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. Welcome to our May version of our tariff trends, webinar today. Thank you so much for attending. My name is Marcus Seaman, and I'm a customs director here at Flexport. If you haven't come to our webinars before, I'm just gonna do a quick orientation here. On your screen, you see a sidebar on the right of the main stage. That's where you can submit questions. At the end of our presentations, we always try to leave a good amount of time for q and a to try to answer some of these audience questions. So please get your questions in early. In that same sidebar, you'll see a tab labeled docs. This is where you can download a copy of today's slide and find other helpful resources like our tariff simulator and tariff refund calculator. Above your screen, you'll see a button labeled audit your customs broker. This is one of our newest AI tools tools that runs a compliance audit on your historical customs entries and can help identify entries with terror stacking issues or otherwise estimate duties that might be overpaid or might be underpaid. Click the button on your screen to get started. Okay. Now a brief legal note. Please note that, all the information we talk about in this session is based on the situation at this current time and may not be customized to your specific business requirements. We always recommend reaching out to a Flexport expert to discuss your particular situation. Alright. Today, I am joined once again by my colleague, Jen Park, our director and head of trade advisory here at Flexport, and she will join me a little bit later in the presentation. Our agenda today is gonna go over the latest news and some of the headlines with an extra extra focus on what happened in the three zero one hearings over the last couple weeks here. And then we're gonna go into an update about section one twenty two, a different kind of hearing, and seeing the results there. And then finally, an update on process, what we're seeing, what can still be done. If you're not quite sure, what to do or if you've run into trouble trying to file on your own, Jen will talk a little bit more about what to do there. After that, we'll go through our resources and end with our question and answer. So we'll start with the today's news, the latest news today. And the headlines are you know, if you haven't heard, the section one twenty two, was struck down at the CIT saying that for a select group of importers, not for everybody, but at least for the a few of the petitioners that that said, hey. The the one twenty two duties are are unlawful. They said the CIT, said, you're correct. And for these three specific importers, you're right. We're not gonna you know, these are these are unlawfully collected. The government appeals right away, and that's kinda where it is now. But Jen will go into more detail about, what can what's gonna be the next steps on section one twenty two duties. Jen will also give her an update on the CAEP refund processing as well, but the kinda headlines right now is that as of 05/12, we saw that there's been 15.1 entries million entries reviewed under CAPE, and about 8,300,000 have had the IEPAA duties refunded, which, you know, are are, I guess, like, the refund has been processed. So that doesn't necessarily mean money in the bank account. That also doesn't necessarily mean that there is a net, the net amount was received as somebody wanted to as we've seen customs also trying to reclaim maybe some other duties, questioning origin, reapplying section two thirty two that may have been missed or misapplied. So that would say that 8,300,000 of those entries have had IAFA duties refunded. But whether or not it's actually shown up in your bank account in the amount you expect is maybe a little bit of a different question. Outside of this, though, we see that another, thing I'd like to highlight that the USTR, as part of the trade summit with China said they're looking to find $30,000,000,000 of Chinese nonsensitive trade to potentially exempt. This was part of goodwill and the negotiations from the Chinese summit last week, where president Trump flew to China and met with president Xi. They talked about many issues, but including trade. And coming out of it, the USTR said, okay. We're gonna try to find 30,000,000,000 of Chinese goods that maybe we could exempt from future duties. This also correlates and corresponds really well with the $3.00 1 renewal that's happening right now. So go back to 2018. The very first section three zero one investigation was starting right now, and every three zero one investigation has a four foot or a four year sunset. And so what they're seeing now is like, okay. We're gonna have to review these original list one, these original list two, section three zero one duties on China. We maybe see some additional exemptions given. So what does that mean? Unknown. But it is your opportunity to make comments. If you think that your imported product is, not, you know, sensitive item in trade, you don't import semiconductor steel, you know, anything probably set up to a dumping order might be might be a little bit a tougher tougher story. But if you have other things that you import from China, this could be a possibility for negotiation. In return, China agreed to keep buying agricultural products and place order for, American engines or in, for for airplanes as well as completed airplanes. DPSC is moving forward still to their July 8 launch. I'm really hoping this isn't the first you've heard us talk about it. I think we've been mentioning this since, I think, October, or November. And you may be and if you're definitely in the loop, you've probably been hearing more of it before then. But, there is a new message set, and it covers a very wide variety of products. So this is a new PGA declaration that is coming down. CPSC has been moving forward over the last couple years with, you know, first, some some sort of electric or, electronic integrations in the ACE system, but now they're gonna say, okay. Not only are we gonna review it electronically, we're gonna make you send us data every time. So if you're not sure if your products are covered by CPSC, if you're not sure how to register your products, if you're not sure what it means to have a full message set or a reference message set, we're gonna go over all that on a webinar on June 4, but please do not wait to get started. This is something that ideally should have been done some some time ago, but the best the best day would have been to start this a year ago. The second best day to start is today. Please take a look into some of our CPSC resources. Please register for our webinar. We'll go into more of this detail here, but, don't don't wait for that webinar. Please get started. Start talking with your leadership. Start bringing resources together about how you can prepare, for your products under CPSC regulation. And the final thing here that I'd also kinda call out is a couple of smaller headlines. As of this morning, looks like the EU parliament's gonna pass the automotive deal. You know, Trump makes many threats on Truth Social, but one of the more recent ones was saying we're gonna levy a 25% tariff on EU automobiles until they sign their side of the agreement. Remember a year ago, we signed a deal with the EU. We set a 15% cap on our rates. In exchange, we'd get, you know, greater market access for industrial products and agricultural products. And then, or at the same time, Trump started to threaten Greenland, which really didn't encourage the EU parliament to go ahead and pass this this rule. Then there was the Iran war, which also sent some more shocks around. Trump got impatient and was saying, I'm going to put 25% on automobiles on July 4 unless you get this deal done. You'd hold up your side of the bargain. You said okay, and now they've now they've done so. There's some other reductions that I think are a little bit smaller as well that kinda go with a theme that I think I've been seeing and I've kinda been talking about is that there's a quiet, I don't know if I would call it retreat or at least a softening of the terrorist stance, more ways in which Trump seems to be deeply motivated by the price of gas and groceries, health care, and housing. The beef quota restrictions that are in place that usually lead to higher rates on beef cuts, has gone down. If you've noticed, in the last year alone, there's been an 18% increase in beef imports of The United States partly because US herds cattle herds have gotten smaller, but I think out of a desire to try to keep the grocery bills lower for everyday Americans, he's finding ways to maybe loosen or or lower some of the rates there, for for certain things that show up in Americans' grocery bills. There was also a new tariff provision for section two thirty two that exempted, more products potentially from two thirty two duties if they don't contain any steel, but there's no restriction on chapter like there was under the ninety nine zero three eighty two zero three that was was exempted. Okay. These four chapters, you can't apply this exclusion to. This one now applies to any chapter. The only condition is that it has to be 0% of steel, aluminum, or copper, which in practice maybe only really applies heavily to, cast iron or maybe ductile iron products, that don't meet the tariff definition of steel. And then finally, the two thirty two inclusion process. I think I mentioned it before, but if it if it maybe slipped under the radar here, previously, industry could, you know, include these two thirty two exclusions. They could request it and say, okay. I want this product now be covered by a steel or two thirty two, investigation, this HTS code in particular. USTR said they're gonna move that internal now. So if they're not no longer soliciting recommendations from from industry about how to get this, that the USTR making these determinations, all of which kinda lead to just a little bit lower pressure, on tariff rates across the board. I'm gonna double click here into section three zero one hearings if you haven't been been following these. We have two section three zero one investigations. And if you've heard before, this is kind of attempting to replace the tariff regime that existed under IEEPA. Right? IIPA was struck down by the Supreme Court in February. The section one twenty two has a one hundred and fifty day expiration, and we're already more than halfway through it. So we're coming to the end of that period. And so section three zero one, which is about other unfair trade practices that unfairly burden US commerce, was taken up. And the USTR looked at two specific areas. Number one, they looked at saying there was countries that are have excess overcapacity in their industrial base, meaning they're essentially creating this, like, situation where there's just not enough room for American producers to compete because companies are or countries rather are deliberately keeping production lower, or industrial capacity lower, but they have that capacity to ramp up, therefore, put downward pressure on prices, so thereby hurting US producers. So that's one. The second one is forced labor, saying that other countries, unlike The US, are, enforcing, restrictions against forced labor in the same way or they're tolerating it within their own countries. Again, by using forced labor, they can lower the cost of labor, thereby lower the cost of production, thereby hurting the American worker. That's kinda the those are the two theses, behind section three zero one. And, overall, it seemed like the USTR is kinda getting what they what they want. These investigations are conducted you know, initiated by the USTR, they're reviewed by the USTR, conducted by the USTR, decided by the USTR, and then any recommendations are made by the USTR. So this is very much happening on their own home turf. And, you know, personally, I very much expect that, the section three zero one, results will will recreate much of what existed under IEPA in terms of tariff rates countrywide. So, I think as a soft deadline for seeing these, I think July 24, is a date that we should all expect to see section three zero one duties in place. Earlier is also very possible as well. The reason why July 24, well, that's because that's when section one twenty two duties expire. So I would expect to see section three zero one duties, active and in place, before July 24 and probably gonna be similar to the IEPO levels. The only question now is, like, are they going to make any trimmings around the edges, additional carve outs, other things like that? There was a quite a bit of of juice to sort through, very, very juicy hearings to look at, from the hearings. A lot of it were really aimed at kind of contesting the premise, mostly led by countries. Ambassadors, chambers of commerce were saying that, no. Our country doesn't actually have this overcapacity that you accuse us of, or we already do have strong restrictions against forced labor. And in fact, US, you haven't really been enforcing UFLIPA well enough. It's also been too too meager as well. So there's been a there was a lot of finger pointing and saying, you've got this all wrong. You know, you accuse Norwegian fisheries of having overproduction. It's like, well, no. We only increased the value has gone up, but that's more of like an inflationary result. Our capacity actually went down over the last few years. Germany is saying, well, no. Like, you accuse our chemical industry of excess overcapacity, but it's been lower for the last four years since the Russian war, Russian invasion of Ukraine, which made energy prices skyrocket and made our our chemical inputs really, you know, much more expensive. So we haven't had that overcapacity issue. So what are you talking about? Why would we ever face three zero one duties for overcapacity? And other people were saying, like, even if there is overcapacity in the chemical space, why would that lead to tariffs on German toys? What's the connection between those two? Is this even the point? So a lot of fun things to kinda sort through there, but I I don't think it's ultimately gonna be convincing, until till some later date. You also see a little bit of a a difference of opinion within the the domestic industries as well who are either benefiting from this or not. We saw the American soybean producer saying, please don't put any more section three zero one duties on China because if they retaliate, it's our soybeans that could hurt more than anyone else. Other domestic industries are saying these forced labor, you know, regimes in other countries are killing us. Like, this is gonna just keep undercutting our business. We need these three zero one duties to survive. It kind of relieves to this overall theme that comes out of USTR and from the president on down about this, we're the consumer of last resort. So all of this extra capacity being produced in other countries comes to The United States because we are the consumer for every other country's industrial base rather than sort of having more natural market equilibriums. Some some country or some, organizations like the, Center for American, Coalition for Prosperous America, they recommended maybe more targeting regimes. Maybe can we look at licenses? Can we have different products maybe? Can we have, you know, maybe use a a a quota regime instead of maybe just broad based tariffs? There's a lot of different approaches to it, and I think there's not quite it's not quite clear what it is. Like I said, I think they're mostly arguing about the edges of these cases, not really the meat of it. The meat of it, I think, is pretty well said, and I think the USTR is going to be placing duties on many countries. But the question is where are there gonna be some some carve outs gonna be? There's also I think after this is that we will expect to see some court argumentation after this. Where it's gonna be, who knows, what are the requirements of section three zero one, and what the court will look at. Who knows? We do know that maybe the USTR has gotten a little bit less leeway, in the post, post Chevron world, you know, where they they maybe have to prove their case a little bit more strongly than they otherwise would have had to, under the previous section three zero one investigations. But it won't be for a while. So even if there is relief, even if this is struck down by the courts, it may still take at least another year, before there's any kind of refund or or relief for importers paid for section three zero one, should it ever happen. So that's a little bit more about section three zero one here, but we're gonna go back to our section one twenty two a little bit here. And Jen will tell us a little bit about what's been happening. Your court cases here, for section one twenty two, how long do we have to keep paying it?

Jenn Park

Alright. Thank you, Marcus. Alright. Before we go into the latest developments on from the CIT decision last week on section 122, we just wanted to give you kind of a high level overview of what has transpired so far as it relates to 01/2022. So as we know, on February 20, the same day that the Supreme Court had found that the IFA tariffs were unlawful, President Trump had come out announcing the Section 122 tariffs of 10% globally. This was effective as of February 24, still in place today, and this has a duration of about one hundred and fifty days. So, they are set to expire I believe July 24. And then in March there was a suit that was filed at the Court of International Trade, multiple states, a few private importers, but this decision on whether Trump had the authority to invoke Section 122 to really discuss a trade deficit problem was the issue here. So the CIT decision came out on May 7 and what the court had said in a two to one split is that the president did not have authority to invoke section 122 to impose these temporary cent tariffs because the balance of payments deficit has a specific definition that was established by legislative history and that, what president complaint, what president was saying was a deficit within the presidential proclamation, was not necessarily meeting the statutory requirement and the definition of what is considered a balance of payments deficit deficit in section 122. Instead, it's actually more of a trade deficit or an actual deficit. So, in other words, it was not the same thing. So, in other words, section 122 would be unlawful in this situation. What's different here from IFA is that this decision was really specifically focusing on the plaintiffs that filed a suit. There were multiple states, there were two private importers, but what CIT really looked at first is do all of these plaintiffs have standing? So did they actually were they actually importers of record? Did they actually pay these tariffs? And essentially, they dismissed all the states that were not really that did not pay these tariffs. What they did was they issued a permanent injunction to stop collecting these Section 122 tariffs against three specific plaintiffs which were two private importers and one which is the state of Washington because they actually did pay the tariffs. In addition to that, what they did was saying that refunds would be issued to these three specific plaintiffs. Great news, everyone's excited that this is a possible situation but this is a very limited relief to these specific importers and as you know the day after, the government did file their appeal at the Federal Circuit. What we don't have outlined here is that, on May 12, this Federal Circuit did approve the department's request for a temporary stay, which is basically saying hold off on the CIT's decision until the appeal's decision is pretty much concluded. So continue to collect tariffs and for them to not refund these tariffs. The plaintiff's response was filed yesterday saying that this pretty much is unfair and so we have about the government has three days to file a response to that, so May 22. So it's still ongoing. There's nothing immediate in terms of what's gonna happen with these Section 122 tariffs, but we wanted to kind of provide you an update on here in terms of what has happened. And as we outlined before, July 24 is kind of like the expiration date deadline of these Section 122 tariffs. In the next slide, we wanted to provide you kind of a side by side comparison of how these 122 tariffs are different from IEPAA tariffs and kind of give you practical considerations on how you can prepare in the meantime while we wait to hear more on how the 122 decision will be ruled out. So, one thing to note is that as noted earlier, the section 122 tariffs does actually authorize the president to implement tariffs of up to 15% for a duration of one hundred and fifty days to address fundamental international payment problems. So, this could be large and serious balance of payment deficits. So, it does authorize the president to actually implement tariffs in those situations as long as the statutory requirements are met. Whereas with IBA tariffs there is no language where it authorizes the president to implement tariffs. What it says is that the president can regulate imports but what the Supreme Court found is that that does not extend into implementing tariffs and that's why the IPAA tariffs were essentially found unlawful. So, that's the major difference there. Also, the timeline, as I mentioned, there is a one hundred and fifty day clock on the section 122, whereas with IAPA tariffs there is no set deadline or expiration date. It can continue until there is some sort of additional step that's taken to remove these tariffs. Also, the refund universality. So, as mentioned, this was very plaintiff specific in the CIT decision that we got last week, whereas for IFA in the Euronotions Florida, which is now the lead case, this is a universal refund that applies to all importers regardless of whether you had filed a civil suit. And so, when we look at the litigation path of what could happen for Section 122, it is possible that it could follow the same chain of events that we saw for IFA tariffs where it started at the CIT, went to the Federal Circuit, and then all the way to the Supreme Court. We know that this was pretty quick in terms of getting the decision from the Supreme Court. It took about nine months to actually get that February decision, so nothing immediate, like I said, for Section 122. It is possible that it could go the same path, but there's also the fact that the Supreme Court may not want to hear this because as I mentioned there is that one hundred and fifty day timeline, it's only 10% and so there are various factors that differ from the IBA tariff so it is possible that it may be handled differently. However, if in the ultimate staying positive that refunds are essentially issued, it is possible that it could follow the same path as IBA where refunds could be issued to all importers under CAPE. So, at least there is a mechanism in place now, whereas with IBA, the government was scrambling to get together a process CAPE to get the refund process started. So, as we look at this side by side, there are a few things that we wanted to share in terms of practical considerations that importers can take as we just wait. One is audit your entries. As we know, for all the IAPA, CAPE, there are a lot of mistakes that were made, whether it's you know, your errors or whether it was a brokerage error on how the tariffs were applied due to, you know, just the broker systems not catching up to all the tariff changes that were happening. So even for IFA today, we have a lot of clients that are auditing their entries to fix mistakes prior to filing. So, I think right now it is a perfect opportunity just to make sure that all your entries are actually correct, that the brokers are applying the instructions that you've outlined for them correctly for each entry. Also tracking liquidations, protest deadlines, similar because as we follow what's going to happen with the CIT decision and the CAFC Supreme Court, we just don't want to lose out on the ability to potentially request refunds on these if that becomes a thing later on.