Tariff Trends 2026: Expert Insights on the Evolving U.S. Tariff Landscape

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Marcus Eeman

Hello. Good morning, and welcome to our continuing series of, tariff landscape evolving, or the tariff landscape evolving, and sometimes it evolves quite a bit quite a bit quickly. So happy to have you all here. My name is Marcus Eamon, and I am your host today. And before we get started, we just wanna do a few housekeeping items. On your screen, you see a sidebar to the right of the main stage, and that's where you can submit questions. We always try to make a good amount of time for questions at the end, and go over all the different, little facets or nuggets just to make sure we get all the piece of information you wanna hear about. Please get your questions in early. In that same sidebar, you also see a a tab called documents. This is where you can download a copy of today's slides, and find other helpful resources like our tariff simulator and refund calculator. Above your screen, you'll also see a button that says audit your customs broker. This is one of our newest AI tools that runs a compliance audit on historical customs entries and can identify entries with tariff stacking issues to help you estimate duties you might have paid or underpaid. Click the button above to get started. Alright. Before we begin, a brief legal note. Please note that all this information provided is based on this situation at the current time and may not be customized to your specific business requirements. We always recommend consulting with a Flexport expert to discuss your own particular situation. And as you know, as if you're here, you probably know things move very fast. So only, only during this webinar will can we be certain of of some of these pieces of information. Alright. My, today, I'm joined by my colleague, Callum Coulter from our, trade advisory department who's been deep into filing the CAPE refunds today. And he will give an update, on CAPE to round out our conversation. But we're gonna start with some of the latest news. We're gonna talk about the section three thirty eight at tariffs. We're gonna talk about the section three zero one updates, which I didn't even put back into the agenda because, it happened so so quickly. But I promise we have several slides for three zero one, and then we'll end with our with our q and a. Okay. So headline news here. We're gonna start with the ones in blue just to kinda go over a little bit little bit broader. These slides in this presentation was had to get reworked a little bit a little bit suddenly this week. For USMCA, you may have noticed that on July 1, there were some announcements about how we did not agree to renew the USMCA. What this has now done is started a ten year clock. And during this ten year clock, Canada, Mexico, and The United States will meet once a year to see about how could we renew or how could we redo USMCA. And a lot of what's been happening around this is some positioning by The US and Mexico and Canada about certain asks, certain carve outs, certain adjustments they want to see made to the process. The US is the one driving a lot of these requests. In in many cases, the biggest piece of this is to create this fortress North America that is sometimes being talked about. The idea saying that if we're going to give duty free access to Mexico and Canada from The United States, we wanna make sure that they're not just, you know, doing just enough modifications to Vietnamese, Chinese, Indonesian, you know, other foreign made parts, just enough to qualify, as Canadian originating or Mexican originating for USMCA. They wanna see, refinements to these rules of origin. And I think we'll actually see a little bit a little bit more about some of this positioning and posturing, in in the next slide here. Jumping over to section one twenty two, these are the balance of payment tariffs, 10% on on every country. That ends today, July 24. And if you've been to my webinars, you know that I was predicting 03/2001 tariffs, would come into play right on as 01/22 ended. I regret to say that I've been correct, and we will talk more about those three zero one. So I will point out, though, there's maybe a little slimmer of optimism for for our importers that the CIT did, strike down 01/22 earlier, this year for a few importers saying this is not what section one twenty two is for. This is not a balance of payments dispute. The government has now appealed this, and that argument is shaping up at the, appellate level. And so we're reviewing, reviewing those cases there just to see how that's progressing, but no news to share. But you should hold out some cautious optimism for refunds for the section one twenty two duties that you've been paying for the last 150. Next, we have section two thirty two, kind of a steady drumbeat, of announcements here, from the last month. One is that copper is gonna need to have melt and pour reporting only on six HTS codes, only on, products in heading eighty five forty four, not so much on some of the raw copper inputs, copper ingots, billets, wire, that sort of thing. That has not been, been needed to report the have the melt and pour. The BIS also said they're gonna start a new inclusion process about how to include more products on the copper two thirty two going forward. Lost a little bit in the shuffle here is that on July 31 is the start of pharmaceutical tariffs, for, section two thirty two. This is going to be a 100 tariff on branded, under patent medications, that are, are not otherwise exempted, which I'll touch on in just a second here. It also exempts, over the counter medication, also exempts generics. And there was a Truth Social post, which I assume will be coming official soon, earlier this week saying that, okay. You know, there's gonna be a one year period for generics to move back to The United States. They can still come in duty free until, you know, July 2027. They pushed that back another year, so until July 2028. The exemption that, is beneficial for most of the large pharmaceutical companies here, for this is that if these pharmaceutical companies have what they call a reshoring plan that has been approved by the secretary of commerce, then they can come back to The, United States, and they get a much lower rate, either 20% perhaps or 0% depending on that particular country if they have some other kind of, pricing agreement to make sure that The US is getting the same price as any other country for those same branded medications. It was also the start of an anthracychol investigation under February, and the February investigation into aerospace, resulted in no duties being levied. So another February, case closed without, tariffs at this time. Okay. Next, we have our section three zero one. So we have our forced labor that went into effect today. We have another three zero one investigation pending on many other countries. This is the excess overcapacity. And we also saw, earlier this week that Brazil has a twenty five percent three zero one tariff coming from their multilayered three zero one investigation case that started about a year ago. This is effective 07/22. There's a brief in transit exclusion. So there's a couple of little quirks where you can have an in transit exclusion for one, but not necessarily the other from three zero one Brazil, but not three zero one, forced labor. There's a few of these here that'll happen for about another week or so. After that point, the Brazilian origin products that are not otherwise exempted pay 25%. And earlier this week, we also saw section three thirty eight finally getting used. This was something that I had thought was gonna be the main replacement for I for IAPA, but it was not. Instead, it was just focused toward Canada specifically. It affects 554, the eight digit subheadings from Canada. It's a 50% rate, but they do have a thirty day notice. So this does not go into effect until August 19. There does not appear to be an exemption for USMCA. Seems pretty clear that those are not gonna be. That was part of the announcement. If you're USMCA Canada and you're in one of these headings, you will not you will not qualify. We're gonna get into that, right now. So what are section three thirty eight duties? How are they a little bit different than three zero one duties or two thirty two? Two thirty two is national security. Right? Tariffs in place for national security reasons. Section three zero one was for unfair trade practices, which is just kind of how they run their economy and kind of maybe a broader, slightly more macro sense, what are these unfair trade practices that disadvantage, or are unfair to US, commerce. Section three thirty eight is discrimination against products of The US that is not applied to other countries. And so this came through in '3 little lists that came together. One of them was about alcohol, saying that all but two Canadian provinces since last year have stopped and allowed the or have stopped, the import and sale of US made wine, spirits, and beer. This is this has been the case for for close to over a year now at this point, since the start of this mini trade spat back in February with with Canada and Mexico and The US. And so that's one of the pieces. The other one is kind of referencing dairy tariff rate quotas in Canada. If you've been around a while, you know that dairy trade disputes between The US and Canada, is not new. This has been going on for many decades. This is just the latest chapter, of a long story, of, of of this dispute. And the third one, was for, oh, I forgot. Let me just double check here. I forgot my notes. For the automotive tariffs because, over the last course of the year, the automotive tariffs, have, or that The US has placed on Canada led Canada to retaliate. And now Canada's retaliation is the form of a discrimination where auto imports from The US into Canada have decreased considerably. As a result of that, The US is calling that discrimination against, US made auto, automobiles and so are levying tariffs. This probably is going to stack on top of the forced labor three zero one tariffs. I see no reason why it wouldn't based on a very plain reading of the tariff language. This would stack on top. So if it doesn't qualify for USMCA, there could be as much as a 60% tariff on goods of Canadian origin combined between, three zero one and this three thirty eight as of August 19. One piece I think maybe that if there's any source of of hope here is that there could be a little bit of an angle when it comes to how to challenge this in court. This will be coming for some time, though. So even if you are ultimately successful, on challenging these tariffs, this is maybe your one case here where the tariffs that have to go in place need to offset the burden or disadvantage that The US has. And so the line of argument goes, well, wait a minute. Should this necessarily be you know, should these tariffs on honey? Should these tariffs on, on planting? Should these tariffs on soybeans or or other kind of agricultural outputs, should these be offsetting like a tariff on beer? How does that relate? Should how do these things relate to, you know, tariffs on certain glass products, fiberglass? How does that relate to automotive? Right? Finding some of these connections about is it an offset of this burden or disadvantage, is is unclear. This is coming from a ninety six year old law that hasn't really seen much play in recent years. So what exactly the court will look for, we're not sure. But in the meantime, I would expect to have these in place, for some time going forward. A lot of the target areas that they go for are food and agriculture produce, not so much the inputs, but things that might compete perhaps with American farmers, things like seed, things like dairy. Those are the sorts of things where we're seeing this year. Other things the other long running, you know, trade dispute areas come with wood products, plywood, MDF, fiberboard. Those are some things that are seeing, these $3.38 tariffs as well. Also, outerwear. There's some Canadian out outerwear brands that may be feeling, feeling a bit pinched by these and a little bit targeted. And, also, hockey gear. These are kinda some areas that are not necessarily major exports of Canada. Right? Fertilizer's exempt. Energy's exempt. Anything subject to February is exempt. And I also wanna point out they avoided any kind of overlap with section two thirty two. I was a bit surprised going through these tariff list to see that they didn't do anything on two thirty two tariffs at all, and two thirty two automotive is exempted if it qualifies under USMCA. So in a way, this is seems doesn't seem like this is really trying to raise revenue from Canada. This doesn't really seem to be, you know, a major a major piece of trying to punish Canada per se, but I see this in the broader context of USMCA negotiations. I think the threat is sincere. I think come August 19, this 50% of tariff will go into effect, But I think this is also doing a second purpose of trying to get Canada to move a different negotiating position on The US, maybe to meet them a little bit closer on rules of origin or labor or environmental rules or anything that's happening in the parallel USMCA negotiation. So I see this as, you know, kinda seeing what they did not put tariffs on. They went for headlines. They went for splashy. They went for hitting farmers, but they didn't really go for the main products that The US actually imports from Canada. I think a third note that is also an interesting one that is something for the the trade wonks in the room here. Seeing that if you know a little bit about Canadian rules of origin versus substantial transformation rules of origin, you'll know that they are similar but distinct and how you may have seen previous rulings, when it came to China, how there were occasional moments where products would qualify for USMCA but still had to pay section three zero one duties. I'm very curious to see how this is actually going to play out in reality as well if products of Canada qualifying for USMCA are also now going to have three zero one duties from other countries. I'm not sure. That's a very interesting one. When these two different headings are competing, these two different statutes are competing, three thirty eight and three zero one, it seems these could apply to both, and you had to apply these two different rules. We saw this in 2020 with some of these rulings from, from from China and Mexico. I'm very interested to see if there is gonna be some some of these funny stories as well coming out of Canada with section three thirty eight in the months ahead. Okay. Three zero one. It's been a long night, I think, for most most people in trade here. And this is where the map stood back in June. This was the proposal, of what they were gonna levy for three zero one tariffs. Orange was gonna get a 10% rate. Blue was gonna get a 12 and a half percent rate. This affected roughly 99% of the import value to The United States, but this is what we actually got. Similar, but a little bit different. They introduced this concept again of capped rates, which if you remember from IEPAA was essentially like this all in, all inclusive rate. So between the MFN, the normal duty rate, standard duty rate, and this additional, you know, penalty amount of section three zero one, it would come up to a cap of 15% back then. Well, now we have caps at 10% for the EU and for Taiwan. We also see a capped rate for Switzerland, South Korea, and Japan. They have a 12 and a half percent capped rate under these three zero one tariffs as well. Many countries, those in orange, are still getting a 10% additional. So whatever the standard duty rate is plus 10%, that's gonna be their, their payment. And then those in blue are also going to get a 12% 12 and a half percent rate based on what they, above the MFN rate, so combining the standard rate plus 12 and a half percent. I circled three countries who, if I go back one slide, you'll notice make a bit of a flip here. Jordan, India, and Sri Lanka were supposed to get 12 and a half percent, but I suppose due to, you know, positive negotiations, there was the Jordanian deal announced just a couple days ago. They are now actually in the 10% category. Good for them. Well done. You've successfully worked out a deal with The United States, and it saves you, two and a half percent as well as Jordan gets some of their own, specific textile provisions exempted. Here's this, map in a much more boring, but I'm what I'm hoping is a much clearer form as well, talking about which countries, and which rates they have. But I thought another level of this would say, like, well, what is actually the impact here on the countries that we actually buy from? Fortunately, we're midway through 2026, which means we have last year's trade data. And last year was a fascinating year and probably more directional about what the future could hold as more supply chains shift toward, you know, a a tariff maximizing or rather tariff minimizing strategy. We see that, 36.39% of the import value that came to United States is gonna get the 10% rate, and only about 18 and a half percent are gonna get that capped 10% rate. So kinda seeing where these countries are and what rate they get and based on which some of the, value of what they import into The United States. You can see that the impact will be pretty significant, but you'll notice that between our, you know, the the capped rate and the additional 10% rate, some of our best and most common trading partners are getting pretty advantageous treatment. Right? They're over 50% of the value of the stuff that we import. They're getting some of the lowest rates. The countries that we import from infrequently with the sole exception of China and Brazil, they are getting this 12 and a half percent rate. What I'd also like to highlight, maybe if I go back one slide to this map, is you'll see a lot of countries here in black. Under section one twenty two, their tariff rate was 10%. Under IEPAA, their rate was 15% or maybe twenty, thirty, 40%. Today, their three zero one rate is zero. The three zero one investigation was country specific, and it mentioned 59, countries plus the 27 EU countries for 86 total countries, but that exempted all of these ones here in black. So countries like Tunisia had a very high IIPA rate. I think it was around 30%. Laos, Cambodia, Laos, and and Myanmar were also around 40% under IIPA. They have 0% today under their forced labor findings. They weren't investigated for this. They don't have it. Now as it happens, we don't import much from them.