Brief No. 005 / Vol. 1
Distribution: Clients & Partners
Navco · Customs & Trade
Trade & Logistics Weekly Brief
U.S. Customs & Trade Developments for IORs, Maquiladoras & Trade Advisors
Bottom Line for Decision-Makers
The handoff happened cleanly, which was not the consensus expectation a week ago. Section 122 expired at 12:01 a.m. ET on July 24, and USTR’s forced-labor Section 301 tariffs — 10% or 12.5% on 60 economies covering 99.4% of U.S. imports — took effect at the identical moment, with a limited in-transit grace period for goods loaded before July 24 and entered by July 28. USMCA-qualifying goods from Mexico and Canada remain exempt, confirmed in the final rule; Mexico’s Economy Minister stated directly that the new tariff did not change Mexico’s effective trade treatment. China, by contrast, landed in the 12.5% tier with no shield of any kind. Separately, and with no advance signal in prior weeks, President Trump signed three proclamations on July 20 imposing a 50% tariff under the rarely used Section 338 on a range of Canadian goods — dairy, alcohol, automobiles and more — explicitly not exempted by USMCA, effective August 19. That landed the same week USMCA Round 3 concluded in Mexico City (July 21–23) with Mexico but not Canada at the table; Canada’s Prime Minister said the two governments would “intensify” negotiations. The structural-overcapacity Section 301 investigation (16 economies) remains the one major track still unresolved. Below: what moved, and what each reader should do about it.
Deadlines at a Glance
| Date | What happens |
|---|---|
| Jul 20 (occurred) | Three Section 338 proclamations signed — 50% tariff on select Canadian goods, effective Aug 19. |
| Jul 21–23 (occurred) | USMCA Round 3 concluded, Mexico City; Round 4 set for September in Washington, DC. |
| Jul 24 (occurred) | Section 122 expired; Section 301 forced-labor tariffs (10%/12.5%, 60 economies) took effect same moment. |
| Jul 28 | Deadline to enter goods that were in transit before July 24 to still qualify for the duty-free grace period. |
| Jul 31 | 100% Section 232 pharmaceutical tariff becomes effective for the 17 companies named in Annex III. |
| Aug 19 | Section 338 50% Canada tariff becomes effective. |
| Sep (early) | USMCA Round 4, Washington, DC. |
Trade Updates
Section 122 has expired; forced-labor Section 301 tariffs took its place at the identical moment
On July 23, President Trump issued a memorandum directing the U.S. Trade Representative to impose the tariffs, and USTR published the implementing Notice of Action the same day; both took effect at 12:01 a.m. ET on July 24 — the instant the Section 122 surcharge expired by statute. We have now read the full Notice of Action and CBP’s implementing guidance (CSMS #69326983) directly rather than relying on secondary summaries, and the exact country-by-country rate structure is more granular than a flat 10%/12.5% split: most economies get a flat rate, but the European Union, Japan, South Korea, Switzerland, and Taiwan are instead assessed a Section 301 rate calculated net of each product’s existing MFN duty, capped so the combined rate reaches 10% (EU, Taiwan) or 12.5% (Japan, Korea, Switzerland) — meaning the Section 301 add-on can be as low as zero for products whose MFN rate already meets or exceeds that cap. Sixteen economies, including Canada, India, and Mexico, receive a flat 10% rate outright. USTR added 471 HTSUS subheadings to the final exemption annexes following public comment, on top of exemptions for CAFTA-DR textiles, Jordan FTA goods, Section 232-covered articles, civil aircraft, pharmaceutical articles, and informational materials/donations. The new duties stack on existing Section 301 programs (notably China’s) but not on Section 232.
Correction to last issue: we previously described India as sitting in the unshielded 12.5% tier alongside China, Vietnam, and Taiwan. Reading the Notice of Action directly shows India is assessed the flat 10% rate, not 12.5% — corrected here, and we regret the error. We also had not previously flagged that Canada is separately assessed a flat 10% rate under this action (distinct from the Section 338 tariff below); goods of Canada and Mexico that qualify for duty-free USMCA treatment are confirmed exempt from this specific 10% by name in CBP’s Chapter 99 guidance (HTS 9903.05.93 and 9903.05.94).
Time-sensitive: a limited in-transit exception applies to goods loaded on their final mode of transport before 12:01 a.m. ET July 24 — those goods escape the new duty only if entered for consumption (or withdrawn from warehouse for consumption) before 12:01 a.m. ET on July 28. If you have shipments in that window, this is an active, closing deadline, not background reading. Separately, the underlying legal fight over Section 122’s validity continues at the Federal Circuit despite the surcharge’s expiry, since the outcome still governs refund rights for duties collected February 24–July 24.
Sources: USTR Notice of Action (Jul 23, 2026; Dockets USTR-2026-0265/-0266) · CBP CSMS #69326983 · Livingston International
Canada hit with 50% tariffs under rarely used Section 338 — and USMCA provides no shield
On July 20, President Trump signed three proclamations invoking Section 338 of the Tariff Act of 1930 — a discrimination-response authority that had lain dormant for decades — imposing an additional 50% ad valorem duty on Canadian dairy, alcoholic beverages, automobiles, and a broader list of goods including items like hockey sticks, plywood, glassware, and cement. The stated basis is Canadian provincial restrictions on U.S. alcohol sales, Canada’s dairy tariff-rate-quota system, and its 25% tariff on non-USMCA-eligible U.S. vehicles. Unlike every other tariff track this year, USMCA-qualifying goods get no exemption here — a valid certificate of origin does not shield a covered product. Energy, potash, fish, critical minerals, and goods already subject to Section 232 are excluded. The duties take effect August 19, 2026 (30 days from signing, the statutory minimum notice period), and unlike Section 122, Section 338 has no built-in expiration.
Canada was not part of USMCA Round 3 this week (see below); Prime Minister Mark Carney said the day after signing that the two governments agreed to “intensify” negotiations. Canada had separately signaled support for a full 16-year USMCA extension back in June — a sharper contrast with Mexico’s treatment now that one USMCA partner faces a new unilateral 50% tariff and the other does not.
Sources: The White House (Fact Sheet & Proclamations, Jul 20, 2026) · Thompson Hine
USMCA Round 3 concludes in Mexico City — Mexico’s USMCA-qualifying goods confirmed unaffected by the new tariffs
The U.S. and Mexico completed three days of talks (July 21–23) in Mexico City, with Mexican President Claudia Sheinbaum and Economy Secretary Marcelo Ebrard meeting USTR Ambassador Greer directly. A joint statement cited progress on economic security, labor, agriculture, electronic payment services, and steel, aluminum, and automotive trade, and both governments flagged concern over non-member countries benefiting from the agreement without its obligations — a reference to China. Separately, and consistent with this round’s tone, USTR’s own Notice of Action (see above) confirms Mexico’s USMCA-qualifying goods remain exempt from the new Section 301 forced-labor tariffs by name, at the HTS-subheading level. A fourth round is scheduled for early September in Washington, DC.
Reported U.S. asks (raising automotive regional-value content toward 82% with a new 50%-of-value U.S.-specific content requirement) remain on the table for the next round; none of this changes current USMCA rules, which stay in force. Canada’s absence from this round, paired with the new Section 338 tariff, sharpens the divergence between the two USMCA partners’ current trajectories.
Sources: USTR · Reuters
China’s 12.5% rate is now final, with no exemption of any kind — and structural overcapacity is the one major piece still unresolved
Per the Notice of Action’s economy-by-economy determinations, China is assessed a flat 12.5% rate with no net-of-MFN formula and no product-level exemption comparable to Mexico’s or Canada’s USMCA carve-out, stacking on China’s existing Section 301 tariffs. Correction to last issue: we had grouped Taiwan with China in the unshielded 12.5% camp; the Notice of Action actually places Taiwan in the 10%-net-of-MFN group, alongside the EU. Vietnam remains flat 12.5%, same as China. Separately, and still unresolved, is the structural-overcapacity Section 301 investigation covering 16 economies (China, the EU, Japan, Korea, Vietnam, Taiwan, India, Mexico, and eight others) — USTR’s own program page shows no determination or proposed rates published, making it the single largest open item on the tariff docket now that the forced-labor track has concluded.
On the legislative side, Senator Wyden introduced the Congressional Trade Powers Reform Act on July 22, which would repeal Section 122 outright and require congressional approval for future Section 301, Section 201, and Section 232 tariffs. The bill faces long odds in the current Congress but is worth tracking as a signal of the pushback these actions are generating.
Sources: USTR Notice of Action (Jul 23, 2026) · USTR Section 301 Overcapacity Program Page · Congress.gov
100% pharmaceutical tariff arrives July 31 for major manufacturers; IEEPA refunds pass $86 billion
Proclamation 11020’s 100% Section 232 tariff on patented pharmaceuticals and active ingredients becomes effective July 31, 2026 for the 17 companies named in Annex III, and September 29 for all other importers; generics, biosimilars, and orphan drugs remain excluded, and companies with an approved onshoring plan and signed MFN pricing agreement can qualify for 0% through January 2029. Separately, CBP’s most recent court declaration put cumulative IEEPA refunds at $86.3 billion actually repaid (of $166 billion collected), with June the largest disbursement month yet at $49.1 billion, and a July 15 CIT order directing CBP to reliquidate roughly 3,700 finally-liquidated entries once CAPE Phase 3 launches.
Between the July 28 in-transit deadline, the July 31 pharma effective date, and the August 19 Canada tariff, the next month has three separate hard dates worth calendaring now.
Sources: The White House — Proclamation 11020 · CBP (Declaration to the U.S. Court of International Trade, Jul 10, 2026) · Holland & Knight
Takeaway for U.S. IORs
Goods loaded on their final leg before July 24 escape the new Section 301 duties only if entered for consumption by 12:01 a.m. ET July 28. Confirm loading dates and entry timing with your broker immediately for anything currently in transit; this window closes fast.
CSMS #69326983 sets out the Chapter 99 reporting headings (9903.05.20–9903.06.21). Confirm your broker has applied the correct 10% or 12.5% code by country of origin, and cross-check the 471 newly added HTSUS exemption subheadings against your product lines before assuming duty applies.
If you import patented pharmaceuticals or active ingredients, confirm whether your supplier is named in Annex III (100% tariff effective July 31) or falls under the September 29 general effective date, and whether an onshoring/MFN pricing pathway to 0% is realistic before then.
The Federal Circuit appeal over Section 122’s legality continues despite the surcharge’s expiry, since it still governs refund rights for the February 24–July 24 collection period. With $86.3 billion in separate IEEPA refunds already repaid, keep entry documentation and protests in order for both tracks.
Takeaway for Maquiladoras & Foreign IORs
Mexico’s Economy Minister confirmed directly that the new Section 301 ruling did not change Mexico’s effective trade treatment. That is good news, but it is not automatic relief — USMCA-qualifying goods must still be claimed with complete origin documentation on every entry. With final rates now in place instead of proposals, this is the moment to audit that every eligible line is actually claiming the exemption, not assuming it.
Unlike every Mexico-side exemption discussed this year, the new Section 338 tariffs on Canadian dairy, alcohol, autos, and other goods apply regardless of USMCA qualification. Any cross-border network touching both Mexico and Canada now faces two very different rule sets from the same trade agreement — audit Canadian-origin exposure separately and don’t assume Mexico’s treatment extends north.
With USMCA Round 3 concluded and China’s manufacturing footprint in Mexican facilities an explicit agenda item, any Mexico-assembled goods with material Chinese-origin content should be documented defensively now. CBP scrutiny of USMCA claims on goods with meaningful non-North-American content is the clearest near-term enforcement risk coming out of this round.
Mexico is named among the 16 economies in the still-pending structural-overcapacity investigation. With the forced-labor track now resolved, this is USTR’s next likely move, and it could layer additional duties on top of what’s now in effect. Watch this track specifically rather than assuming this week’s developments are the end of the story.
Navco Trade Advisory & U.S. Customs Brokerage
Navco is a CTPAT-certified U.S. Customs broker (national permit), bonded warehouse and FTZ operator with 3PL and Fulfillment operations in Texas and partner network across the country. With new Section 301 tariffs now in effect and a new 50% Canada tariff on the calendar, the levers below are where we help clients hold the line. (Commercial section — Navco advisory.)
The EO 14411 CTPAT requirement, already satisfied
Navco’s active CTPAT certification is precisely the credential the order requires of the broker filing formal entries for a foreign IOR. Entries continue through a partner already at the mandated standard — no scramble to qualify.
CAPE compliance under the new warehouse-entry policy
With CAPE no longer accepting warehouse entries directly, we manage the corrected declaration-and-withdrawal sequencing needed to capture IEEPA refunds on affected entries, including those filed April 20–July 6 without a matching withdrawal.
Duty deferral through Fulfillment-from-Bond ahead of Aug 19
Stage Canadian-origin cargo in-bond ahead of the Section 338 effective date, reclassify against the covered-goods annexes, and time consumption entry deliberately. With USMCA offering no shield here, deferral and careful classification are your two real levers.
Protest filing & bond review
We preserve Section 122 refund rights for the Feb 24–Jul 24 collection period through disciplined protest filing and reconcile IEEPA claims via CAPE — while reviewing continuous-bond adequacy against the EO 14411 enforcement posture.
In-house Bonded & FTZ program design, certification, and management
Beyond our own bonded and FTZ facilities, Navco’s Trade & Logistics Advisory team reviews, designs, certifies, and manages in-bond and Foreign-Trade Zone programs directly at a client’s own location — manufacturing plants, distribution centers, retailer DCs, or 3PL warehouses. We have successfully implemented and managed these programs at client-owned sites across the country, giving importers the duty-deferral and compliance benefits of a bonded or FTZ operation without relocating inventory to a third-party facility. As EO 14411 raises the bar on bonded-custodian vetting and in-bond utilization, an audit-ready, Navco-certified in-house program is one of the most direct ways to stay ahead of the enforcement curve.
Sourcing standard. Every factual claim in this brief is sourced and dated. Sources are limited to: U.S. government (USTR, CBP, the Federal Register, Congress.gov, and other vetted agencies), Executive Orders, CBP CSMS, and analyses from named trade-law firms (Skadden, White & Case, Morrison Foerster, Diaz Trade Law, Braumiller Law, Brownstein, Holland & Knight, KPMG, Thompson Hine, and other vetted trade related firms and advisors), and Reuters, Bloomberg, CNBC, Financial Times, WSJ and other vetted news sources. Opinions, where offered, are labeled.
Disclaimer. This brief is informational and does not constitute legal advice or a customs ruling. Tariff treatment depends on facts specific to each entry. Confirm current rates, effective dates and eligibility against primary CBP and USTR sources before acting.
© 2026 Navco. Trade & Logistics Weekly Brief — Brief No. 005, issued July 27, 2026.