved on.
So understand that although this isn't new, it's really being used in an innovative way now in the sense that in the last several years, e-commerce and online marketplaces and things shopping along that line in the United States has exploded. And that activity has been coming into the United States under these specific de minimis exceptions. So again, the original executive order that was issued by President Trump did state that goods from China and Hong Kong would not be allowed to use this exemption. And for several days, that order stood in place. However, the order stood back. It was suspended. And at that point, then de minimis goods were allowed to re-enter U.S. commerce. I think the reality was the significant staggering volume of goods that flow into the United States every day was too much for U.S. system processes to manage.
If you don't know this, there are an average of four million shipments a day that come into the United States, not just from China and Hong Kong, but in total under this de minimis exemption. That's a massive amount of freight that comes into the individual shipments that comes into the United States. So you do have to understand that the order was suspended. So goods are allowed to come into the United States right now under this de minimis exemption. But at some point, once again, this order will go into place. So as you can see on this slide, certain government agencies, the Secretary of Commerce, and U.S. Customs and Border Protection have to make sure that there are adequate systems in place to expediently process that high volume of freight and collect tariff revenue.
So again, once those systems are put into place, then we anticipate that this ban will go back into place and be enforced. We do not know when that will happen or even how much warning we will get. We know that the government has to take certain actions, create processes, do systems changes, but we don't know how long that will take, and we also know in the United States there's quite a bit of concern in general about de minimis imports into the United States. It's not just focused on China. It's the idea in general. I just want to make sure, please, stay aware of developments in this particular area if this is important to your business because we do anticipate there are several other initiatives related to low-value shipments, and we anticipate those will move forward.
It's important to stay aware as we go. I guess if nothing else, remember, it is the year of the dragon. Besides power and good fortune, the dragon has wisdom. Make sure and be wise. Pay attention to what's going on as this goes and stay aware and stay tuned with us. We'll try to make you aware as well. With that, I will turn this over to my friend and colleague, Alex Chen, and he will speak to some specific actions taken within China. Thank you.
Okay. Thank you, Ted. Well, actually, I think that February 4th is the last day of the Chinese Lunar New Year. So I think many media or many people expected that China may take some action, reaction the next day. But however, the China Tariff Commission of the State Council announced the additional tariff would be posted for the products originating from the United States on the last holiday of the Chinese Lunar New Year. Basically, we can see that 15% additional tariff on coal and liquefied natural gas, which are included eight HS subheadings. Additionally, there are 10% additional tariff on kind of certain products, including crude oil, agricultural machinery, large displacement vehicles, and pickup trucks. It's total around 72 HS subheadings. And this time, I think the way they put the additional tariff is very direct. It's just added to the current applicable tariff.
It's the same, just like it's different with the previous way that there's no kind of exemption or exclusion for additional tariffs at this time. Interesting, when I grabbed some data from the website, we can see that, for example, China's coal import from the United States in 2024 around accounted for approximately 12.8% of the total U.S. coal exports. The crude oil is kind of the China, the total imports is only accounting for 1.85% of China's total import, the value of the crude oil. We took like the large displacement vehicles from the United States. If we take example as over 2.5 L produced in the United States last year in total 132,120 units. Pickup trucks in 2024, the United States exported around 62,000 pickup trucks to China. Basically, we think this is China government's reaction is moderate. Okay.
Then we were talking about the non-tariff action. The first non-tariff action is kind of China initiated the dispute complaint with the World Trade Organization, WTO, because China and the U.S. are all members of WTO, and China always believed that we should settle this kind of disputes through the international organization. And also the MOC announced that it added additional two U.S. companies, PVH Group and Illumina, to their Unreliable Entity List. Here is some clarification. It's not just because this kind of China just put why these two companies. I think that the investigation upon the PVH Group happened last year. It's same for the Illumina. The reason is because for PVH Group is because the China government investigation is precisely about the group's unwarranted boycott of Xinjiang cotton.
Then for the Illumina, because the Chinese government believed that Illumina is behind the scenes, is a pusher of the Biosecurity Act proposed by the U.S. last year. So that's why these two companies were added to the list. NOC and also GSC also announced additional, I think, metals and related items into the export control list. So majority is kind of widely used in their high-tech semiconductors and their military industry. The last one is about the State Administration for Market Regulation. They initiated the investigation against Google for their potential violation of China Anti-Monopoly Law . So far till now, we are seeing that this is all the tariff and the non-tariff reactions from the Chinese government. But as Ted mentioned, so we've got to stay at the top to watch the whole situation.
If there is additional actions from the United States, so I think the Chinese government will take retaliatory action. Let me hand over to my colleague in the States, Madeleine, for additional information sharing. Thank you.
Okay. Thank you so much, Alex. And good morning, everyone. It's a pleasure to be with all of you, at least virtually. Oops. There we go. Okay. I advanced too far. Anyway, thank you so much for joining us. And I am going to talk about a few other big updates that are happening here from a U.S. North America perspective. So one of the things that was announced actually only about a week ago under President Trump's administration is new tariff actions on steel and aluminum. So this is not something completely new. So if we go back to President Trump's first administration in 2018, he used Section 232 of the Trade Expansion Act of 1962. So this is what Ted talked about earlier in the presentation on one of the first slides. And this particular law in the U.S.
Specifically is aimed at any type of threat to national security. And back in 2018, President Trump and his administration said, hey, we have a national security risk in regards to steel and aluminum, meaning that domestically, there wasn't enough production of steel and aluminum, in particular for the military, so that the military could acquire enough steel and aluminum domestically to be able to build equipment for the military. So at the time, the Trump administration said, hey, the way we're going to counteract that is it's a national security risk for our military, so we are going to implement a 25% tariff on steel and a 10% tariff on aluminum. But when that was implemented, there were many exceptions made, meaning there were several countries that were exempt or did not have the steel and aluminum tariffs implemented. And there was also an exclusion process.
The exclusion process was cumbersome. Basically, a U.S. company could come or an importer could go forward, approach the government and say, hey, this particular product that I import, I cannot purchase. I cannot find it domestically in the U.S. So therefore, I have to get it abroad or purchase it abroad and provide the reasoning, the dimensions, the specifics about the product. And the government, specifically the Commerce Department, would review the application. And if they felt that the importer had a good case, they would provide an exclusion for that particular product from the tariffs. So that was also in place. So there were exclusions in place. There were countries that were excluded from these tariffs.
On the February 10th, so just recently, about approximately a week ago, and on the February 11th, President Trump came out with two big memorandums, one called Adjusting Imports of Steel and another called Adjusting Imports of Aluminum. And basically, he and the administration have said, hey, even though there are still some tariffs or quota on steel and aluminum, it's not enough. And therefore, we are going to put a 25% tariff on all articles of steel and aluminum. And those are going to be effective in the not too distant future, the March 12th, those go into effect. And his administration is removing all countries that had exemptions. So there were exemptions for Argentina, Brazil, Australia, Canada, Mexico, South Korea, EU, UK. All of those exemptions are removed and terminated.
The exclusions that companies had gone to for specific products are also no longer going to be granted. The exclusion process is going to go away. That will no longer exist. And in addition to that, something that is very interesting is in specifically CBP, so that stands for U.S. Customs and Border Protection, they have been directed to prioritize these specific entries, specifically steel, to make sure that goods are not misclassified. And they're going to issue penalties if they find that goods are misclassified in such a way to avoid maybe the payment of the duties, they will issue penalties. And so we can already see there will be a lot of enforcement around this area by U.S. Customs and Border Protection when this is implemented on the March 12th, a few weeks from now.
So anyway, we will see more tariffs on steel and aluminum. The operational process still has to be defined. We are still waiting on more information from U.S. Customs on the actual operational process. Now, looking at some other announcements that came out at the beginning of February, on February 1st, there were a couple of executive orders that came out. One of them on February 1st was on Canada. Remember also on the slide that Ted covered at the very beginning, the different U.S. laws. He talked about the one law called the International Emergency Economic Powers Act, or IEEPA. That particular law is what President Trump and his administration used to basically substantiate the executive order that he issued both on Canada and on Mexico.
So basically, President Trump said, hey, we have a national emergency on the southern border between Mexico and the U.S., and we have a national emergency on the northern border between Canada and the U.S. And this national emergency has to do with fentanyl, the drug fentanyl coming into the United States through Canada in this particular case and through Mexico, and also illegal immigrants coming in through the northern border and the southern border. So in response to what he, again, what the president considered a national emergency, he issued this executive order saying, hey, we are going to implement a 25% tariff on all goods, country of origin, Canada, except for goods that are energy or energy resources. For those goods, there's a 10% tariff that's going to be implemented. And you'll see some of the examples of energy or energy resources, crude oil, natural gas.
You see some of the examples listed there. Those would be a 10%. Everything else, country of origin, Canada would be at 25%. And in that executive order, the Trump administration also said that if Canada retaliates, those amounts of 25% and 10% could go up. There's also no drawback will be available for those duties. So again, drawback is a means for many importers to mitigate some of the duties. Again, if they've paid at a very, very high level, if you've paid import duties on a product imported into the U.S. and then you export it, there could be a means of regaining those duties through drawback. But drawback is not eligible for these additional duties. And no de minimis, no low-value shipments. What Ted was explaining earlier, no de minimis would not be allowed on any product coming in from Canada.
Also just to mention, on goods entering a foreign trade zone, the duty rate would be locked in at the time the goods enter the zone. So that was also specifically mentioned. But as many of you may have seen, President Trump spoke with Prime Minister Trudeau on that Monday, February 3rd, and they came to an agreement. And Prime Minister Trudeau said, hey, we're going to send additional folks to the border, and we're going to address the fentanyl issues. And so based on that discussion, President Trump said, o kay, we're going to pause, and we're not going to implement these tariffs. And they are on pause until March 4th. March 4th, we'll see what happens. Canada, though, when President Trump first announced the executive order on February 1st, Canada was quick to respond. They said, hey, if the U.S.
is truly going to implement these tariffs, we will also implement tariffs of 25% on $30 billion worth of U.S. goods." And you see those listed there. There's also a second list that Canada said they would implement $125 billion worth of U.S. goods. But that list would be subject to feedback and commentary from those folks in Canada. And the 25% would be assessed on the value for duty of the imported good. So anyway, this is on pause for right now, and we will see what happens on March 4th. Now, the same thing happened with Mexico. Again, February 1st, there were two executive orders, one for Canada and one for Mexico. Again, both under the same U.S. law, that International Emergency Economic Powers Act. And for Mexico, the Trump administration had planned to put a 25% tariff on all products for Mexico, country of origin, Mexico.
They had the same verbiage as in the executive order for Canada, meaning if Mexico decided to implement retaliatory tariffs, that the 25% could go up. The same situation with foreign trade zones that the duty rates are locked in when the goods are entered into the zone. No drawback would be eligible for these duties, and again, no de minimis, low-value shipment, that process of de minimis would not be accepted by the U.S. on any products from Mexico. Now, President Sheinbaum also spoke with President Trump, but early on that day, on that Monday, February 3rd, and she also came to an agreement with President Trump, meaning she had also promised to send additional troops to the southern border and work on the immigration and the fentanyl issues, and so President Trump said, all right, we will pause. We will not implement these additional duties.
We will wait and give it a month. And these are on pause until March 4th. And President Sheinbaum from Mexico, she also has a list of tariffs that Mexico planned to implement on U.S. goods. It was called Plan B. Her economy minister had drafted that. We don't have visibility to what products were on that list, but she was ready to implement additional tariffs as well. But again, this is on pause until March 4th. So then we will see what happens. And then most recently, this was just last Thursday, the Trump administration talked about reciprocal trade and tariffs. So this got, of course, a lot of publicity. Basically, what President Trump and his administration is saying is that on average, they say the U.S. has a very low average weighted tariff rate. They say on average, it's around 2.5% on average.
And so what President Trump is saying is if another country, let's say, has a tariff rate of 20% on a product, then on the U.S. side, we must also implement a tariff rate of 20%, being fair and reciprocal. The fair and reciprocal plan is what he refers to. So what he issued on February 13th is basically a plan. It's basically a memorandum to all the different heads of government, the Department of Commerce, the Department of the Treasury, the U.S. Trade Representative, all the department heads of these different government departments. And he has said, you need to do an evaluation. So the plan that he released on February 13th is to do an evaluation of all tariffs imposed on all U.S. products in all countries that are deemed to be unfair, discriminatory, or extraterritorial taxes, such as value-added taxes.
So you can imagine that is a huge research project and evaluation to look at all products, U.S. products, and what they are or what the tariff rate is in all these different countries. We assume that the Trump administration will probably prioritize those countries where we may have the largest trade deficit. And in a few moments here, Brenda is going to go into depth and talk about the trade deficits. In addition, the Trump administration said, hey, we're not only looking at tariffs with this plan, but he's also asked his government departments to look at non-tariff barriers that affect the cost for U.S. businesses, workers, and consumers. They are also looking at exchange rate deviations and limitation on market access. So anywhere where the U.S. maybe can't get their product into or where they're not provided fair competition. So that's what was released.
It's a plan that requires a lot of research by the government. We do not know when any reciprocal tariffs will be implemented. That is the big question mark. We have no idea when something will be when reciprocal tariffs are going to be announced by the government and implemented. So we have to wait and see. At this point, it's a lot of research that is being conducted by the U.S. government. So now I will pass it to my colleague, Brenda, and she will speak about what is on the horizon.
Thanks very much, Madeleine. Good morning, everyone. It's a pleasure to be with you. So what we have just talked about is a lot of detail about things that have already happened, and we are all in the busy time of trying to implement the new guidance around tariff rates.
But what we would like to do now is to give you a little bit of information that we are using to try to assess what might be next. It is very hard to predict. And as my colleague Ted said earlier, we don't speculate, but we do find that there is some useful information that may help you make judgments about how to handle all of the changes coming at you. So the first thing that we wanted to walk through with you were the different types of the different uses of tariffs that President Trump and his administration are leveraging increased tariff rates or decreased tariff rates in some cases for. So the first category would be to remedy what President Trump sees as an unfair trade practice. And that is generally applied at an industry level or a country level.
We saw the use of this in the first Trump administration when tariffs were applied under Section 232 on aluminum and steel, as well as on Chinese goods, certain Chinese goods under Section 301 trade remedies. The second category of tariffs are when tariffs are used to raise revenue for the government's budget. Many years ago, nearly 100 years ago, the United States used to rely almost solely on the collection of duties and tariffs to fund the activities of the government. Since the U.S. passed an internal revenue tax, that is not the situation. At this point in our country's history, tariff revenues only make up 2.4% of the federal budget. It is a very small amount, but President Trump has indicated that there are a number of new activities that he would like to implement.
And so we'll look to potentially use the revenue from new tariffs as an offset for those activities. And then the third area or the third reason to use tariffs is as a negotiating tactic or as leverage to achieve certain other policy goals. We described earlier in this presentation about the president's desire to strengthen border security on both the Canadian and the Mexican borders. And so he put on or proposed putting on 25% tariffs on Canadian and Mexican goods, two of the U.S.'s most important neighbors. Both the governments of Canada and Mexico pretty immediately agreed to work with him to control illegal migration into the United States. And so he has made good progress on his goal of securing the border by threatening the use of tariffs. It is likely that we will see that continued conversation.
We have already heard messaging from the President about tariffs on Denmark if they don't change the relationship with the country of Greenland. We have heard about tariffs on Panama if we don't change the relationship between the U.S. and Panama on the Panama Canal, and so it remains to be seen exactly how this will be carried out, but often, as you know, the President likes to see himself as very good at the art of the deal, and so we believe that tariffs will continue to be used for that purpose. The other thing that we're looking at is trade deficits, and this chart, a little complicated, but let me walk you through it. We have heard for many years President Trump talk about his concern about trade deficits, and as we looked at the data, we saw some very interesting things.
If you look at the small diamonds, generally on the left-hand side of the screen, that represents the level of U.S. exports. The small round dots, generally on the right, towards the right-hand side of the screen, represents the imports to the United States. And so if we look at, let's say, China or the European Union, we see that there are fairly significant differences between what the U.S. exports and what the U.S. imports from those trading partners. We also thought it was important to share with you the other countries on this list. So these are the countries that have the largest trade deficits with the United States. And that would be the trade deficit in commercial goods. So China at the top of the list, followed closely by the European Union, then Mexico.
We also have a significant deficit with Vietnam, a smaller one with Taiwan and Japan, South Korea, and Canada. But these are the countries, if the president is really looking to make a difference in the balance of trade between the United States and its trading partners, our belief is that this is where action will be taken. And we know because of the guidance issued around the reciprocal tariff plan that Madeleine just talked about, that one of the significant factors that must be considered is the size of the trade deficit with our trading partner. We also wanted to draw your attention to the guidance that the president issued on January 20th, his very first day in office. And this was a memorandum requiring a number of reports and recommendations from various cabinet departments on a wide array of trade issues.
If you haven't read this, it is a very interesting document, and we thought that on the very first day President Trump was in office, and since that time, members of his trade team have indicated that the America First Trade Policy Memorandum is really the president's roadmap and what his trade team will work on implementing with him, so let me call out just a couple of the issues that were raised in this memorandum where the president asked for analysis and recommendations. Things like the level of unfair trade practices or the impact of trade agreements and where there might be opportunities for new bilateral or sectoral trade negotiations, he was very interested in what the impact of the U.S.-Mexico-Canada Agreement is and what the flows of migration and fentanyl are from Canada, Mexico, and China.
He has a very strong interest in the use and the impact of the de minimis exemption, and we believe that is an area that is likely to get activity from the Trump administration. He's also looking at using his Section 232 authority and looking to see whether additional investigations are warranted and whether the exclusion process, which many businesses have used to reduce their tariff bills, are in fact effective. There are many, many questions about China and the relationship between the United States and China, particularly whether or not the results of the China Phase One deal and the impact of the Section 301 investigation. He is also interested in the United States' use of export control authorities as well as rules around outbound investment. There are many, many issues that the government departments are working to analyze now and make recommendations.
I would also tell you that while you're keeping an eye on the communications around these issues, you should also be watching the communications from the U.S. Congress, which has in many cases parallel efforts where they are looking at things like outbound investment and export control authorities, as well as the relationship between the United States and China and the exemption around the de minimis approach. This is something. If you read no other document, and you're interested in where the United States is likely to go over the next four years with respect to trade, this is a very good document to start with. We also wanted to flag a couple of other issues that either the president had talked about during his election campaign, during his transition, or since the time that he has taken office.
As you're aware, the United States does have a number of trade agreements and partnerships, but we believe that the Biden administration's approach to less market access-focused agreements and more forums for consultation and collaboration are unlikely to be the model for the Trump administration going forward. In fact, just yesterday, we were told by the U.S. State Department that the Americas Partnership for Economic Prosperity, which generally involves the United States and its Latin American neighbors, would no longer be active, and they would find other ways to engage with our neighbors in the Western Hemisphere. We are also watching what the Trump administration is likely to do on some trade preference programs, particularly the Generalized System of Preferences, which has expired several years ago but is unlikely to be renewed going forward, or the status of the African preference program known as AGOA.
We have already seen action on the Trump reciprocal trade, or I should say action similar to that called for in the Trump Reciprocal Trade Act, which was a legislative proposal by the president during his campaign to allow the president to issue reciprocal tariffs. We also expect continued significant activity around export controls, and we are likely to see continued enforcement of the U.S. export controls. We do believe that there is likely to be pushback from the United States on the climate control or carbon control measures implemented in places like the European Union. We are not clear, though we know questions have been asked around the subsidies and grants made under the IRA and CHIPS Act programs under the Biden administration. Lots to keep an eye on.
As I mentioned when I started, we don't have a crystal ball, but these are the things that we are watching, and we're happy to communicate them to you. I'd now like to turn it over to my colleague, Alex Chen, who will kind of pull this all together for you and maybe give you some hints.
Yeah. Thank you. Thank you. Thank you, Madeleine. Thank you, Brenda. So actually, I think this is the last slide. So I appreciate everybody's time today morning. So we feel that it's important, including you and the Expeditors. So we should have certain of their principles. First of all, I think we got to check and trace those trade developments. So I think many of you may already be doing this. Maybe before you go to bed, you check the email, check the news, see what has happened in the States.
The next day morning, you will see, hey, whether the Chinese government is going to take some actions, right? But however, we have to understand that if one side initiated any action, which subsequently will cause another side's reaction or retaliation, and besides, we see that there are so many regulations, policies, changes, kind of the orders, those contents. I think it's most important for us is trying to understand the impact, try to understand what's the impact on the execution level, and try to understand is that what is the ripple effect, so certain of the trade regulation changes is going to cause a kind of the air market, ocean market price change. It's also going to impact your whole supply chain. Okay, then we have to understand that it is an ongoing process.
It could be a very hot topic in the whole year, and it just started. It's a marathon, it's not a sprint. As a company or as an organization, we do suggest you to look at your internal strategies, whether you have established your response mechanism, whether the response is quick enough, and there has flexibility. The most important is that it's got to be very compliant. Nowadays, I think we have many resources, right? We have governments, websites, general trade news, and the trade law firm, maybe external consultancy, a podcast, a webinar, seminar, offline, online. Also we can use some AI tool like ChatGPT and DeepSeek. As Expeditors, I think that if you have additional support, you want additional support, just feel free to reach out to your account manager or local sales because Expeditors, we have a Tradewin.
Tradewin is a subsidiary company of Expeditors, specialized in global trade and their customers' compliance consultants service. We also have Onyx. Onyx is a part of Expeditors. They are specialized in geopolitics and the macroeconomics consultancy. So just feel free to reach out to us if you need any support. Yeah. Okay. So I turn over to the host, Wang Ping.
Thank you very much, Alex. And thank you, everyone, for joining the conference today. We appreciate, once again, speakers Alex Chen, Ted Henderson, Madeleine Veigel, as well as Brenda Smith. We do have a lot of questions that came along during this session. I believe most of them have been answered. Just around for the speakers, do you think we still have another one minute to take some of these questions? Okay.
So if not, then what I will do is I noted that there's a few key topics that have been repeatedly asked. One is relating to the country of origin. And there's also questions relating to export out from Vietnam, anti-dumping. So all these questions, we have already taken note of that. And please be sure that your Expeditors' key contact will follow up with our audience, and you will be able to get our responses from there. So once again, thank you very much for joining our session today. This is part of a webinar series. And stay tuned for our next session, more to come. Thank you very much. And back to you, Gabby.
Thank you.