Over the last month, attorneys practicing International Trade and Immigration Law have held their heads and resorted to instant reproductions of Edvard Munch’s seminal work, “The Scream.”
Read also: U.S. Open to Trade Talks with China and Canada Amid Tariff Disputes
This article aims to shed light on the impacts of this rollercoaster ride implementing new tariffs by the United States’ ability to continue to attract foreign investment, and the impacts on visas for international companies and investors seeking to invest in the United States.
Legal Authority
The President appears to be relying on the International Emergency Economic Powers Act (IEEPA) to announce (and then revoke) tariffs; especially against Canada and Mexico.
To be clear, the IEEPA does not specifically mention tariffs, duties or import restrictions, but it does allow the President, after declaring a national emergency, the authority to deal with any “unusual and extraordinary threat” including by regulating transfers in foreign exchange, and importation and exportation of relevant property.
What is the national emergency, you ask? The Fentanyl crisis which was the alleged basis demanding Mexico and Canada do more to control the flow of Fentanyl at the borders when the first set of proposed tariffs were announced.
Tariffs announced against China, have also been set in the context of Chinese authorities not doing enough to curtail the manufacture and exportation of precursor chemicals.
The announcement of the tariffs was justified by language from the White House saying that Chinese officials have “failed” to stem the flow of precursor chemicals, used to make fentanyl, to criminal cartels. The White House also claimed that Mexican drug trafficking organizations have an “intolerable alliance” with Mexico’s government, and that Canada had a “growing footprint” in international narcotics distribution.
Trade Wars and Future of USCMA (NAFTA)
This current trade war against Canada and Mexico is round two of what started under the first Trump administration.
In the 2016-2020 term, Trump let it be known that he was not happy with the NAFTA trade agreement, calling it “one of the worst trade deals ever made” and wanted it replaced with a deal that he would personally negotiate for the benefit of the United States.
The USMCA replaced the North American Free Trade Agreement (NAFTA), signed in 1993. NAFTA created a free-trade zone between the United States, Canada, and Mexico, and established rules to protect intellectual property, investment, workers’ rights, and the environment.
The USMCA entered into force in July 2020 after more than two years of negotiations. The agreement created stronger mechanisms to enforce labor standards, established stricter rules of origin for North American automobiles, expanded U.S. farmers’ access to Canada’s dairy markets, changed dispute settlement processes, and set up guardrails for digital trade and e-commerce. It also introduced a sixteen-year sunset clause and six-year review requirements.
A mandatory review of the USMCA MUST be completed by July 2026. The issues that need to be resolved by Canada, Mexico and the US were already fraught without adding the newly developing issues of roller coast tariff policies and the announced plans by this President to annex Canada!
Impact on Immigration Visas Promoting Inbound Investments into the US
Tariffs on China, initially levied at 10% have now risen to 20% and remain in place. Allegedly, new tariffs are planned to take effect in April for European countries. The impact of these tariffs will negatively impact inbound investments into the US which are facilitated via various visa categories whose fates are uncertain.
TN Visa and USMCA:
The TN visa category, created under NAFTA and carried over into the USMCA, allows professionals from Canada and Mexico to work temporarily in the U.S. in approved professions such as engineering, science, and healthcare.
- TN Visa Continuity under USMCA: While Trump’s administration prioritized American job protections, the USMCA maintained NAFTA’s original TN visa terms. Canadian and Mexican professionals have continued to qualify under this agreement without significant policy changes.
- Potential Review of Visa Provisions: The “America First Trade Policy” memorandum directs the U.S. Trade Representative (USTR) to review existing trade agreements, including the USMCA, and prepare for the scheduled 2026 review. Any proposed changes to the TN visa category could involve renegotiations with Canada and Mexico, potentially impacting eligibility or administrative processes.
- End of TN? This would immediately jeopardize multiple businesses across the United States and impact hundreds of thousands of Canadian and Mexican professionals working and conducting businesses in the United States.
E-1: Treaty Trader/E-2: Treaty Investor:
The E-1 and E-2 visas are codified in the Immigration and Nationality Act (INA); therefore would need an act of Congress to repeal or significantly amend these visa classifications. However, visa holders of these categories also face severe headwinds because of the tariffs uncertainty that has emerged under this administration.
These visas are available to a number of citizens of various countries that have existing treaties of trade and commerce with the United States. One of the core requirements of the E-1: Treaty Investor is that the applicant must “be involved in substantial trade between the United States and the treaty country”.
“Substantial trade” is generally defined as a significant and continuous flow of international trade between the United States and the treaty country. “Principal trade” can be established when more than 50% of the volume of international trade of the individual treaty trader is between the United States and the individual’s treaty country of nationality.
In the worst case scenario, then, a citizen of a treaty country who has been in the US conducting their business, now must fight increased cost of doing business and potentially continue to buy goods and services are increased costs in order to maintain their business and visa status. USCIS has the right to deny any applications for extension of the E-1, if the investor fails to meet this 50% threshold.
Key Strategies Businesses can explore:
Revisit Product Classification and Valuation:
Companies, especially those that have been in business for a long time, may be using a prior classification without checking to ensure that this is still the classification that works best for products that may have changed or been modified.
Ensuring that businesses use the correct tariff classifications and properly value imports can help prevent compliance risks and avoid costly overpayments.
Utilize Trade Program and Foreign Trade Zones (FTZ):
Foreign-Trade Zones (FTZ) are secure areas under U.S. Customs and Border Protection (CBP) supervision that are generally considered outside CBP territory upon activation. Located in or near CBP ports of entry, they are the United States’ version of what are known internationally as free-trade zones.
Authority for establishing these facilities is granted by the Foreign-Trade Zones Board under the Foreign-Trade Zones Act of 1934, as amended (19 U.S.C. 81a-81u). The Foreign-Trade Zones Act is administered through two sets of regulations, the FTZ Regulations (15 CFR Part 400) and CBP Regulations (19 CFR Part 146).
Many businesses can leverage free trade agreements, tariff drawback programs, or bonded warehousing to manage or defer costs. Participation in FTZs can also help provide cost savings.
Decrease in Capital Investments in the US:
While the proposed tariffs are intended to curb illegal immigration and drug trafficking, the economic repercussions could ultimately have the opposite effect. The constant imposition and almost instantaneous revocation of announced tariffs leave no room for confidence in long-term US policy that a foreign entity or investor can use to predict the path of their investments in the United States.
I am already having conversations with clients who have decided to stall on planned investments or look to other countries for their expansion plans.
Economic risk, coupled with immigration risk, does not inspire confidence in US markets. I hope the authorities understand that the long-term financial and diplomatic costs of the tariffs and trade wars waged by the current administration outweigh their intended benefits.
Conclusion
Navigating the complexities of U.S. tariffs, particularly the sweeping changes to trade policy announced by the Trump administration, requires a tailored approach. Add Immigration to that mix, and it is enough to make you pull your hair (or what’s left of it) out screaming!
A careful analysis of the trade laws and impacts on Immigration visas for you and your employees is crucial. In an era increasingly marked by uncertainty in international markets, such a strategy can impart a significant competitive advantage for your business.
