U.S. Tariffs and Intracompany Transfers: A U.S. Immigration Solution to Trade Barriers

On February 1, 2025, U.S. President Donald J. Trump announced a 25% additional tariff on imports from Canada and Mexico and a 10% additional tariff on imports from China (energy resources from Canada will have a lower 10% tariff)[1]. On February 3, 2025, President Trump announced the postponement of the application of tariffs on goods originating from Canada[2] and Mexico[3] for 30 days. More recently, the U.S. President has hinted that the European Union could soon be targeted by trade tariffs[4] and on February 18, 2025, he threatened to impose significant import tariffs on automobile, semiconductor and pharmaceutical imports, a statement which caused Asian stocks to drop[5].

The ability to easily access U.S. markets is key for many global businesses, especially for those now faced with the threat and in some cases, the sudden implementation, of significant U.S. import tariffs[6]. Businesses must review options for mitigating the negative effects of tariffs, as described in our firm's article which explains multiple options for doing so, including that "Businesses whose goods are assembled in a jurisdiction that is not their target market may wish to consider building assembly facilities in their target market, particularly if the goods at issue are high value. Assembling goods in the target market based on components built elsewhere, rather than shipping finished products into the target market after assembling them elsewhere, may minimize the customs value of goods that are subject to duties".

The U.S. Congress created the L-1 intra-company transfer program in 1970 in response to a need for businesses to transfer and develop personnel from abroad who were vital to the interests of U.S. business[7]. Whether used to bolster staffing of an existing related U.S. entity or to establish a new related entity in the U.S, L-1 classification continues to serve as a useful tool for companies looking to transfer workers to the U.S. as described below.

The L-1 intracompany transferee nonimmigrant classification allows a foreign employer to transfer an employee who has been working in a managerial or executive (L-1A) or specialized knowledge (L-1B) role for a continuous period of one year during the three years prior to application to a related U.S. company in a managerial, executive or specialized knowledge role. The U.S. company must be a parent, branch, subsidiary, or affiliate of the foreign company. 

Three types of roles are eligible for L classification:          

• Executive capacity generally refers to the employee’s ability to make decisions of wide latitude without much oversight.
• Managerial capacity generally refers to the ability of the employee to supervise and control the work of professional employees and to manage the organization, or a department, subdivision, function, or component of the organization. It may also refer to the employee’s ability to manage an essential function of the organization at a high level, without direct supervision of others. 
• Specialized knowledge means either special knowledge possessed by an individual of the petitioning organization’s product, service, research, equipment, techniques, management, or other interests and its application in international markets, or an advanced level of knowledge or expertise in the organization’s processes and procedures[8].

Application Criteria

To qualify for L-1 classification, the U.S. employer must:

• Have a qualifying relationship with a foreign company (parent company, branch office, subsidiary, or affiliate, collectively referred to as qualifying organizations); and
• Currently be, or will be, doing business as an employer in the United States and in at least one other country directly or through a qualifying organization for the duration of the beneficiary’s stay in the U.S. as an L-1.
  • Doing business means the regular, systematic, and continuous provision of goods and/or services by a qualifying organization and does not include the mere presence of an agent or office of the qualifying organization in the United States and abroad[9].

Application Process

Canadian citizens can present an L-1 petition to U.S. Customs and Border Protection ("USCBP") at a port of entry to the U.S. when travelling to the U.S. to begin work. USCBP has designated 14 ports of entry, including 4 airport preclearance locations in Canada, that provide optimized L-1 processing to Canadian citizens[10]. Alternatively, the petition can be filed directly with U.S. Citizenship and Immigration Service (“USCIS”).  USCIS processing times can vary, but a premium processing service is offered by USCIS for an extra fee of $2,805 USD. This service guarantees that an L-1 petition will be processed within 15 business days from the date of receipt[11].

For citizens of countries other than Canada, in most cases the petitioning company must file an L-1 petition with USCIS and if approved, the applicant must then file an L-1 visa application at a U.S. Consulate[12].

L-1 visa interview wait times fluctuate based on workload and staffing at U.S. Consulates. The U.S Department of State publishes estimated visa interview wait times on its website[13].

Duration of L-1 Status

Qualified employees entering the United States in L-1 status are eligible for a maximum initial stay of three years and requests for extension of stay may be granted in increments of up to an additional two years, until the employee has reached the maximum limit of seven years in the case of executives and managers, and five years in the case of specialized knowledge workers. These term limits only refer to time spent in the U.S. When seeking an extension of status, the worker can recapture any time spent outside the U.S.

L-1 New Office Petitions

For new U.S. operations, an L-1 new office petition is required. "New office" means an organization which has been doing business in the United States through a parent, branch, affiliate, or subsidiary for less than one year[14]. Among the evidence to be submitted with the petition, the new office petition will need to include evidence that sufficient physical premises to house the new office has been secured, and photos of the inside and outside of the premises as well as a detailed business plan should be submitted with the petition[15].

New office petitions are initially granted for a period of one year only.  Further extensions may be granted in two-year increments until the employee has reached their maximum stay (explained above).

Benefits of L-1:

• No Cap: Unlike the H-1B Specialty Occupation visa which has an annual cap, there is no quota on the number of L-1 petitions approved per year.
• No Educational Requirement: The L-1 does not require the worker to hold a degree.
• Family: The L-1 worker's spouse, and dependent children under age 21 can accompany the L-1 worker to the United States.
• Spousal Employment: Upon admission to the U.S. in L-2S status, the spouse of an L-1 worker can work for any employer.
• Dual Intent: L-1 is one of the few temporary non-immigrant statuses which are "dual intent, meaning that the L-1 holder may have the intent to immigrate to U.S.
• U.S. Presence: Operating a related business from within the U.S. may result in a reduction in cross border trade which can mitigate the damaging financial effects of U.S. import tariffs.
• Proximity: The proximity to American clients, suppliers, and vendors can strengthen business relationships and ensure growth and stability in the current challenging economic environment.

Conclusion

Other U.S. immigration visa options exist to help businesses integrate the U.S. market; however the L-1 has long served as a reliable and practical immigration option for foreign businesses looking to establish operations in the U.S. or to enhance existing U.S. operations by facilitating the transfer of key employees to related U.S. offices. In today's ever-evolving economic landscape, the L-1 can be leveraged to provide foreign businesses with a valuable means to integrate the U.S. market, navigate the complexities of international trade, and the opportunity to minimize the tumultuous effects of import tariffs.

For more information please do not hesitate to contact a member of MT❯iplus, a division of McCarthy Tétrault.

[1] White House Fact Sheet, “President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico and China” (February 1, 2025)

1. [2] White House Executive Order, “Progress on Situation at Our Northern Border” (February 3, 2025)

[3] White House Executive Order, “Progress on Situation at Our Southern Border” (February 3, 2025)

[4] BBC "EU tariffs 'pretty soon' but UK can be worked out - Trump", (February 3, 2025)

[5] The Economic Times, "Asian stocks to drop as Trump floats more tariffs" (February 18, 2025)

[6] USCIS, Policy Manual and H.R. Rep. 91-851 (1970).

[7] H.R. Rep. 91-851 (1970)

[8] Definitions of terms can be found at INA §214(c), INA §101(a)(44) and8 CFR 214.2(l)

[9] INA §214(c), INA §101(a)(44), USCIS regulations 8 CFR 214.2(l)

[10] U.S. Customs and Border Protection https://www.cbp.gov/travel/canadian-and-mexican-citizens/traveling-tn-or-l1-visa-canada (accessed February 17, 2025)

[11] U.S Citizenship and Immigration Service, "How Do I Request Premium Processing" (June 18, 2024)

[12] USCIS, “L-1A Intracompany Transferee Executive or Manager"(July 29, 2024) Certain organizations may establish the required intracompany relationship in advance of filing individual L-1 petitions by filing a blanket petition.  The approval of a blanket L petition does not guarantee that an employee will be granted L-1A classification. It does, however, provide the employer with the flexibility to transfer eligible employees to the United States quickly and with short notice without having to file an individual petition with USCIS.

[13] U.S. Department of State, "Global Visa Wait Times" (January 7, 2025)

[14] 8 CFR 214.2(l)(3)(v)

[15] Code of Federal Regulations, 8 CFR 214.2(l)(3)(v)(A) and 8 CFR 214.2(l)(3)(v)(B)