Trade & Tariff Update #32 - USMCA Negotiations, Section 122 Tariffs & More

Opening Statement

Last week was relatively quiet after the prior week’s flurry of tariff activity.  A proposed action in the Excess Capacity Section 301 investigation is anticipated and could be announced this week. This would finish out the various Section 301 actions the Administration is preparing to replace the IEEPA duty framework. 

USMCA Negotiations Messaging

The Administration continues its behind the scenes messaging on the process for re-negotiating the U.S.-Mexico-Canada (USMCA) trade agreement.  In addition to staking out the position that the Steel, Aluminum, and Copper and automotive tariffs imposed last year must be retained, U.S. Trade Representative Jameison Greer has also stated that Canada must drop its retaliatory tariffs. While Canada is arguing for the elimination of the 2025 tariffs from the U.S., it so far has expressed optimism that the agreement will be renewed by the July 1 deadline. 

USTR Announces Development of United States-China Board of Trade

Last Thursday the U.S. Court of Appeals for the Federal Circuit ruled that the 10% Section 122 tariffs imposed by the Administration after the Supreme Court’s invalidation of the IEEPA duties can continue to be collected while the appeal case goes forward.  According to the court, the tariffs can be collected because the “government has made a sufficient showing that it is likely to succeed on the merits.”  These tariffs are due to expire on July 24, 2026.

IEEPA Refunds: CIT Request and A Pending Motion for Class Certification    

Last week the Court of International Trade (CIT) judge presiding over the IEEPA tariff challenge urged the Administration to drop its appeal of his decision mandating refunds of liquidated entries as it was delaying tariff refund payments.  Judge Anthony Eaton stopped short of issuing a new order compelling a withdrawal, and there is no sign the Administration will heed his request.  U.S. Customs and Border Protection (CBP) has said that it has accepted and started to process claims for nearly $90 billion in refunds of what it ‌estimates could be up to $127 billion in Phase 1 refunds, which are the least complicated cases. 

Susan Thomas, a ​CBP official who testified ‌at Tuesday's hearing, said that $23 billion in refunds have been completed and sent to the Treasury Department for distribution to importers. 

Meanwhile, importers have moved to certify a class of all importers who paid IEEPA tariffs and whose entries are currently ineligible for refunds through CBP’s Consolidated Administration and Processing of Entries system (CAPE).  Judge Eaton has not yet ruled on that motion. 

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