Brief No. 002 / 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 headline this week is North American: on July 1 the United States declined to renew the USMCA in its current form. The agreement does not lapse — it remains in force through 2036, and every tariff preference and rule of origin stays intact — but the U.S. refusal triggers annual reviews and sharpens the bilateral track with Mexico, whose next round is set for the week of July 20. Meanwhile the July 24 cliff is now under three weeks out: the Section 122 surcharge keeps collecting under the June 11 Federal Circuit stay until it expires by statute, and the two Section 301 tracks meant to replace it are racing to be ready — forced-labor comments close today and the hearing is tomorrow, while the structural-overcapacity determination is still pending. China carries the heaviest exposure of any single economy across both tracks, with no USMCA-style carve-out and duties that stack on its existing Section 301 tariffs. Executive Order 14411’s importer-of-record overhaul runs on its rulemaking clock underneath. The single most valuable hedge for North American supply chains remains documented USMCA origin qualification — and after July 1, defending that qualification matters more than ever.
Deadlines at a Glance
| Date | What happens |
|---|---|
| Jul 6 (today) | Forced-labor Section 301 — written comments due. |
| Jul 7 | Forced-labor Section 301 — public hearing. |
| Jul 8 | CPSC electronic filing begins (updated message set, v2.5). |
| Wk of Jul 20 | U.S.–Mexico USMCA bilateral round (Round 3), Mexico City. |
| Jul 24 | Section 122 surcharge statutory expiry; de minimis comment deadline & postal effective date; Section 301 measures expected to take effect. |
| Aug 10 | Germany pharmaceutical Section 301 — written comments due. |
Trade Updates
U.S. declines to renew USMCA; agreement stays in force, annual reviews begin
On July 1, 2026, the USMCA Free Trade Commission held the first six-year joint review under Article 34.7. The United States declined to confirm its intention to extend the Agreement, with USTR Ambassador Greer stating it “did not agree to renew the USMCA in its current form.” Mexico and Canada each confirmed support for a 16-year extension. Critically, the Agreement has not lapsed: under Article 34.7.1 it runs through July 1, 2036, and all tariff preferences, rules of origin, and investment protections remain fully in force. What did not occur on July 1 was the optional early extension.
The refusal triggers annual joint reviews through 2036, and the 16-year extension remains available “at any time” through written confirmation by the three heads of government (Art. 34.7.4) — no renegotiation required. The United States is pursuing bilateral tracks: it has completed two rounds with Mexico (Round 1, Mexico City, May 28–30, covered automotive rules of origin, steel and aluminum, and economic security) and scheduled Round 3 for the week of July 20 in Mexico City. Canada participated in the July 1 meeting but has not begun substantive text-based talks. For importers, the near-term rules are unchanged — but rules-of-origin scrutiny will intensify, and origin qualification is now the pivotal variable.
Sources: USTR (Greer statement, Jul 1, 2026) · White & Case · CNBC · USMCA Art. 34.7
Section 301: forced-labor comments close today, hearing tomorrow; overcapacity determination pending
Forced labor (60 economies). The June 2 proposal — additional duties of 10% on 14 economies (including Mexico, Canada, and the EU) and 12.5% on the remaining 46, with carve-outs for USMCA-compliant goods of Canada and Mexico, certain CAFTA-DR duty-free textiles and apparel, and goods already under Section 232 (no stacking) — reaches its written-comment deadline today (July 6), with the public hearing tomorrow (July 7). USTR is widely expected to be positioned to impose before the July 24 Section 122 expiry.
Structural overcapacity (16 economies). The parallel investigation (China, the EU, Japan, Korea, Vietnam, Taiwan, India, Mexico and others; hearings May 5–8) has not yet produced a determination or proposed rates. The target is on or before July 24. This remains the single largest open variable for Mexico-origin goods.
Other actions. Brazil’s 25% Section 301 (proposed June 1) is separate, and USTR opened a new Section 301 on Germany’s pharmaceutical pricing (June 18; comments due Aug 10). Unlike Section 122, Section 301 carries no statutory time limit or rate cap — these measures are durable once imposed.
Sources: USTR (Jun 2 & Jun 18, 2026; Mar 11 initiation) · Fed. Reg. 2026-11296 · White & Case, WilmerHale
Section 122 surcharge still collecting under Federal Circuit stay; expiry now ~18 days out
The 10% surcharge (HTS 9903.03.01) continues to be collected from effectively all importers under the Federal Circuit’s June 11 stay pending appeal (State of Oregon v. Trump), which paused the Court of International Trade’s May 7 invalidation. The surcharge expires by statute on July 24, 2026 — roughly 18 days away — regardless of the appeal. The operative rate remains 10% under Proclamation 11012; the 15% announced in February was never formalized.
If Section 301 measures are not in place by July 24, covered imports would revert toward pre-surcharge treatment (retaining Section 232 and pre-existing China Section 301 duties) — a potential brief gap in coverage. There is still no broad refund mechanism: relief so far reaches only the three named plaintiffs, so importers preserving rights should continue timely protests and disciplined recordkeeping.
Sources: U.S. Court of Appeals, Fed. Cir. (Jun 11, 2026 order) · Skadden, PwC · Fed. Reg. 91 FR 9339
China carries the heaviest exposure across every active track — and none of Mexico’s carve-outs
Unlike Mexico, China has no USMCA-style exemption from any of the pending tariff actions, and it stacks. Under the June 2 forced-labor Section 301 proposal, China sits in the 46-economy group facing the 12.5% rate (Mexico and 13 others face 10%, with a USMCA carve-out China does not have). China is also one of the 16 economies under the structural-overcapacity Section 301 investigation, where a determination is still pending and could land at or before July 24. Both proposed duties would layer on top of China’s existing Section 301 tariffs and Section 232 derivative coverage where applicable — the forced-labor notice does not stack on Section 232, but it does stack on pre-existing China-specific Section 301 duties.
China-origin goods, and non-USMCA-qualifying goods with significant Chinese-origin content assembled in Mexico or elsewhere, are the two highest-exposure categories heading into July 24. Both the forced-labor and structural-overcapacity outcomes for China should be treated as near-certain to result in additional duty, with the open questions being rate and effective date rather than whether action occurs.
Sources: USTR (Jun 2, 2026 determinations; Mar 11 initiation) · Fed. Reg. 2026-11296 · White & Case, WilmerHale
EU–U.S. reciprocal trade deal takes effect at a 15% headline rate
The EU implemented its side of the 2025 framework: the Council of the EU adopted the enabling regulations on June 25, and the deal took effect July 1. Most EU-origin goods now enter the U.S. at a 15% all-inclusive headline rate, while the EU removes duties on U.S. industrial goods and grants preferential access for certain U.S. farm and seafood products. Separately, the President has stated that a 100% tariff would apply to goods from any country implementing a digital services tax affecting U.S. firms — a live risk to monitor for technology-linked supply chains.
Sources: USTR (Presidential Tariff Actions) · CNBC · Euronews
EO 14411 “Strengthening Customs Enforcement”: IOR and in-bond clocks running
One month after signing (June 3), Executive Order 14411’s importer-of-record overhaul remains in the rulemaking phase; no implementing proposed rule has published yet. Its sharpest provisions fall on foreign IORs: for formal entry, a foreign IOR must be CTPAT-validated where CBP deems it eligible, or file through a CTPAT-validated, licensed U.S. customs broker (§2(c)(i)(2)), and may not rely on a continuous bond unless CBP is satisfied the revenue is fully protected. Foreign IORs are also barred from filing informal entry (§2(b)).
Across all IORs, the order requires a minimum level of tangible U.S. assets, bonding, or both; a “good standing” requirement; beneficial-ownership and business-affiliation disclosures; recurrent vetting of IORs, brokers, freight forwarders, and bonded-merchandise custodians; restrictions on in-bond utilization; and a minimum penalty floor of not less than 50% of the assessed penalty (§4). Watch for the first CBP proposed rules: several directives are due within 90 days (on or about September 1), with the broader registry overhaul on a 180-day clock.
Sources: The White House — Executive Order 14411 (Jun 3, 2026) · Morrison Foerster, WilmerHale, Hogan Lovells
Cargo Systems Messaging Service — guidance in force
#69035485 (Jun 23) — CAPE for IEEPA refunds: reconciliation-flagged entries. CAPE Phase 2 is now live; most IEEPA duties are refund-eligible via the ACE Portal.
#69031301 (Jun 23) — Withhold Release Orders on garments produced in Jordan by Needle Craft Ltd. and Casual Wear Apparel L.L.C.
#69019366 (Jun) — Updated CPSC Message Implementation Guide (v2.5); CPSC electronic filing begins July 8.
#68855869 (Jun 5) — Section 232 steel, aluminum and copper guidance (Proclamation 11032; effective Jun 8, through Dec 31, 2027).
Source: CBP Cargo Systems Messaging Service (ACE)
Takeaway for U.S. IORs
9903.03.01 remains due from essentially all importers under the June 11 stay. Do not classify around the appeal. With expiry ~18 days out, keep filing protests and preserving entry documentation now; recovery is neither automatic nor available beyond the three named plaintiffs.
Map which SKUs move from the flat 10% surcharge to country- and product-specific Section 301 rates, and plan for a possible brief coverage gap if the 301 measures slip past July 24. With no confirmed grace period for goods on the water, in-transit timing and entry sequencing carry real duty consequences. China-origin lines carry the highest combined exposure — model them first, since existing China Section 301 duties will stack with the new forced-labor and (if determined) overcapacity rates.
Expect more audits and active liquidated-damages enforcement against a 50% minimum penalty floor. Confirm continuous-bond adequacy against rising duty exposure, and ensure classification, valuation, origin and supply-chain records would withstand a CBP review. First proposed rules could appear around September 1.
With CAPE Phase 2 now processing reconciliation-flagged entries, IORs with outstanding IEEPA claims should verify status in the ACE Portal and move complex entries forward, watching the 30-day reconciliation-deadline rule.
Takeaway for Maquiladoras & Foreign IORs
Preferences, rules of origin, and duty treatment are unchanged and remain in force through 2036. But annual reviews and the U.S.–Mexico bilateral track (next round the week of July 20, focused on automotive rules of origin and steel/aluminum) signal tightening ahead. Build sourcing and inventory plans that can absorb rule-of-origin changes at each annual review.
USMCA-qualifying goods remain exempt from the Section 122 surcharge and from the proposed forced-labor Section 301 action. The exemption is not automatic; it must be claimed with complete documentation on every entry, and CBP USMCA audit activity is rising. Stress-test Chinese-origin content in Mexico-assembled goods against the rules of origin now in play.
On forced labor, Mexico sits at the 10% tier, but USMCA-compliant goods are carved out; China sits at the 12.5% tier with no equivalent shield, and the new duty stacks on existing China-specific Section 301 tariffs. On structural overcapacity, both Mexico and China are among the 16 — rates are still pending and could land near July 24. Non-USMCA-qualifying Mexico-origin goods, and any Mexico-assembled goods with material Chinese-origin content, carry the same exposure as direct China-origin goods; identify those flows and confirm whether they can be brought into USMCA qualification.
For formal entry, a foreign IOR (including a maquiladora) must be CTPAT-validated where eligible, or file through a CTPAT-validated, licensed U.S. customs broker, and cannot rely on a continuous bond unless CBP is satisfied revenue is protected. Review bonding, beneficial-ownership and good-standing posture ahead of the staged deadlines.
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 USMCA entering annual reviews and the July 24 cliff approaching, 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.
Origin qualification, defended and documented
After July 1, USMCA preferences remain but face rising audit scrutiny and future rule-of-origin change. We build and maintain the origin records that keep qualification audit-ready and portable across annual reviews.
Duty deferral through Fulfillment-from-Bond
Stage cargo in-bond across the Section 122/301 transition, assess the post-expiry rate environment, and time consumption entry deliberately. With a possible coverage gap in play, deferral protects working capital and optionality.
Protest filing & bond review
We preserve Section 122 refund rights through disciplined protest filing and reconcile IEEPA claims via CAPE Phase 2 — 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.