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

The below transcript has been generated by an AI system and may contain inaccuracies, errors, or omissions. While efforts have been made to ensure the accuracy of the content, the AI-generated transcript should not be considered fully reliable or definitive record.

Marcus Eeman

Hello. Good morning, and welcome to our ongoing series of tariff trends 2026. My name is Marcus Eeman, and I am a customs director here at Flexport. We have a lot of content to cover. And so before we begin, if you're new to our webinars, we wanna go through a few housekeeping items. On your screen, you see a sidebar to the right of the main stage where you can submit questions. Questions, I feel like, are a big part of a lot of what we do is we wanna hear from you. And so at the end of the presentation, we host a q and a and answer, as many audience questions as we can get through in a reasonable time. So be sure to get your question in early. In that same sidebar, you'll see a tab called documents, and this is where you can download a copy of today's slides and find other helpful resources like our tariff simulator or tariff refund calculator. Above our screen, you'll see a button called audit your customs broker. This is one of our newest AI tools that runs a complete audit on your historical customs entries. It can help identify entries with care stacking issues or estimate duties that you might have under or overpaid. Click on the button above the screen to get started. Okay. Now a brief legal note. The contents of the webinar here are based on the information at this current time, and I I do mean this current time. I'm gonna correct a a slide that was out of date. I missed it by six hours, where they where they overrode what I said. So, we'll see that here. So please know that anything we talk about is is just general advice and is not customized to your specific situation based on the information that we have at this moment. We always recommend reaching out to a Flexport expert to discuss your own situation in particulars. Okay. Joining me today, is Jenn Park, our director of trade advisory, and we are going through the following topics. We're gonna hit our latest news. What are some of the main highlights from trade, in the last couple weeks? We'll do a little bit of a deeper dive into section three zero one and section two thirty two, and what these updates meant. I try to shoehorned in a couple of these into the CPSC webinar, but we'll have a little bit more time to unpack these and talk through them in a little bit more detail. Jenn is gonna talk a little bit more about IEP update, what's the status of CAPE filings, what's happening in the court. She'll talk about that. We'll go over a few resources we have and end with our q and a. Alright. We'll get started, with latest news. With latest news, I think the first one, we're coming up to the July 1 deadline of USMCA. And before you all freak out, I would like to kinda clarify. This is a negotiation that was set when USMCA was renewed, or rather re you know, kinda reinvented NAFTA back in twenty nineteen, twenty twenty. They said, okay. We're gonna look at this 07/01/2026 and see if we wanna continue it. Regardless of what happens about this continuation decision, USMCA and the trade preference benefits there, you know, associated with that, that will continue for another ten years. So this is not the end of USMCA even if there is no renewal. But that being said, this kind of renewal and negotiation period coming July 1 is probably not gonna have any changes. There probably will not be any decisions made out of this. Going into it, it seems unlikely to do so. There are some fundamental disputes going on between Canada, Mexico, and The United States, about what kind of preference and benefits to get. The US's position has been looking to seek more specific US labor content. You know, there's a labor content provision, especially within the automotive space for USMCA. The US negotiating position is to include more specific US content. Both Mexico and Canada are opposed to this saying this is a trilateral agreement. It's supposed to boost manufacturing in any or all of our countries, not just in The United States. Canada and Mexico have also been subject largely to section two thirty two duties on metals. There have been some carve outs for the automotive space, but within metals, you know, aluminum, copper, steel, Canada and Mexico have still been paying the full amount that any other country has been paying. So these are also something that is definitely contrary to the spirit of a free trade agreement, and Canada and Mexico want to find some some form of resolution here. Another piece that The US is maybe looking is to try to unify anything of this outside of North America agreement. So we have extra tariffs on cars with China and, you know, banning their their EVs. We would like to see Mexico and and Canada follow suit. In some ways, they have, but in some ways, they haven't. And so that's another key position for The US in these negotiations. That may not happen. I think there's a larger summit scheduled for late July, but this, somewhat, somewhat artificial, but somewhat some but, you know, definitely symbolic July 1 deadline, is probably gonna pass without any update. Last, two Fridays ago, I hosted a webinar talking about an executive order that had to do with, importers of record and specifically foreign importers of record, and it was pretty broad. It does quite a few things. If you miss that, the short version is the president is saying, you know, I would like CBP to create regulations that set new requirements for importers of record and specifically foreign importers of record. US is somewhat unique, not not the only one, but I think one of three countries that does allow for nonresident importers of record to be that is countries or I'm sorry. Companies based in foreign countries, that, are importers of record legally for The United States. The administration stands on this as saying this is just a source for fraud where companies will set up sham importers of record. They'll work with unsavory customs brokers who will, you know, not do their due diligence and not have reasonable responsible supervision. And so this is their way to try to counteract this here. It's like, how can we maybe try to upstream some of this and weed out a lot of these bad actors? However, what that probably means for everybody is higher documentation requirements about organizational setups, affiliate organizations, and how maybe people buy. And I think if you are a foreign employer of record, you'll have more effects. Namely, they're gonna look for what the phrases that was listed in the executive order was sufficient tangible assets in The United States, which is a bit of a ambiguous term, and we don't have a ton of information about what it looks like. But my guess was that they might look for, US banking information, perhaps US real estate, US employees. These are things that we expect foreign importers of record may need if they wanna stay as a foreign importer of record. There are also gonna be some threats about using continuous bonds, and raising bond minimums if you are, a foreign importer of record. There's a lot to do. You can check out, our blog on this. We have a few posts about it, but we can definitely answer more of those in the q and a if you'd like. But pretty expansive order. Nothing concrete yet. Right? Those are just directives to customs to promulgate regulations, right, to set new rules about how they treat importers of record, how they review them, how they, you know, do risk assessments, that sort of thing. So those are still being crafted behind the scenes right now, and we'll have to look for those announcements from customs in the ninety to a hundred and eighty day timelines. Section one twenty two, these are the balance of trade tariffs at 10% on on everybody here. People challenged it. The state of Washington, a couple of importers challenged us, and they won at the first level of court, which is the Court of International Trade. That was the first tier. And they said, okay. These tariffs are prevented for these three or four importers of record, But the government immediately appealed to the next level up, the second tier, the, circuit court of or the circuit appellate court for I don't know. I forget the exact, standing here. But the next level up, they, said, okay. We're actually gonna let the tariffs continue to be collected until we get a chance to hear it. Regardless of this kind of slow moving court process, the one hundred and fifty day expiration date on section one twenty two expires July 24, and that will be unchanged regardless of what happens. This may just be a question of what happens retroactively. Do we see refunds for section one twenty two? That seems to be the focus of the debate, and that will probably still take some time to sort through. Finally, the I'd like to highlight again. CPSC, is coming into effect July 8. Do not, do not take this lightly if you're kind of in, you know, the spaces most affected. Toys, children's products, consumer goods, rugs, you know, all sorts of of little household articles, that are could be in scope here. Anything associated with children, children's products, children's toys, children's clothing, children's bedding, all of these things are gonna be in scope. We've we've had a few webinars on this here, and you're getting a running a little bit low on time to try to use CPSC's eFiling system. Get familiar with it. It's still not too late. It'll make your life easier if you're a heavy importer of these products. If nothing else, start to make sure you have the documents available. You probably have shipments on the water now that may end up being subject to CPSC declaration by the time they actually arrive in The United States on or after July 8. So, start assembling these documents. Do I need a child product certificate? What do these, different intended use cones mean? How do I talk about them? Okay. Deeping, diving deeply into 301 and 232. I'm gonna start with 03/2001. We have information about the forced labor 03/2001 investigation. Remember, there are two. There was forced labor, excess overcapacity. No news of excess overcapacity. When it came to the hearings, it was only about a week behind. But here we are a couple weeks later. No update on the excess overcapacity, but that could change at a moment's notice, where we where we hear more information here. But the forced labor affected just about, just about everybody with The US imports from. About 99% by value of all US imports come from, from these from these countries. There were two tiers, a 10% rate that was recommended on 13 countries plus 27 EU countries, 12 and a half percent recommended on another 46 countries. And most of those trade deal countries that we've seen before, they are on that 10% list. And right now, the USTR is accepting comments, about this saying, is this is this correct? Should we do anything different here? Should these countries be on a 10% list or a 12 and a half percent list? They're asking for those comments now. There are many, many exclusions, though, from this three zero one that they've already identified. One, unavailable natural resources, bananas, coffee, cocoa. Those things are already on exemption lists, that mirror very, very closely to that, annex two under IEPAA. Goods subject to two thirty two were also said to not be subject to these three zero one duties, again, similar to IEPAA. Critical minerals, ores, those sorts of things, chemicals, pharma, beef, civil aircraft, those things would also be exempted from these three zero one duties. And anything qualifying for USMCA or Doctor CAFTA would also be exempt from these three zero one duties. So these exclusions look pretty familiar if you think about what exclusions there were eight, nine months ago under IEPA. They look they're they're very well mirrored here as well, under the proposed three o ones. One thing that is undefined in that the USTR does seem to be legitimately seeking comments on is they're doing a tariff rate quota regime for textile imports. If any of you have been around in the trade for a while, you know that this actually may have this was very, very common back, you know, twenty years ago when China joined the WTO. They this became far, far less common, those those absolute quotas. But here, they maybe wanna do a tariff rate quota. Right? So they can bring in a million pairs of blue jeans at a 10%, three zero one rate, but maybe anything after the first million pair of blue jeans comes in at a higher three zero one rate or perhaps a lower three zero one rate or or some some other version of this here. They're actually asking for comments on this. So if you are an apparel importer, if you are, part of an association that deals with apparel, clothing, footwear even, I'd say this is a good time to kind of maybe flex some of that lobbying muscle and let the USTR know what you think and say, this is how a tariff rate quota regime should go. Here's how you should assess it. Here's how you should maybe allocate quota. And this is maybe a good chance here to try to influence government. That, those comments are open through July 6. So if you haven't used that yet, you have a couple of weeks to go, but get drafting now. They're receiving comments through July 6. There's also gonna be a hearing on July 7 that is kinda following up from this. But my expectation is that these three zero one tariffs on forced labor are gonna be fully in place before the end of the one twenty two tariffs on July 24. Maybe I'll be off by by a week or so, but I I strongly suspect the intention is for these to overlap. That has definitely been what what the administration's talked about. Okay. There's already some vultures circling, though, about is this even legal similar to what we saw with AIPA. The proponents say, well, this is a burden to US commerce, and the USTR has to investigate, but how they conduct their investigation is their business. So, yeah, even if you wanna say it's like a rigged investigation or whatever, it wasn't really a real investigation, doesn't matter. Unlike IIPA, there's some clear congressional delegation saying you can use section three zero one with an investigation to levy tariffs, and so these are legal. Third point is saying that even if it's prohibited from entry, which it you know, for forced labor products, the scale of this problem needs a different solution than prohibitions. This is this is something a little bit different, and we can't always prove it. So, the opponents, though, say, well, wait a minute. This is actually quite a bit different. And what we just saw in the learning resources case that struck down at HIPAA maybe brings back into the major questions doctrine that the three kinda swing, you know, middle middle conservative justices use in their opinion saying, is congress actually intending this to be used on every country? Are they intending to say, well, Norway is not doing enough to limit forced labor. Therefore, they deserve tariffs. Was that congressional intent, or was that clear enough, for this, like, delegation principle or major questions doctrine or some of these legal theories here? They say, no. This really this really isn't it. So they're saying the learning resources case that used a little bit of this major questions doctrine might use it again should three zero one ever be challenged because this is, in some ways, a bit of a fig leaf. Opponents of this would also say, unlike the twenty eighteen three zero one, so this is back when they, you know, hit China with 25% and, you know, list one, two, three, four, eight, seven and a half percent. They're saying there's more on the merits of this case against these tariffs. Right? Three zero one with China wasn't really challenged too much on the merits. Like, nobody really disputed the core tenants that was there intellectual property theft? Was there a clearly designed industrial policy by China to promote certain exports? The answer was yes. There was a lot of this. And so this made it, you know, unjustifiable or or or unreasonable and discriminatory towards products of US commerce because of this state led support. They had a long 200 page report back in 2018. It said, here's all the ways in which China's specific actions has burdened US commerce, cheated US commerce, and it's roughly worth about $50,000,000,000 a year. So we recommend to the president to levy tariffs worth $50,000,000,000 a year on Chinese products to kind of offset this in some ways. That led to list one and list two, which were worth about $50,000,000,000. It came directly from this report. All of that is absent here. There is no while there's some a few specifics in it in some minor cases, the connections are a little bit less obvious. They talk a lot about a few case studies saying, well, there's, you know, forced labor in, you know, Burmese rice production. And the question then is, like, okay. But then why should there be a tariff on Japan because of the Burmese rice production? Well, the theory goes is that the forced labor is lowering the cost artificially of rice exports from Burma or Myanmar, and therefore, the entire market is affected, including US exporters. Therefore, we in order to kind of offset the global conditions of forced labor that bring down the entire market, what we need to do is we need to start levying tariffs on everybody across all markets to, offset this kind of this kind of thing here. The numbers a lot of the hard numbers, though, aren't really there. They point to a lot of countries, say these countries here don't have strong enough laws in place. So the USTR is saying, well, you didn't actually have a law that, you know, looks similar to r. You flip a law. Therefore, you're skirting this. You're allowing it. You're tolerating it. You're, you know, slight somewhat even condoning it. And that's not enough. In order to offset the scourge of forced labor, we need you to do more. We need you to actually enforce your law or rewrite your law in this fashion, and that will get more of a reduction. If you're not totally convinced by that argument, I think that's probably also very common. I think that's another thing that separates this out as well from some of these other pieces here is it's very difficult to separate these three zero one investigations from the context which brought them about. These three zero one investigation on forced labor didn't really exist until AIPA was struck down by the court where the USTR, president Trump, made some pretty clear comments saying, you know, we have to replace these tariffs through other means. They made comments to that effect on several occasions after AIPA was struck down. That suggests that maybe this isn't necessarily about a fair investigation by USTR. If they're going to, you know, use some of congress's enumerated powers to, you know, levy tariffs and raise taxes, if they're gonna if the president's gonna do this, if the USTR is gonna suggest to raise tariffs here, shouldn't there not just sort of be as a replacement to tariffs that have also been ruled illegal? Is that really what the intent of this really was? Was there actually kind of a forced labor concern before this or not really? The history doesn't look good. So I think we are teeing up for another round of a court battle here when it comes to section three zero one. That's something we'll have to have to watch for. Two thirty two, changing gears a little bit. There were some adjustments made a couple weeks ago, but a lot of these were fairly narrow in scope. There were some additional reductions from two thirty two duties for products used, in agriculture, agriculture machinery production, HVAC, and residential HVAC, and also mobile industrial products, things like cranes on wheels, bulldozers, that sort of thing, and several of those derivatives. And so they qualify for this. And so they would be being many of them were reduced from, the 50% rate down to a 25% rate, or they were eligible for other types of exclusions that that we get to here. But I would highlight just a a couple notes here that some of these provisions only qualify if they're in the right chapter and they are, quote, exclusively used for the production of one of these, you know, qualifying machines that we talked about. So if it's not actually for residential HVAC, not really for you know, it's not for a, agricultural tractor, but maybe it's for a a, you know, a road tractor. You know? You have, you know, wiring kits that could be used for a forklift, but also could be used for an ATV or could also be used for, you know, a passenger vehicle, you may not necessarily qualify for some of these reductions. They did lower The US content threshold as well for all products. So before, they said, okay. If it's 95% here, you can get an extra reduction from 15 to 10% rate, and it qualifies, which is similar to some of the existing breaks here, but they just said the threshold is no longer 95%. It's now 85%, US content for these two thirty two reductions. Trade deal countries also get a capped 15% rate on those mobile industrial goods. So those bulldozers, those cranes, those forklifts, those sorts of things are getting a 15% capped rate. The EU 27, the other countries named there are, key players for that reduction. And there's also a reduction for USMCA, products as well in that mobile industrial list. And it's only it's a little bit weird, though, and this is where I have to say, once again, our webinars are only valid at the time that we that we talk about them, because in in just a few hours, this, my slide from last time was was, was superseded here. This 25%, rate for USMCA only applies to the non US content up to only 40% of the article value setting a 15% rate. And what I showed you last time I talked about this is I said, oh, what if you have a $10,000 forklift to use your HTS? It's under USMCA. I said something weird happens at 41% US content where the executive order said, well, actually, you can't take any more reductions. This code can't be used past 40%, which I thought was odd. And six hours later, CBP, maybe they saw my webinar. Hello. If you're out there, thanks for watching. I'm like, I'll take credit for it, even if it's even if it's not earned. There was a CSMS message that clarified this six hours later, and it did say, actually, no. You can't use this more than 40% of the value. This isn't something that was in the executive order, but customers did clarify yes. So what this means is that the 40% rate allows you to only pay $1,500 of duty on this, forklift, and then it stays there. So the actual correct chart looks like this instead. So which is actually let's on on the whole, let's be very glad This is a much more logical chart, than what before. It was like, why should something with 80% US content have more duty than something with 30% US con anyway, we didn't have to worry about that anymore. It was great. Thank you for customs for clarifying that. This is a very logical outcome, but just wanted to correct that, from the last webinar. Okay. With that, I will turn this over to my colleague, Jenn, here who will talk a little bit more about IEPAA, the case, the CAPE filings, all the stuff about how to give money back. So take it away, Jenn. Oh, Jenn, you're on mute.

Jenn Park

Thank you. Of course, I do that. Alright. Thank you everyone for joining today. I'm happy to provide the updates on AIPA and CAPE. And as you know, the past two, two and a half weeks have been pretty exciting in terms of some of the updates that we received and I think what we've been kind of long searching for. So, I'll start with May 27 as what has started or initiated all of the updates that we've seen. So, May 27, we saw that Judge Eaton had issued two specific orders. One is to show cause as to why the court should not remove this suspension of immediate compliance on this order that CBP liquidate and reliquidate all the IPA tariffs, right? And the second order was that he requested that Commissioner Rodney Scott appear in person to explain the timeline of when they will reliquidate the liquidated entries for the EBITA tariff. So, I think what we can gather from this is that Judge Eaton is a bit frustrated with the timeline of the refunds that are happening. I'm sure you all the importers as well you know we've gotten April 20 was when CAPE was launched. There were progress updates happening since then to the CIT explaining kind of the progress that's been happening on CAPE But I'm sure you've noticed as well there has been no indication of any future phases of CAPE. It was specifically focused on how the unliquidated entries were processing, what the update is there, and there was no mention of, you know, the liquidated entries. And I think this is kind of Judge Eaton's way of trying to push the government to do something about it. And I think it kinda worked, right? Because in the following weeks, what we saw is that not only did we get some insight as to the future phases of CAPE, but we also finally got the confirmation from the government, The US, that they intend to appeal, right? So, just going through the timeline you see that on May 29 the government does respond to the twenty seventh order, but this one is really specifically focused on the request for, commissioner Ronnie Scott to appear. What they basically said is there is no extraordinary circumstance for him to appear. What would make more sense is for Brandon Lord or Susan Thomas who has who has more first hand knowledge and can speak to the to be able to speak on behalf of the update. So it does not require the commissioner to come. But in that, what's finally provide some insight that the government does intend to appeal the April 17 order. So we do get some insight there that the appeal is coming. And then shortly thereafter, June 2, we do see that the appeal, has been filed. What the appeal is really focusing on here is that they're saying that the universal injunction is unlawful basically and that they're really focusing on the liquidated entries. I know when the appeal was released everyone thought they were very concerned does this mean CAEP is going to stop? Does that mean we have to refund all of our refunds from the unliquidated entries? Is this going to affect everything? And so I think what we want to highlight in this, is that what the government is saying is that for finally liquidated entries, CBP has no authority to grant refunds on those. And for those, what what they do require is that there needs to be an importer specific relief from the courts in order for the importers to receive these refunds. So, what they're saying is that universal injuncts should not apply to these finally liquidated entries. What will need to happen is that not only do you need liquidated entries but the importer needs an importer specific relief from the courts in order for the refunds to be issued. So it's not that the government doesn't want to issue refunds. I think it's just more of like they're arguing what the process should be in order to receive those refunds. And so that's the main argument there but that was what we got inside into the appeal is happening. You know it's more under discussion but immediately following that we do see that there are is some updates on CAPE. Right? In the CIT hearing we do see that there was kind of like an agreement that Cape progress okay finally is happening. We're okay with it. But we also got insight from The US response to the May 27 order on I believe June 4 where they say they don't want the immediate suspension to be removed for three specific reasons. One is that it's just logistically impossible. Right now, CAPE is not set up to be able to process refunds for every single entry. They had a phased approach on purpose in order to be efficient to be able to, issue refunds to importers. Two, refunds are being processed so there is no reason why that the suspension should be lifted. Right? Like, the process is working. Let it go through the process. If they were to expedite the process even further, what that would mean from a CBP perspective is that they would have to divert some resources from other teams in order for them to help expedite the process which would kind of go against the whole, you know, security mission of being able to, increase high end CBP enforcement at this time. So they're making a bit of excuses but I think that what they're trying to say is it's it's working so why why do we need to lift the, suspension in order to process it faster? Third is that, you know, they bring up once again the universal relief that, you know, it should not be allowed on importers that did not have a court specific relief. I know once this was announced and this or this was released, a lot of importers had questions as to do I now need to file a civil suit in order for or file a complaint at the CIP in order for me to receive refunds on our liquidated entries. This is still being litigated. Right? It's still not final. I think this is the government's position saying that in order for refunds to be issued on liquidated entries it only makes sense that there is a importer specific relief by the courts in order for it to be granted. However, if we go back to March time when all of this happened and Judge Eeman issued his initial order, he did make it very clear he did not want the importers to all flock to the courts, right, to file solicitors in order for them to receive refunds. He said he wanted to make it fair. He also wanted to make sure that the, the smaller, importers would get the same kind of relief as, you know, the large companies. So he wanted a level playing field. So I think what's gonna happen is that we're trying to figure out what is what's the ultimate outcome of what is the process in order to receive refunds on these finally liquidated entries. And when I clarify finally liquidated there has also been some confusion. Is it entries that are past one hundred and eighty day protest deadline or is it the entries that are past that ninety day voluntary liquidation period post liquidation? So, finally liquidated in terms of CAEP for what they're litigating here is that it's anything that's past the ninety day voluntary liquidation period. That is what is kind of in limbo at this time. And so right now we can't really say yes, file still sued. That's the way it's gonna, you know, that's in that's the only way for you to receive refunds. I think this is still being litigated. We're gonna have to find out. There's two different positions on this. But I think what we can take what we can say from a practical consideration is that, our recommendation is still the same. You should still file protests on those entries that are nearing that protest deadline or liquidated just so that you're safe on those. And then if you do want to file a civil suit, which seems to be more prevalent today than a month or two ago, you can go ahead and file a complaint at the CIT and if you just want to be safe. It is possible that these two may not be required at the end but for those that are being conservative that just want to make sure that they can, you know, cover all bases, We do see that some importers have initiated a civil suit at the CIT once this was announced. So, it is something that you may wanna consider or, you know, just kind of start the conversation if you haven't.