Good morning and hello, everyone. We welcome you to Expeditors U.S. Customs Market Update. We appreciate you joining us this morning. We are going to go ahead and get started with some of our housekeeping items as people start to log on. My name is Samantha Hurst, and I'm one of our managers for marketing and bids here with the Expeditors Americas region. I will be supporting in the background, as well as a few of my colleagues, if you have any issues during today's webinar. Today's content will be about 55 minutes, though we're going to try to answer questions as we go. If you will submit your questions in the Q&A window, we will answer them as we can. As I said, we typically have quite a few of our Americas Customs team members on to support those.
One question we always get is, how do we receive the slides and the recording? As typical, you will receive a short feedback survey after the event today. It typically will go out within two hours of the event wrapping up. Once you complete that, you will be given a link to the landing page where you can find the recording, its passcode, and the slides. Finally, also people ask, how do we get more information? Maybe this is your first time joining a webinar with Expeditors. You can subscribe to receive all of our invites through this QR code, as well as global market updates. Now I will introduce our speakers. These people are certainly no strangers to many of you who have joined our customs market updates throughout this year. We have with us Madeleine Beagle.
She's our Senior Director of Customs for the Americas. Brenda Smith, who is our Global Director for Government Outreach. Ted Henderson, who's our Senior Advisor for Customs. Stephanie Holloway, who's our Regional Manager for Customs in the Americas. I will pass it on to them. Ted, take us away.
Thank you so much. Thanks again, everyone, for joining the call today. Just a real quick reminder that we are not a law firm. We are a global logistics company. As Samantha pointed out, the people who are leading this webinar today, we're all from our customs product team. Our goal is to provide information. We are not legal or financial advice. Hopefully, you appreciate this information and you do find it helpful. Let's take a quick look at the agenda as we get a feel of how we're going. Typical flow of our webinars for those of you who've been on before. It's really just the major topics that we want to highlight, most recent trade actions to start. We'll spend some time looking at what's on the horizon.
We're going to really try to spend some time speaking on a couple of our frequently asked questions that pop up in the course of probably the last month or two. There were a couple of announcements from President Trump yesterday, one with potential for future relief for those of you who are related to the auto sector, and certainly one for potential refunds for a number of folks. We will be discussing those as well. We work frantically afternoon and evening to try to distill out the key information from those announcements for you so we can speak to that today. Again, just remember, we're speaking to information that's based on public announcements, either from President Trump, U.S. government agencies, other government agencies around the globe. We try not to offer our opinions, our speculations.
We try not to be the magic eight ball and think, hey, this is really where things are going. We just try to focus on the facts in front of us. Definitely, we try not to speak to any political issues. We're just, again, trying to inform you with facts, and hopefully you can make better decisions about your business. Real quick reminder, if you're coming on now, please post your questions in the Q&A box, and we will do our best to get through them as we go. One of the common questions that we always answer is, how do I get the slides? You will get an opportunity to receive them after this presentation. All right, snapshot of what's going on in the world right now with our current trade actions.
The first bullet point on this slide is not necessarily a tariff action in and of itself, but perhaps giving us some guidance on future tariff actions. This is about the America First trade policy reports that President Trump, one of his first executive orders, was an issuance to a number of government agencies to do reporting about certain key issues that are relevant to U.S. trade, import and export from a variety of areas. Those reports were due in earlier this month. Those reports are in. An executive summary has been published on whitehouse.gov. A little bit later in this discussion, Brenda will be talking about it and some key points from that. Beyond that, then we do speak to the major tariffs.
Whether that's the IEPA tariffs for China, Hong Kong, Canada, Mexico, and then the Section 232 tariffs that are in place right now, we'll speak to those specifically and the auto later. Of course, the reciprocal tariffs. We'll have a little discussion about that as it goes. The next slide shows us a view of things that have happened in April and things that we see coming up in the next few days, and certainly later in the summer. The Section 232 tariffs on automobiles, light passenger vehicles, things like that, light trucks, that went into effect at the beginning of April. At the beginning of May, we're going to see the counterpart to that related to automotive parts. We'll talk a little bit about that in a bit.
You see a cluster in kind of the left middle of this graph that speaks to the reciprocal tariff actions and how they were at one point at just a basic 10%. Then we saw a bespoke rate for certain countries coming in, and then we saw most countries go back to 10%. China, of course, went up to 125%. We will touch on this a little bit as it goes. Really, the things to think about, which we are going to spend some time on, are the actions that are coming up at the end of this week, Friday and Saturday, the de minimis removal for China and Hong Kong, and then again, the auto parts tariffs that come in. Other key thing to just keep in mind, and we will certainly speak to the reciprocal tariffs, is in July, that's the end of the 90-day pause.
We're expecting a lot of activity with a number of other countries in the U.S. to sort out where those reciprocal tariffs end up. All right, speaking of reciprocal tariffs, let's take a quick look at where we're at. For those of you who were on our webinar two weeks ago, I said this was the big darn deal. Of course, in the middle of our webinar, President Trump made an announcement on Truth Social that made it an even bigger deal at the time. We're still in the midst of this as it goes. Right now, we are in a position, as I said, where reciprocal tariffs are in place. They're in place under the International Emergency Economic Powers Act. It's based on the national emergency declared by President Trump related to deficits with other countries, trade deficits primarily.
The tariffs that are in place, by and large, are 10% for all countries, kind of a universal tariff, if you will. For imports from China, Hong Kong, Macau, we're at 125%. There is some good news, if you will, within these tariffs that there are a number of granted exemptions. Those are on the right side of this screen as you look at it. We see that there are certainly kind of that basic idea that materials that are being donated or information materials are generally exempted under these tariffs. We do not see the stacking, the cumulative approach on reciprocal tariffs in certain areas.
Steel and aluminum, auto parts, there's a whole annex two, generally is how we speak to it, that's related to the executive order that identifies a number of items that are exempted, if you will, from the reciprocal tariffs. Canada and Mexico, in the eyes of President Trump, stand on its own, and he doesn't lump them into the reciprocal tariff activity that all other countries are facing. The IEPA tariffs that Canada and Mexico are subject to, those stand on their own and are not cumulative with the other reciprocal tariff actions. You've got some other things that are in there that really are not quite as significant, things like the countries that are under column two duty rates already.
The thing that we really, I think the easiest thing to continue to say is we're incredibly uncertain as to where things are and where they will go right now. We certainly know these are incredibly impactful, staggering financial hit to importers, particularly with goods from China. We've seen that with our top importers into the United States. The jump in duty payments has really just been staggering. People now are into the billions annually of duty payments based on these tariffs. We do not know specifically how long these 10% tariffs will be in place. We just know that there's a 90-day pause that we talked about until July. Brenda in a bit is going to talk about where we see the path forward on reciprocal tariffs. I just keep reminding folks about this, that there's a couple of key things we have to think about.
Just because the U.S. ultimately will come to an agreement with a certain country on what that final reciprocal tariff will be, don't expect that the duty rate will automatically go to zero. We have to keep in mind that the U.S. already started out with a specific rate for a country. If you remember, for that brief one day of April 9th, there were specific rates for a number of countries, 60 countries out there in the European Union. Let's take Vietnam as an easy example. The specific rate for Vietnam that's suspended right now is 46%. We have to anticipate that at the conclusion of the negotiations between the U.S. and Vietnam, we might see a duty rate from anything from zero to 46%. Honestly, if the negotiations don't go well, we might see a duty rate greater than 46%.
Don't just think that our starting point, if you will, for negotiations is 10% and things can only go down. That's not necessarily the point. The other thing is, and I think Brenda might touch on this, we really don't know how the administration will implement these duty rates. We don't know if they're going to be on a country-by-country basis, multiple countries dropped at one time, or if we're just going to wait till the end of the 90-day suspension period, and then we'll see the new country rates. Again, lots of uncertainty around this. Things continue to change in this area. We see exemptions expanded a little bit just recently on this. The best we can say is hang in there on this one.
As your customs broker or logistics partner, we're doing all we can to provide information and impact analysis and trying to help as we can. Honestly, we're all in this together. We're all facing the same amount of uncertainty and, quite frankly, the stresses of managing imports of goods in this environment that honestly is 10 times more complex than any of us have ever operated in. Hang in there and watch for some new announcements. I just mentioned that we saw an expansion of the exemptions, and I want to talk about that when it comes to the semiconductor exemption that came up. If we look on the next slide, I want to highlight the fact that there was a presidential memorandum that came up on the 11th of April that clarified the specific, as you see the print from whitehouse.gov.
It's a clarification of the exceptions under the EO that basically applies to reciprocal tariffs. There was an exception already under Annex Two that spoke to semiconductors. On the 11th of April, we saw a new definition, if you will, of semiconductors provided by the White House. That new definition of semiconductors encompassed things like smartphones, computers, smartwatches, things along that line. There was an increased list of harmonized tariff schedule numbers that came out as part of this. Just again, to highlight in this particular instance, the president's orders related to tariffs, they can be modified on short notice. It's absolutely critical to stay informed, seek out expert assistance, make sure you understand how each of these actions might impact your business, and quite frankly, be ready to pivot rather quickly as things go.
Next thing I want to touch on is the de minimis exception that will be going away for goods from China and Hong Kong here in a day or two, two days, I guess. We've talked about de minimis for a long time. It's in the public news quite a bit. Congress talks about it. The president talks about it. A number of companies are certainly built around the e-commerce business. This idea that low-value goods, goods valued at less than $800, can be brought into the U.S. without any type of formal entry duty payment. They also get to avoid the trade remedy tariffs, things like that. We saw earlier in the original order from President Trump related to the IEPA tariffs based on the fentanyl emergency, there was an effort to block the exemption for goods from China and Hong Kong.
The de minimis exemption to take that away. That ban was in effect for basically a few days. The system that deals with the total process and the system from the government to the logistics providers to everybody were overwhelmed because, as I remind folks, there are about four-plus million goods that come in daily under the de minimis exemption right now. About 70% of them come from China and Hong Kong. They come through the postal network. They come through couriers. They come through heavyweight freight forwarders and different providers. There are a number of mechanisms about how these goods come to the U.S. Again, to suddenly take away the opportunity for the de minimis exemption was a bit too much for the system to handle.
After a couple of days, President Trump amended his order, which allowed goods to use that de minimis exemption until there was a point where the Secretary of Commerce could certify that the government was ready to manage this. The government is now ready to manage this. We have the new order that goes into effect on the 2nd of May. That order does stipulate that no goods from China and Hong Kong may use the de minimis exemption. They will have to be entered. If they're not moving through the postal network, they will have to be entered by a party that's qualified to make entry in ACE. ACE is the Automated Commercial Environment that CBP operates. We, as a customs broker, transmit our declarations. All brokers do through ACE. It has to be entered through the system.
That means no paper declarations, as customs has interpreted this. Goods are going to be subject to all applicable duties. That is trade remedy duties, the basic most favored nation rate, all of that sort of stuff. Customs did make it a little bit easier, if you will, for everyone to process it under this and expanded the use of informal entries to allow anything and everything, if you will, even if the goods are subject to trade remedy tariffs, to be entered under the informal process if they're valued at $2,500 or less. The postal network has their own rules and ways that have to be managed. That is really just due to the fact that the postal service operates under the international postal codes, plus they have to operate under customs tariff codes.
Bottom line on this one, we do not anticipate this one to be walked back or suspended. The government, customs has made it very clear. I was on a call with CBP last week as part of a working group in this area. They state they are firmly prepared to move forward on this. I would anticipate that we will not see another suspension on this. I think Brenda will mention we potentially will see an expansion of this de minimis exemption or expansion of the ban, if you will, to other countries. With that, I will pass it along to my colleagues to talk about some of the interesting things that did come up yesterday. Stephanie, away you go.
Thank you, Ted. Okay, a lot of questions are coming in that are directly related to things that happened yesterday.
Let's shake ourselves off and see if we can follow this. First of all, we have what we're labeling sector tariffs because these are certain industries that the Trump administration is targeting to apply additional tariffs. President Trump himself has been very clear about different sectors he is honing in on. I'll be showing some of those in a future slide as well. This is just kind of the first one that they have done outside of steel and aluminum. At the end of March, I think it was an executive order was issued on automotive that covered the automotive sector. It broke it into two parts. It was autos and auto parts. Autos is passenger vehicles and light trucks. What that did was put a 25% tariff on all of those specified HTS numbers. That started April 3rd.
There were two exemptions that were given. First of all, if there was an HTS that you were using that did not actually meet this criteria, you can use an exemption. Or if the vehicle was manufactured 25 years ago. Okay? They also in that said, "Hey, we do want to exempt the U.S. content portion from being tariffed or taxed at 25%." At this point, the Department of Commerce has not given us that process. For all practical purposes, anyone who is importing a passenger vehicle or a light truck right now is paying that 25%. We are standing by. That was one of the things that Ted showed on that timeline slide. We are waiting for a way to handle this U.S. content in vehicles that are being imported. Okay? Secondly, this Saturday is May 3rd.
May 3rd is when auto parts are going to go on. Auto parts are going to be at 25% as well. They also have some exemptions that were given in that original executive order at the end of March. That was an exemption for goods that do not meet the criteria, which is fine, and an exemption for USMCA qualifying auto parts. That was until the Department of Commerce gives a process for the U.S. content portion. As of right now, we will be able to not pay the 25% on anything that is USMCA qualifying. This was the big twist that came out yesterday. There was a proclamation issued. There is a link here. If one of my team members can throw that into the webinar chat, that, like I said, is a bit of a twist.
This was covered extensively in the news yesterday leading up to the proclamation being published. Essentially, in a very small nutshell, automakers who build cars in the U.S. are going to be able to seek an import adjustment offset amount. That is the technical way that the administration defined it. Essentially, people keep using just the word credit. Okay? However many vehicles you're producing in the U.S., you will be able to request it is a percentage portion of the sales value that will decrease over time. You can use that credit to apply it to your auto parts. Okay? In the proclamation, you can see there is going to be a number of different things that automakers will need to provide to the Department of Commerce. Right now, the Department of Commerce needs to put that process together. That is not done.
This proclamation just came out yesterday. Okay? This is going to be something that all of us should be watching very closely, especially if you're in the auto parts business. The other twist that had not been reported in the news before the proclamation came out is that automakers who build cars or light trucks in the U.S. could offer those credits to their suppliers if they import. Okay? This is something if you import auto parts and you're selling them to automakers, this is something that I'm sure your legal teams were already jumping on and trying to figure out how those allocations are, seeing if your company can get some of that credit. I have no idea how this is going to shake out. This is less than however many hours old at this point. We will see.
If you're in the auto parts business, you absolutely should take the time to read that proclamation because it is going to be of utmost importance for you to understand that. We also learned, not from this proclamation, an executive order, but I will just make the statement, steel and aluminum derivative duties are not going to stack on auto parts. That was a big open question that people had. We got that answered yesterday. Those will not stack together. The auto parts 25% will win. We don't know how we're going to do that operationally yet, but we did get that question answered. FTZ products, these are kind of the standard things that we typically have been seeing in the executive orders. FTZs need to come in as privileged foreign. No drawback is available.
Lots happened in this space, but also not a lot because it was a lot of words. We do not have the process from Commerce. We do not know how we are going to operationally apply this. It is just really saying this is the direction the administration wants to go. There are a lot of pieces that still need to come together. Okay? With that said, this I think is hopefully kind of a basic way to look at it or think about it if you are in the auto parts space. We have certain automobile parts. That box gives what the exact definition was in that original executive order. I also have the link to the Federal Register notice on this. When you get this slide deck, you will be able to go look at that yourself. Okay?
On May 3, although we do not have the HTS numbers available, this is what we have been told that we will use and how the breakouts will occur. We will have one classification for qualifying auto parts. We have another one that is an exemption. It is essentially a 99 number we are going to use that has a free duty rate associated with it. It is saying I have goods that are in this HTS list, but they are not auto parts. There is another one. It is actually the same HS number, but it is saying these are USMCA qualifying. That will give you that 0% for USMCA qualifying parts for now. That bottom box or those boxes down there I am trying to show is at a future date. I have no idea if that will be Saturday or five weeks from now or five years from now.
I have no idea. USMCA auto parts eventually will not be exempt from tariffs. Okay? You will need to pay 25% on the non-U.S. content. Okay? Like I said, again, we do not have a process for this. The Department of Commerce has not put out a process for this yet. Once that happens, we will have to pivot and adjust. Okay? I can only imagine how many questions are in there about auto parts. The other executive order, I guess the other was a proclamation. The other executive order that got issued yesterday addressed something that is called HTS stacking. Jared, if you do not mind throwing this link in the chat, it is important to read this. You can start about halfway down if you would like. Start at the first parenthesis, one, and parenthesis. That is where it gets good and helps explain this.
Fair warning, you're going to need to get out a pen and paper to track it, but you can do it. I have confidence in you. They issued this executive order. The intent is to prevent the cumulative effect of overlapping trade remedies. Okay? These are often called stacking. Okay? The chart below outlines the scenarios eligible for this treatment. First and foremost, when you read the executive order, which I absolutely hope you do, you will see that not all trade remedies are on the table. Okay? The original Section 301s are not on the table. Reciprocal tariffs, not on the table. Anti-dumping, not on the table. There is a very small subset of trade remedies that are on the table, I guess, to keep using my terrible analogy for this executive order. Okay?
I put them in this chart with some of my colleagues so that you can clearly, hopefully, see what opportunities you might have for a refund and how we're going to need to do entries going forward. If you have paid IEPA, fentanyl, and immigration duties, that's Canada and Mexico only, not China IEPA, and you paid Section 232 steel or aluminum, then you could get refunded your Section 232 steel or aluminum. In that scenario, fentanyl and immigration is going to win. Even though they're the same duty rate, that's the one that is going to win. The other one will not be applicable. The only time that those overlapped was starting March 12th onward. The next scenario is IEPA, fentanyl, and immigration duties for Canada and Mexico only, and autos.
If you paid those from April 3rd, right, because that's when autos started, onward, you will be refunded the IEPA, fentanyl, and immigration duties, which is 25%. Same percentage as autos, right? It's just 25, 25. So those are what is on the table to be refunded. I did put the other scenarios in here that technically could occur based on the parameters of the executive order. From a practical perspective, they don't actually occur because there's no HTS overlap. I put them here because I went through the process similar to many of you guys. You're like, "Hey, she didn't cover this scenario." I actually did. I wanted to make sure everybody knew that we thought about those scenarios. They're just not practical in application. Okay? With that said, this chart does not include auto parts because auto parts do not start until Saturday.
I do not know what will happen between now and Saturday. CBP might provide us a way to make sure that these are not stacked. We might stack them. I do not know. Right now, this really just shows what is on the table. Also, CBP has until, I think it is May 16, if I remember right, to come up with a process. Right now, we are going to need to, as a broker, keep filing the way that we were filing until we get instructions from customs on how to do this. Because if we start trying to leave out some of these HTS numbers, we could potentially get some rejects depending on how it sorts out. We need to figure out what that looks like. Also, how we are going to get our customers the refunds. More to come.
This is a very dynamic situation right now. We look forward to making sure that you guys get your money back and then also get this implemented. The biggest thing to take away from this is that there are certain trade remedies that will be eligible for this anti-stacking, but there are many others that will not. I will touch on those in a little bit. Brenda, with that said, what is on the horizon?
Stephanie, I do not know how I can top yours. I am not sure that anybody has brain space left to think about what might happen over the next few months. What I want to try to do this morning is to give you all a bit of a cheat sheet just so you have this in the background. As Ted mentioned and he walked through, was what had already happened.
I want to give you the cheat sheet on what may happen. There is a tremendous amount of 232 activity underway. We'll talk a little bit more about the maritime action on cargo ships and ship-to-shore cranes. Not going to touch too much on the potential tariffs associated with sales of Venezuelan oil and gas. We know that's out there. We haven't seen the Secretary of State, though, flag any countries for additional duties because of their interaction with Venezuela. We do want you to keep in mind that there are, let's see, seven 232 investigations underway, which could result in duties. Some of these you've heard about before: semiconductors, copper, wood. There are two new ones in the 232 world: one on heavy trucks and parts that was announced on April 22nd, and one on critical minerals also announced on April 22nd.
Those two 232 investigations are looking for feedback from the public. Those comment periods close May 16th. If that's your industry and you have something to say, be sure you get your comments in to the Bureau of Industry and Security. All right. Let's move on and talk a little bit about where reciprocal tariffs are. Just as Ted noted, April 2nd, Liberation Day, announcement of not only a 10% duty rate, but bespoke or custom tariffs on over 60 countries. Those were paused shortly thereafter. What we have learned over the last week or so is that there are a number of countries, over 60, actually, I think over 75 was the last number that I've heard, that indicated to the U.S. government that they wanted to engage in trade negotiations. There were approximately 18 that actually came in with a documented offer.
Those are the 18 that the United States Trade Representative wants to engage with on a formal basis. There was a great article over the weekend from The Wall Street Journal, which basically indicated that USTR has set up a process. They have a template for their trade agreement that they'd like to see as the foundation for these negotiations. In that base trade agreement, they want to cover things like tariffs and quotas, non-tariff barriers, as well as other discriminatory practices like a digital services tax, some practices associated with rules of origin, and then the general category of economic security. It looks like they will be meeting with 18 of those countries in the next six weeks to try to reach agreement. If I was a betting person, I would say that the negotiations with countries like India, the U.K., Japan, and Korea are the furthest forward.
We've seen that in the press that there have been ongoing discussions. To be honest, the big elephant in the room are the talks with China, with the Canadians, and with the Mexicans. China, a phase two deal with China, is on a separate track. We believe that the negotiations with Mexico and Canada may be happening in the background, but the bulk of those negotiations will be part of the review of the USMCA and any subsequent renegotiation. All right. Let's move on and talk about the recent Federal Register notice issued by the United States Trade Representative, which was a result of the Section 301 investigation on China's maritime and logistics industry. The focus of this Federal Register notice was to implement new fees on the activity of Chinese-owned and operated ships and Chinese-built ships.
It may have caught your attention a couple of months ago when we saw proposed fees of $1 million to $1.5 million per port visit. That structure has changed slightly. The details are on the slide. I won't walk through all the details. The bottom line is these are fees that will be charged on ocean carriers and collected by U.S. Customs and Border Protection. We don't know yet because we haven't gotten guidance from those carriers whether there will be a pass-through of those fees to importers. They will not start the collection of these fees. CBP won't start the collection until the middle of October. We will likely see additional operational guidance on how those fees will be collected. Stay tuned on those.
The other part of that Federal Register notice was a proposal to increase the tariffs on Chinese-produced ship-to-shore crane and other cargo handling equipment. The thing I want to call out here, and they are looking for comments on these due tariffs. The thing I want to call out here is that it is not only on goods manufactured in China, ship-to-shore or cargo handling equipment manufactured in China, but by Chinese-owned or Chinese-controlled individuals. That is something that I have been expecting to see from the Trump administration. For example, if you have a factory in Vietnam that is owned by a Chinese individual that maybe previously was in China but has moved into Vietnam to avoid some of the China tariffs, the Trump administration believes that those should be subject to a China tariff rate. Watch for that. Let's see how that plays out.
It is something that should be on your radar screen. Lastly, we're going to speak about the America First trade policy reports. Ted noted that on Inauguration Day, the President asked for analysis and recommendations from a number of federal agencies. We have not seen those final reports from the agencies that were due on April 1st. In the report from the White House summarizing those reports, there were six areas that struck me as ripe for additional activity, whether it is additional duty rates, a change in process, increased enforcement. Those should be no surprise to you, things like the USMCA review and renegotiation, a broad swath of new trade agreements, some changes in the anti-dumping and countervailing duty process, including the self-initiation of anti-dumping cases. There is a call for ending the de minimis exemption.
We have already seen those changes that will take place later on this week. I would anticipate that anything that is not coming from China that still has a de minimis exemption is likely to be closed in the next couple of months. There is a focus on a phase two agreement with China. Finally, additional Section 301 investigations on China. All of these things should be on your radar screen in that brain space left to you to think about the future. With that, I am going to pass it back to Stephanie for more good information.
Thank you, Brenda. Okay. You guys, I tried to do the impossible, which was provide a visual on tariff stacking. I would like to give you all of the disclaimers on this.
Every good visual falls apart at some point right now due to the complexity of how these tariffs are applied. But hopefully, this will give us a little bit of a grounding spot. The first five levels, which is an amazing thing to even say, are fairly straightforward. The top level, we have a base tariff rate. That's the HTS number that we've always used that has an associated duty rate with it anywhere from, of course, free to, well, I don't know what the top end is, 40-50% for just a normal HTS number. If you have a free trade agreement, that's where you would apply that, and it would impact your base duty rate. We have the layer of anti-dumping and countervailing duties. Of course, those have not gone away. Those used to be big numbers that shocked us.
Boy, they don't anymore. We have this green bar that I'm showing as 201 active cases. Those aren't super prevalent or super popular, not popular. Legal trade basis is a popular thing. We're not seeing as many of those right now. These were actually the very first trade remedies that Trump rolled out under Trump 1.0. It was washing machines and solar cells for anyone here who remembers all of that. The layer four is the Section 301 forced technology transfer. I had to start using the full name, and I started asking people in the chat about this. It's like, you can't just say 201 or 232 or 301 anymore because there's so many of these cases. I'm really trying to make sure that we're using the full name.
Section 301, the forced technology transfer, once again, this is a trade remedy from the original Trump administration. Biden actually built on it. This was where he put on syringes and face masks and semiconductors and batteries and electric vehicles. All of those, of course, are still flowing and stacked. Now we have this layer that is a five, well, what I call five. I broke it into two because it's a little bit, this is where things start to get a little bit hairy. We have the IEPA fentanyl duties for China and Hong Kong, right, which currently are at 20%. Then we have the IEPA fentanyl and immigration duties for Canada and Mexico, which are also at 25%, or also at 25%, 20% for China and Hong Kong, 25% for Canada and Mexico.
This is where, like I said, things get hairy, and any good visualization falls apart. Let's go to the left side. The left side is the reciprocal tariffs. Okay? IEPA fentanyl for China and Hong Kong can stack on top of the reciprocal tariffs, and we are seeing that today. Okay? That's where China and Hong Kong right now are 125% or 20% for fentanyl and then 125% for reciprocal. It's technically, and you'll see this in the news, most people say at a minimum, it's 145% duty rate for China. Those do stack. For reciprocals, of course, remember, reciprocals aren't on, didn't go away. Their country-specific ones are on pause. Everybody is paying the universal 10% unless you're at China and Hong Kong where you're paying the 125%. Okay? Now let's go over to the left or the right side. This is the Section 232.
When the Trump administration put out the reciprocal tariffs, they had this intent to say, "Hey, we don't want to actually double dip between the reciprocal tariffs and the Section 232 tariffs." What made it a little confusing was it wasn't just the active 232 cases. It's also all of the pending 232 cases. Okay? Steel and aluminum and auto and technically auto parts are not active yet, but autos are. Then there's a whole lot of pending cases like Brenda showed, right? We got the copper, the timber, pharmaceuticals. You guys can all read. They're right there. Okay? You really are trying to be in one of these buckets. Okay? That's what this tries to show is depending on where you are, you're going to be paying either reciprocal or 232s.
If you're Canada and Mexico, IEPA, then you don't pay any or you don't pay those. Hang on. Now I'm confusing myself. You don't pay any reciprocal. You're just over on the side there paying your IEPA. And now sometimes your 232s, but that's all up in the air now based on the executive order from yesterday. I have managed to confuse myself. We'll just keep going here. I did take a couple of minutes just for fun because this is my idea of fun is to go find a shipment where we have seen this. This is an actual real-life shipment, I promise. Have seen this progression. This importer brings in, it's like 100 textile belts. At the end of every month, we clear this entry. I think many of you guys have the same experience.
It's interesting to see as each month goes, you start off with, of course, just the old 301s and the base tariff. The next month in February, at the end of February, we had the same thing, but then we had this fentanyl transit exemption. We increased the complexity, but didn't increase the duty payment yet. That duty payment increase came in March, right? Now we are paying the 20% on fentanyl. In April, once again, turned the dial up on the complexity. Now we have a transit exemption for reciprocal, but still paying the same duty amount. I think this is an interesting visualization because it shows a bit of the slow roll that all of us are going through while we're managing the complexity of the additional tariffs and then somewhat of a lag of the duties.
I don't know if you guys are all interested in this as well. Thinking about in the future, if this company chooses to, and just like is being reported in the news, we are seeing so many people holding freight, especially out of China right now, waiting to see what the Trump administration will do. In theory, if they bring in the same shipment of belts, the belt is going to be almost twice as expensive in duties as with the actual value of the belts that they are buying. Just an interesting way to think about it and look at it. I think a lot of times as brokers, we go to the worst case and we show you this insane 19-part HTS stack. This, I think, is what most people's reality is. One other thing to go back to my example that always falls apart.
If those additional tariffs come on, like Brenda was chatting about, we're now going to have multiple 301s, right? We have the 301 Venezuela oil gas duties. We have this 301 Chinese-made port equipment duties. Of course, all of the 232s could move to an active case status. Really, who knows what other industries might be brought in under Section 232 pendings. One person asked how long a 232 case takes. Technically, on paper, it takes 270 days. Yet I think we would all be naive to think that any of that would take that long under the Trump administration. We have seen everything kind of upended and all those norms tossed out the window. I think many of these, you should expect a lot shorter timeline on them coming into force. With that good news spread, Madeleine, let me turn it over to you.
I don't know if I have any better news to top that, Stephanie. Thank you. Everyone, in this crazy environment, and because we have so many complex, as you heard from all my colleagues and as you're hearing and seeing every day, so many complex regulations and changes and tariffs being thrown at us, there's unfortunately still a lot of gray areas where we don't have really clear guidance from customs and from the government. We just wanted to take a few minutes to talk about an example and how some key principles that we are using and that we recommend maybe all of us use to help us succeed in this environment where there are still a lot of areas that aren't clear and are not where we don't have black and white guidance from the government.
One of the first things is, of course, to stay, and of course, we're all trying, staying as informed as possible. One thing to note here, when you get a copy of the presentation, you will have links to what you see here under number one. That is that customs is posting frequently asked questions and answers in regards to IEPA, Section 301, Section 232, both for steel and aluminum and for autos. They do not send out a CSMS message saying, "Hey, by the way, we just posted some new questions and answers on automobiles under Section 232." They do not do that. You have to go to their website and look at these sections and see if there have been any additions.
I recommend having someone on your teams or doing that maybe on a weekly basis because they are adding information and adding guidelines and clarity. It is not maybe happening as fast as we would all like to see, however, they are coming forward with this information, but you have to check. The second, of course, I'm sure you are asking lots of experts on and getting their opinions on some of these gray areas. Because there's no clear guidelines, you're probably getting a lot of different opinions because there are no clear guidelines. Everyone's looking at some of these areas in a slightly different way. One thing too that I would encourage is if you are getting a lot of different opinions, and it's an important question to you, send that in to CBP. We have a link here to their email address.
They will get back to you. It may not be the next day or for a few days, but they will get back to you, or they will just post the question and answer on their website. I do encourage that because it's good for CBP to see if the same people are asking the same question. I think they will at least see that, "Hey, this is an important area where we need to apply better guidance." I think one of the most important things to remember and really to ascertain for all of yourself and for your companies is what is your company's risk tolerance? Because with some of these gray areas, you really have to determine, are we going to take more of the conservative approach or path, or are we going to take a little bit less conservative path?
It all depends on your risk tolerance. What kind of risk do you want to take? Because at the end of the day, if you take a less conservative path, customs may or may not agree, and you'll end up having to do post-entry. The key is whichever path you take in these gray areas, as we are awaiting further guidance, make sure you're keeping very good records, records to support the choices or the path that you're taking. Make sure that it follows the principles of reasonable care. We've added a link here to the informed compliance guide on reasonable care and be ready to pivot. Once those black and white guidelines, if they do come out, you'll need to be able to pivot and be ready to either file post-entry or whatever it may be to make those changes or not.
I wanted to walk through an example, one that we have talked about a lot internally, and we've talked with many of our customers, and we're still awaiting clear guidelines. One example are the transit exemptions. There was a transit exemption at the beginning of February, and there was one here recently in April circulating or just right around having to do with the reciprocal tariffs. In the executive order, it states, "Loaded onto a vessel at the port of loading and in transit on the final mode of transit before 12:01 A.M. Eastern Standard Time on or before April 5th and entered for consumption or withdrawn for consumption after April 5th." That is, if you do have cargo that departed prior to April 5th, you may very well be able to take that transit exemption.
When you take that transit exemption, it means the duties, you will not have to pay those additional duties, not all the duties, but the duties specific to that time period. There has been a lot of questions and answers about this transit exemption. For one being, what's the definition of vessel? Customs has given a very specific definition of vessels. You can find it in 19 USC 1401.
It basically states, "As watercraft or other contrivance used or capable of being used as a means of transportation in water, not including aircraft." We have taken more of a literal interpretation and taken that definition to mean, "Hey, this transit exemption should be just for freight coming in via ocean." There are other companies that do not agree with that, that look at this differently and say, "Hey, this could actually be applied to air or other modes." Here is where there is a real gray area. There are no clear guidelines. However, there is a definition for vessels. You either take a conservative approach and stick with the literal interpretation, or maybe you take a less conservative approach and not stick to the literal interpretation, but you will want to have the proper backup and show reasonable care. There is also the and that has been included in this transit exemption.
There is lots of discussion about, and in transit, is it sufficient for the goods just to be loaded on board the vessel, or does the vessel actually have to be moving? I literally look at this. It should be moving, but there are other companies that look at that differently. In addition to that, there is a lot of discussion about, is it the mother vessel or is it the feeder vessel? If you take a very strict conservative approach, you may say, "Hey, it should just be the mother vessel, the last vessel coming into the United States." You could also look at this as including the feeder vessel. Again, do you take a more conservative approach or a less conservative approach?
Whichever approach you take, as there isn't a clear guideline, you want to make sure you have the proper documents and backup that you have in place in case customs asks you about this or wants more information. The one thing that we can say about all of this is we are seeing quite a bit of enforcement. If we go to the next slide, we do see, and we have seen a lot of CF28s and 29s regarding the transit exemption, the specific one at the beginning of February. That is where we've seen quite a bit of activity where customs says, "Hey, this vessel or this actually departed after February 1,st the transit exemption was applied, and it should not have been applied." We do see them looking at this. They're looking at it very closely.
Again, most of the activity that we've seen has just been with the February transit exemption. This is why it's important to have backup and records that you can show if you don't agree and that you're ready to provide customs and, of course, your customs broker. There are varying, and I know this is frustrating for many of our customers, that there are so many different opinions in these gray areas, right? We, as your customs broker, may give you one opinion. Your attorney may give you another opinion. A trade association may give you a third opinion. There are varying opinions out there. That's, of course, because there's no clear guidelines. Everyone's looking at it a little bit differently.
The most important thing is make sure that you're looking and exercising reasonable care and you've got the proper backup to support whichever path you choose to take as we are awaiting clear guidelines. We are bringing these questions up with customs. We have sent them in to customs. We've actually had a conversation with customs headquarters. They are working on a lot of these questions. Hopefully, they will come out with clear guidelines on some of these gray areas. Lastly, as we go to the next slide, see here close to time, key takeaways. These are things that we have talked about in previous webinars. To the right, you will also get links to all of the Section 232 investigations that Brenda talked about earlier and the Section 301 investigation.
Those are all the ones listed to the right are all open where you can provide comment. We have provided the links. If you are in those industries and want to provide comments, you certainly can. I will also allow you, obviously, to the left, the potential impacts. Many of these areas you have seen already in previous webinars and can review this when you look at our slide deck and just reach out to us if you have any questions. Lastly, for all of you that are customs brokers or CCS certified through the NCBFAA, this webinar is certified. We do have the certification number at the very end of this slide deck and that you will receive as well. You will be able to count this webinar for your continuing education if you are a licensed customs broker.
I think I'm coming up right to the end here. Two more minutes, Samantha. Had to rush through a little bit at the end, but hopefully. Anyway.
Madeline, I wanted to chime in real quick. Kelsey included a link. In full irony, CBP just posted some clarification on their transit exemptions. Look at that. It's almost like we call it forth. Please, everybody check that out. I haven't read it yet, so I don't know exactly what the clarification was, but never dull. Never dull around.
There's always breaking news, everyone, as we do these webinars.
Exactly. If you need a question answered, just let us know and we'll put it in the webinar. Hopefully during the webinar, it will get answered for everybody.
Yeah. Minute to minute.
Thank you all. You definitely, as always, covered a lot of information.
We appreciate customers' all of your questions. We fully recognize we still have some out there and we will work to get those answered for you. Thank you, Kelsey, for dropping that link. I have also added a couple of links because we had several questions about the ocean market as well as duty drawback. We have two webinars coming up in the month of May, one on the ocean market on May 9th and another on duty drawback, specifically focused on that May 20th. We hope you all will join us for those events as well. As I mentioned, please fill out your feedback survey that we will send you within about two hours. You will get the materials from today's event. Speakers, thank you so much for all your hard work on all of this content.
Thank you, everybody. Thanks, everybody.
Take care.
Take care, please. Bye-bye.
Hang in there.
Yeah. Thank you.