Trade & Tariff Update #48 - Canadian Trade Thaw, Section 301 Excess Capacity & More

Canadian Trade Thaw

The Canadian trade relationship likely warmed somewhat last Friday when President Trump removed certain items from the list of products subject to Section 338 duties and added others.  Many of the products removed impact Maine, prompting chatter that the move is an effort to aid Maine Senator Susan Collins’ re-election campaign.  View the fact sheet here. 

Over the weekend, Bloomberg reported that White House economic advisor Kevin Hassett stated that the United States and Canada are “very close” to reaching a trade agreement.  

China Section 301 Port Fees 

On October 26, the Office of the United States Trade Representative (USTR) published a Notice for Comment regarding the additional two-month suspension through January 9, 2027, of the Section 301 China-built vessel fees.  The two-month extension was included in the trade truce extension negotiated during the recent President Trump/President Xi summit.  USTR is seeking comments on the proposed extension by Oct. 30.  

New Section 338 Tariff Litigation Over Canada Tariffs 

A new lawsuit challenging the Section 338 tariffs against Canada was filed last week in the Court of International Trade (CIT).  Plaintiff Gellert Global Group, a New Jersey food importer, is requesting that the CIT declare the tariffs unlawful, block their enforcement and order the Trump Administration to refund duties already paid plus interest.  The complaint argues that Section 301 of the Trade Act of 1974 effectively superseded and replaced Section 338, under which the Canadian tariffs at issue were imposed.  An opinion piece published in the Hill last Friday discusses this question and advocates that Congress act to confirm that Section 338 was superseded by Section 301 which casts a wider net yet also imposes safeguards.  While the court has yet to rule, the argument that Congressional action is required could suggest that the 338 tariffs rest on firmer legal ground. 

Plaintiff Gellert is represented by the Liberty Justice Center, the same legal organization that successfully challenged the IEPPA reciprocal tariffs struck down by the Supreme Court in February. 

Section 301 Excess Capacity

The Brookings Institute released an interesting analysis of the circumstances surrounding the pending Section 301 Excess Capacity investigation.  The author noted some consensus among countries that excess capacity -- particularly in China -- is a problem, but highlighted the challenge of finding a collective solution.  During a recent presentation, a trade attorney observed that the Excess Capacity investigation may be the ultimate endgame in tariff policy.  If the IEEPA tariffs were implemented on dubious legal grounds and the Forced Labor Section 301 duties implemented hastily, the deliberate process Excess Capacity investigation is neither.  The international consensus that the problem exists and is real could make whatever remedy the USTR determines more legally durable and lasting. 

De-Minimis Exemption Compliance Extension 

Last week United States Customs and Border Protection announced it is extending the compliance deadline to January 20, 2027 for shippers to meet new reporting requirements under the elimination of the de-minimis exemption. 

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