While efforts to settle the conflict with Iran continue to limit any significant new tariff activity, activity continues in the background. U.S. Trade Representative Jameison Greer indicated last week that, despite the Court of International Trade (CIT) ruling that declared them illegal, the administration could extend the Section-122 10% tariffs beyond the July 24, 2026, expiration date because Section 122 does not explicitly bar it from being reactivated after it expires. This seems to be a continuation of the Administration’s “pay now, sue me later” approach to tariffs and likely due to the fact that crafting an alternate tariff framework based on Section 301 investigations will take longer to construct. Although Treasury Secretary Bessent has suggested that the new framework could be completed in the five months before the 122 duties expire, the usual timeframe for the process is a year. Moreover, any shortcuts could expose the intended permanent, litigation-resistant tariff framework to legal vulnerability.
Although press reports early last week indicated that the Administration has processed $20 billion in tariff refunds, anecdotal reports suggest that the refund flow has tapered off. It has been suggested that the refund order provides the Administration with a court-ordered tariff off-ramp in the form of an economic stimulus to businesses receiving a refund windfall, but that conflicts with reports last Friday of Administration plans to challenge broad-based IEEPA refunds. The Administration likely will challenge having to refund already liquidated entries, and the issue of whether Judge Eaton has the authority to change the statutorily imposed liquidation deadlines could be an open question, prompting a new round of litigation.
On May 29. 2026, the U.S. Trade Representative launched a new Section 301 investigation into Vietnam’s policies regarding intellectual property protection and enforcement. This could result in additional tariffs on imports from that country. More information on this investigation may be found here. Additional background information may be accessed here. Comments from interested parties are due by July 2, 2026 and may be submitted on the USTR’s Comments Portal.
The Administration seems likely to continue its slow churn towards establishing a permanent Section 301-based tariff framework that will yield negotiation leverage in trade deals with countries such as China that should moderate import duties compared to 2025 levels.
Also of note are Secretary Greer’s comments in testimony before the House Ways and Means Committee that the Administration does not intend to include an exclusion process for Section 301 and 232 duties as it did – albeit haphazardly -- for the IEEPA tariffs. While this might be a negotiating ploy to pressure China to finalize a deal in advance of Chinese President Xi’s visit to the United States in September, the lack of a formal exclusion process would prevent helpful input regarding legitimate exclusions based on the policy of not imposing tariffs on products that cannot be sourced domestically. Depending on what is decided, there could be a need for legislation from Congress to require a formal exclusion process.
The process of negotiating renewal of the U.S.-Mexico-Canada trade agreement is underway and the Administration has indicated that any new agreement will maintain the tariffs imposed on both countries. The Administration has expressed frustration with Canada which likely will only be exacerbated by the recent announcement that Canada will purchase warplanes from Saab instead of aircraft made by Boeing. At the same time, however, Canadian Prime Minister Mark Carney has expressed hope for improved economic cooperation between Canada and the U.S. The exemptions for USMCA-compliant products have endured so far, and hopefully will survive any renewed agreement.
The dichotomy between the confidence voters express in the economy and that indicated by their pocketbooks continues to muddy the economic impact of the Administration’s policies. Personal consumption expenditure figures released Thursday by the Bureau of Economic Analysis reflected an April increase of .5 percent in consumer spending. Since the start of the U.S./Iran war two months ago and surging gasoline prices, spending has increased 1.49 percent, which translates to an annual gain of 9.3 percent. Consumers are spending 3.9 percent more than they did one year ago.
Although the 25 percent rise in prices in March and April significantly helped to increase spending, it only highlights consumer resiliency. While many economists expected that Americans would be forced to pull back on some spending due to spending more to fill up their gas tanks, that does not appear to have happened. Durable goods spending rose 1.7 percent over March and April, an annualized gain of 10.7 percent. Compared with April of last year, Americans spent 3.2 percent more on durable goods. Furnishings and durable household equipment dipped slightly in April, but are up 1.19 percent over the two-month window, an annualized gain of 7.4 percent.
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