Mexico and Canada Mostly Escape New Tariff Hit

By the time the announcement came from the White House Rose Garden on April 2, most lighting people were already bracing for impact. Another volley in the tariff wars, this one sweeping in scope, punitive in tone, and backed by President Trump’s invocation of emergency powers. But then came a twist — unexpected, modest, and quietly consequential: Mexico and Canada, largely spared.

For months, the U.S. lighting industry had lived in a kind of policy purgatory. Tariffs were coming. Then not. Then coming again — but maybe not for your supply chain. The latest April 2 directive does, at the very least, bring some clarity. Beginning April 5, nearly all countries will face a blanket 10% tariff, with higher, “reciprocal” rates — up to 25% — targeted at nations with large trade imbalances. But USMCA-compliant goods from Mexico and Canada? Exempt. For now.

The Cost of Global Dependencies

Let’s start with the obvious: America does not make LED chips. Or at least, not at any scale that matters. The United States imports the vast majority of its LED chips, light bulbs, drivers, $10 downlights and $20 flat panels from Asia. China, yes — but also Vietnam, South Korea, Japan, Cambodia, and India. The April 2 order pulls all of them into the tariff dragnet.

China, one of America’s largest trading partners, now faces a fresh set of duties: 34% layered on top of existing 20% rates — a punishing escalation that reshapes the cost structure of nearly every imported lighting product. And unlike steel or labor, there’s no easy pivot. These aren’t parts you can just source from Nebraska.

Comparisons to consider are coffee beans and bananas. We don’t grow them here. We import them. And so, when tariffs go up, the price does too. Lighting people who rely on LED components or economical finished goods from Asia will almost certainly see price increases. No amount of reshoring rhetoric can change that fundamental math.

Thing is, some North American manufacturers aren’t too concerned. For years, they’ve built out domestic assembly operations, sourced North American steel, and leaned into USMCA thresholds (which replaced NAFTA in 2020) to gain compliance.

But even those firms don’t operate in a vacuum. Their LED drivers come from China. Their chips from Japan. Their margins, like everyone else’s, are subject to the volatility of global sourcing. And now, they’re calculating whether being “mostly made in the U.S.” is enough to withstand a 10% cost increase on everything else.

Mexico and Canada Mostly Got a Pass — and Why It Matters

Lighting companies with operations in Ontario, Juárez, or Monterrey woke up on April 3 with a sense of relief — less rattled than they had feared they might be.

"For Canada and Mexico, the existing fentanyl/migration IEEPA orders remain in effect, and are unaffected by this order," the White House release said. But the White House decision to shield USMCA-compliant goods from the new tariffs was both political and practical — an acknowledgment of the deeply intertwined nature of North American manufacturing. For those who meet the 60% net cost or 50% transaction value thresholds, the old tariff rate of 0% still applies.

And steel — though not part of the new April 2 action — remains an unavoidable cost center. The 25% tariffs on imported steel and aluminum, part of a March tariff announcement, continue to ripple through the supply chain. That hits lighting poles, brackets and housings. Even U.S.-based manufacturers, hoping to escape the penalty, are discovering that many domestic steel providers source upstream from Canada — which means the tariff burden is still baked into pricing, just one step removed.

So yes — aside from automotive, energy, and potash (still not entirely clear what that actually is), Canada and Mexico got off relatively easy this time. But for lighting companies, compliance with the USMCA has become something more than a bureaucratic box to check. It’s a passport. Not just to dodge tariffs on finished goods, but to insulate against the broader cost pressures now radiating from every corner of the supply chain.

Winners, Losers, and the Trouble with Being Nimble

If the past few years have taught the industry anything, it’s that agility is expensive. Lighting companies that once touted their sourcing from “anywhere but China” now find themselves exposed — Vietnam, Japan, India, Cambodia and South Korea are all caught in the new tariffs. Some might be exploring rerouting supply chains through Mexico. Others may be negotiating dual production lines: one for North America, another for everyone else.

In theory, this kind of reshuffling could create new winners. A U.S. firm with full compliance, North American suppliers, and low exposure to Asia might see a competitive edge. But they’ll also face rising prices for steel and electronics, and pressure from customers balking at new project bids that come in 15% higher than last year.

The latest order leaves the door wide open. Tariffs can be increased, reduced, or modified at the President’s discretion. Some lighting people quietly suggest the administration is using the threat of tariffs more than the tariffs themselves — as a lever to force sourcing shifts. If so, it’s working. But the cost is real.

Uncertainty Still Reigns

Despite the newfound clarity on rates, the industry’s deeper anxiety hasn’t gone away. Projects are already being paused. Distributors are rewriting quotes. Manufacturers are hedging, hard. The move to a 10% global tariff baseline (and 25% for major deficit countries) gives everyone a number — but not much confidence.

Even with Mexico and Canada mostly spared, no one is breathing easy. Too many firms have been burned by sudden reversals. And if border-related tariffs resurface, or retaliation measures emerge from Asian partners, the calculus could shift yet again. The April 2 order was meant to bring stability. In practice, it’s just the latest curveball in a trade war defined by its unpredictability.

The Bottom Line

For now, the message is this: if you’re USMCA-compliant, you’re in the clear — sort of. If your supply chain runs through Asia, prepare to pay more. And if you were betting on stability, think again.

The industry isn’t panicking. It’s adapting. But the price of that adaptation — like everything else lately — is going up.