The Bottom Line
Our July 24 special bulletin explained what importers needed to know about the new Section 301 forced-labor duties. On July 28, USTR's notice of action addressed the open questions: there will be no exclusion process, promised textile quotas haven't been implemented, and drawback eligibility remains unresolved. Since then, importers have sued, the in-transit grace period has ended, and Canada's three 50% proclamations under Section 338 take effect in 21 days.
What we shared last week on the new Section 301 forced-labor duties:
Source: CBP guidance to the trade, CSMS #69326983
USTR has now ruled out an exclusion process. Companies asked for one and for periodic reviews, and the answer was that cutting tariffs on more products would go against the President's directive.
Textile quotas are not in place yet. Apparel and textiles from Bangladesh, Cambodia, Indonesia, and Malaysia currently face the full 10% duty. USTR has indicated it plans to establish three-year quotas based on each country's purchases of U.S. cotton and textile products, but no timeline or application process has been announced.
The biggest unresolved issue is drawback eligibility. When CBP introduced the Section 122 surcharge in February, it explicitly confirmed that drawback was available. For these Section 301 duties, however, neither the notice nor the guidance provides the same clarity.
These are duties importers cannot currently assume are recoverable. For companies that import and re-export goods, this creates a potential working capital issue.
This is exactly the kind of gap that gets missed in the first weeks of a new program. If your broker hasn't raised it, ask this week. We'll be watching for CBP guidance.
The in-transit grace period has ended. The transition period closed at 12:01 a.m. ET Monday, meaning there is no longer a window to plan around. Importers should focus on maintaining the documentation supporting any claims under 9903.05.85, including loading and entry records.
Sources: USTR notice of action, 91 FR 47318, July 28 · Presidential memorandum of July 23, 91 FR 47717 · CSMS #69326983
A spice company and a watch retailer sued at the Court of International Trade on July 24, the same day the duties took effect. They're asking the court to set aside the action, stop collection, and order refunds with interest for a proposed class of importers.
This is worth watching, but probably not for the reason the headline suggests. Nobody expects this to immediately end the duties.
The bigger question is whether importers could recover duties already paid if the challenge succeeds. In the IEEPA cases, that came down to a technical issue: whether an entry was still open when relief arrived. That means the entries you file now are the ones that could ultimately benefit from a favorable ruling.
The legal argument here is also narrower than the IEEPA fight. The question is whether USTR could launch 60 investigations, close them all within five months, and impose duties on 99.4% of U.S. imports without making the country-specific findings Congress required. The challenge does not dispute the President's authority to use Section 301.
One note on sourcing: CIT does not publish newly filed complaints, so we're working from the ECF-stamped copy posted by counsel rather than the court docket.
Source: Complaint, CIT No. 26-03345, filed July 24, 2026
We flagged this date in last week's bulletin. The three Section 338 proclamations are now published, each covering a different sector (alcoholic beverages, dairy, and motor vehicles), and each carrying its own Annex II list subject to an additional 50% duty. That's the maximum allowed under the statute.
The three proclamations share two carve-outs: goods already subject to Section 232 duties and goods covered by the WTO Civil Aircraft Agreement (excluding unmanned aircraft).
One important catch: USMCA qualification doesn't help here. While it exempts qualifying goods from the new Section 301 duties, it provides no relief under Section 338. Same origin, two programs, two very different answers.
Start by identifying the Canadian imports that already pay Section 232 duties; they're outside the scope of these proclamations. Then focus on what's left, because those are the entries that get more expensive in three weeks. Like the Section 301 notice, the proclamations are also silent on drawback.
Sources: Alcoholic beverages, 91 FR 46639 · Dairy, 91 FR 46653 · Motor vehicles, 91 FR 46663
If you build automobile or medium-duty and heavy-duty vehicle engines in the United States, you can start claiming import adjustment offsets today. Commerce published the application procedures this morning, building on the rules it released in May. The offsets apply against duties under the two vehicle proclamations.
This is the kind of program that's easy to miss. For some manufacturers, the only thing standing between them and lower duty costs is an application that no one has been asked to submit. If you think you might qualify, make sure someone owns it this week.
Source: Commerce notice, 91 FR 47807
Brazil. The national emergency underlying the Brazil duty program has been extended for another year beyond July 30, so there are no immediate changes for importers. (See notice.)
Spray-foam systems from Canada. Commerce has opened a country-wide circumvention inquiry into spray-foam systems assembled in Canada using Chinese components under the alkyl phosphate esters orders. A separate scope inquiry covering Chinese systems is on hold until this case is resolved. If you import these products, this is the notice to read this week. (See notice.)
Small solar panels. Commerce is considering partially revoking the China solar orders for certain off-grid portable solar panels. (See notice.)
Sugar quotas. USTR published the FY2027 tariff-rate quota allocations for raw cane sugar, refined sugar, and sugar-containing products, covering the October 2026-September 2027 quota year. (See notice.)
The CIT is reportedly set to hear arguments on August 6 over whether importers with finally liquidated entries can proceed as a class. We haven't been able to confirm the date from a primary source yet, so treat it as tentative for now.
Review your first week of entries.
Our checklist last week went out before anyone had filed entries under these headings, so the first week of filings deserves another look. Pull every entry summary filed since July 24, sort by country of origin, verify the 9903.05 heading on each line, and correct any mismatches with a post-summary correction.
Get your in-transit paperwork in order.
For every claim made under 9903.05.85, make sure you have the supporting records: loading date, routing, final mode of transit, and entry date.
Screen Canadian sourcing against the Annex II lists.
Map your wine, dairy, and vehicle lines against products already subject to Section 232 duties. Then run landed-cost scenarios on the remaining exposure with the additional 50% duty taking effect August 19. In our experience, the impact is usually smaller than expected, and more concentrated in specific product lines.
Know which entries are still open.
If the lawsuit moves forward, the relief will likely reach open entries. Liquidation may decide that question for you if you don't.
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