The Bottom Line
The week started with a bang: on July 20, the President invoked Section 338 of the Tariff Act of 1930, a Depression-era provision never used before, to hit Canada with an additional 50% tariff on a wide range of goods, with no USMCA exemption, effective August 19. Around that headline, the July 24 convergence is here (Section 122 sunsets, de minimis suspension and a new postal-entry process take effect), CBP has begun deactivating dormant importer accounts, a July 15 CIT order reshaped the IEEPA finally-liquidated refund path, and USTR's Section 301 forced-labor decision is expected any day.
On July 20, the President signed three proclamations under Section 338 of the Tariff Act of 1930, imposing an additional 50% tariff, the statutory maximum, on certain Canadian goods, effective August 19, 2026. This is the first time in the provision's history it has been invoked. Section 338 lets the President impose duties of up to 50% to offset a foreign country's discrimination against U.S. commerce, and requires at least 30 days' notice before taking effect.
The stated basis is Canada's retaliation against earlier U.S. tariffs, which the administration found discriminates against U.S. exports of motor vehicles, alcohol, and dairy (citing, for example, an approximately 81% drop in Canadian imports of U.S. alcoholic beverages and a roughly 22% drop in U.S. motor-vehicle imports over the past year). While framed around those three sectors, the annexes reach much further: wine, car parts, cement, clothing, furniture, technology, hockey sticks, ornaments, flowers, and more. Energy, potash, goods already subject to Section 232, fish, and certain critical minerals are excluded.
The critical point for planning: these tariffs apply regardless of whether a good qualifies under USMCA. Unlike Section 122 and Section 232, there is no USMCA carve-out here, so North-American-sourcing clients cannot rely on qualifying status to avoid them. The novel legal theory is likely to draw court challenges, and the 30-day runway (alongside this week's USMCA negotiating round) leaves room for a negotiated off-ramp, but given the state of U.S.-Canada relations, that is far from certain. Every client importing from Canada should pull the three proclamation annexes now and screen their HTS lines against them.
One open question as of this issue: drawback eligibility for the new Section 338 duties has not yet been addressed in the Federal Register, so treatment remains unclear for now.
Source: White House Fact Sheet, July 20, 2026
On July 15, the CIT signaled how finally-liquidated entries will be resolved: it intends to enter case-specific orders in each of the roughly 3,700 individual IEEPA cases, directing Customs to reliquidate certain finally-liquidated entries under a procedure to be spelled out. The court designated a new lead case, Freestyle World Inc. v. United States (after the Euro-Notions plaintiff signaled voluntary dismissal), and indicated Rule 23 class-certification proceedings may begin soon, a potential route to refunds for importers who never sued but fit the class definition.
The government still maintains Customs cannot reliquidate finally-liquidated entries absent a specific court order, and its Federal Circuit appeal continues. CAPE Phase 2 launched June 29 and Phase 3 (finally-liquidated) is on track for late July; roughly $89B has been accepted with about $22B moved to Treasury. For material finally-liquidated exposure, a protective §1581(i) filing remains the only fully self-controlled path while the class question develops.
Source: CIT order, Freestyle World Inc. v. United States, July 15, 2026
USTR's forced-labor action, 10% for 15 partners and 12.5% for 45 others across 60 economies, completed comments (July 6) and hearings (July 7 to 9), with a determination expected around July 20, timed to land before Section 122 lapses. Section 232 goods and certain listed inputs are exempt.
Brazil: the proposed 25% action appears designed to stack on the 12.5% forced-labor rate for a cumulative 37.5% on certain goods.
Germany (new): USTR opened a Section 301 investigation June 18 into Germany's pricing of innovative pharmaceuticals; comments due August 10.
Overcapacity: the 16-country structural-overcapacity case continues and could carry higher, country-specific rates.
Watch: USMCA-qualifying status exempts goods from Section 122 but does not automatically carry into Section 301, relevant for Mexico-origin goods named in the overcapacity case.
Sources: Federal Register, forced-labor determinations, June 5, 2026 · Federal Register, Germany investigation, June 24, 2026
Following the July 1 joint review, at which the U.S. declined to renew the agreement in its current form, USMCA entered the annual-review track running to 2036. The agreement remains fully in force, preferences, rules of origin, and investment protections unchanged, and a further round is expected the week of July 20 in Mexico City, with Canada prioritizing relief from U.S. sectoral tariffs. That round now carries added weight: it is also the most likely venue for any off-ramp on the new Section 338 tariffs before August 19.
Inactive IOR deactivation (new). On July 16, CBP introduced an "Inactive for Entry Purposes" status in ACE and began deactivating Importer of Record accounts that have not filed an entry within 366 days and have no outstanding post-entry transactions, under the Strengthening Customs Enforcement EO and 19 CFR 24.5(e). A deactivated IOR cannot file entries, though it can still perform non-entry functions. Reactivation runs through an ABI broker (a Transaction Processing message, Action Code A, moving the account from 20-Inactive to 10-Active with full CBP Form 5106 data) or by submitting an updated Form 5106 to the Center Entry Specialist Team. This is a real trap for seasonal or returning importers: verify IOR status before the next entry.
Source: CSMS #69241265
International mail. Effective July 24, de minimis for international postal shipments valued at $800 or less is suspended and replaced by a formal postal-entry process under 19 CFR Part 145: eligible filers submit a monthly worksheet with 10-digit HTSUS, pay duties by ACH by the 7th of the following month, and maintain a continuous bond in ACE eBond. AD/CVD, quota, PGA-regulated, alcohol, tobacco, and Chapter 98/99 goods are carved out and must be entered formally or via Entry Type 13, with enforcement of most exclusions beginning October 22. The broader June 3 enforcement EO (higher IOR bonding, foreign-IOR limits, a 50% penalty floor) continues on a 180-day rulemaking clock into December.
Source: CSMS #69183472
Section 122's 10% global surcharge hits its hard 150-day limit on July 24 and cannot be extended without Congress. EU-origin goods already moved to the EU-U.S. deal's 15% ceiling on July 1, so the sunset is materially a non-EU event. The replacement floor is forming under Sections 301 and 232, neither of which carries 122's cap or sunset. Immediate takeaway: to secure the current 10% rate rather than a potentially higher 301 rate, non-EU goods likely need to arrive before July 24.
Screen Canada sourcing against Section 338.
Pull the three proclamation annexes and map your Canadian-origin HTS lines, and remember USMCA status does not exempt them. Model landed cost at +50% for covered goods from August 19.
Check every IOR's status in ACE.
Any client that hasn't imported in the past year may be deactivated; reactivate through your broker before the next entry to avoid a filing block.
Beat the July 24 clock.
For non-EU cargo, confirm what can arrive before July 24 to lock the 10% Section 122 rate; model the same lines under the incoming 301 and existing 232 floor.
Re-run IEEPA refund triage.
Sort by liquidation status; for finally-liquidated exposure, track the Freestyle World / class path and weigh a protective §1581(i) filing.
Stand up postal-entry compliance.
If clients receive international mail shipments, get worksheet, HTS, ACH, and continuous-bond mechanics ready before July 24.
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