While no new tariffs are being imposed immediately, USTR also issued its recommended remedies, covering all 60 economies investigated: 

• USTR recommends import tariffs of 10% on 14 economies:  Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, the European Union, Guatemala, Indonesia, Malaysia, Mexico, Pakistan, Taiwan, and the United Kingdom. 
  • These 14 economies are those that USTR found to have implemented (but not yet enforced) a prohibition on the importation of goods produced with forced labor (Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan); to have committed to do so via an Agreement on Reciprocal Trade with the United States (in addition to some of the preceding, Argentina, Bangladesh, Cambodia, El Salvador, Guatemala, Malaysia, and Taiwan); or to have imposed “a partial regime with the effect of preventing the importation of certain forced labor goods” (United Kingdom). 
• USTR recommends import tariffs of 12.5% on 46 economies:  Algeria, Angola, Australia, The Bahamas, Bahrain, Brazil, Chile, China, Colombia, Costa Rica, Dominican Republic, Egypt, Guyana, Honduras, Hong Kong, India, Iraq, Israel, Japan, Jordan, Kazakhstan, Kuwait, Libya, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Peru, The Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sri Lanka, Switzerland, Thailand, Trinidad and Tobago, Türkiye, United Arab Emirates, Uruguay, Venezuela, and Vietnam.
• The above-referenced tariff rates are country-wide, with certain exceptions:  products referenced in Annex A to the Federal Register notice; informational materials, donations, accompanied baggage; all articles and parts of articles that are subject to Section 232 tariffs; USMCA-compliant goods of Canada or Mexico; and textiles and apparel articles that enter duty-free as a good of Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, or Nicaragua under CAFTA-DR.
• USTR also recommends establishment of “a textile mechanism that would allow for a certain volume of apparel and textile imports from certain economies to enter the United States at a reduced Section 301 tariff rate.” 

USTR is requesting public comments on these recommended remedies by July 6.  Comments may be submitted via the designated Public Docket for comments on the USTR Comment Portal.  Specifically, USTR requests the following input from the public:  (1) The specific products to be subject to increased duties, including whether products should be retained or removed from the scope of the action, or whether products currently listed in Annex A should be added to the scope of the action; (2) Whether products listed in Annex A are appropriately excluded; (3) The level of the increase, if any, in the rate of duty; (4) Whether different tariff rates should be applied to an economy where the economy has made a commitment to the United States to impose and enforce a forced labor import prohibition; has imposed a forced labor import prohibition; or has imposed a partial regime with the effect of preventing the importation of certain forced labor goods; and (5) Features of a textile mechanism, including the U.S. and foreign products to be covered, the relative market opportunities for each side, and the tariff rate (if any) to be applied to products subject to that mechanism, as well as whether a similar mechanism should apply to any other product or sector.

The USTR-led Section 301 Committee will also convene public hearings beginning on July 7. Requests to participate at the hearings, along with a summary of the testimony to be provided, must be submitted to USTR by June 22 via the designated Public Docket for hearing participation on the USTR Comment Portal. 

USTR’s announcement does not address other investigations under Section 301 of the Trade Act of 1974, including:  the investigation related to structural excess capacity and production in manufacturing sectors of 16 economies initiated on March 11, 2026; the investigation into China’s implementation of commitments under the Phase One Agreement, initiated October 28, 2025; the investigation into Vietnam’s acts, policies, and practices related to intellectual property protection and enforcement announced on May 29, 2026; or the determination and proposed remedies related to Brazil’s unreasonable acts, policies, and practices announced on June 1, 2026.  USTR’s findings and recommended remedies the excess capacity, China, and Vietnam investigations are still forthcoming.  Remedies subsequent to each investigation are expected to stack on top of the recommended remedies announced here for economies subject to multiple investigations. 

The timing of this announcement aligns with the general expectation that USTR plans to have at least some final Section 301 tariffs in force before the current 10% global Section 122 tariffs expire on July 24. 

About the Author

Josh Kagan, the former head of the USTR Labor Office, brings firsthand experience overseeing forced labor trade enforcement and negotiations on behalf of the U.S. government. Drawing on that unique perspective, Josh leads Kelley Drye's globally recognized Forced Labor Trade Enforcement practice, helping clients understand these developments and anticipate what is coming next.

If you need assistance navigating the implications of this announcement, submitting public comments, participating in the public hearing, or identifying forced labor enforcement risks in your supply chain amid the growing proliferation of global forced labor import prohibitions, please reach out to Josh or any member of Kelley Drye's Forced Labor Trade Enforcement team.

The Section 122 statute. Section 122 allows the President to impose tariffs up to 15%, not exceeding 150 days, when fundamental international balance of payments issue exist.  On February 20, 2026 (the day the Supreme Court struck down the IEEPA tariffs), President Trump announced a 10% tariff on imports, with some exceptions. The tariff went into effect February 24, 2026, and is currently set to expire July 24, 2026.  In imposing the tariffs under the law, which requires a “large and serious United States balance-of-payments deficits,” the President identified “deficits in trade, primary income, secondary income, and the current account, and a negative net international-investment position” as support. 

The decision.  The court reviewed the text of the statute, its legislative history, and historical context to conclude that the President’s February 20 proclamation did not properly rest on the existence of a balance-of-payments deficit.  According to the court, “what is relevant is what Congress meant by ‘balance-of-payments deficits’ in 1974, and what Congress meant can be determined based on what it reported at the time of enactment, namely the balance-of-payments deficits as measured by liquidity, official settlements and the basic balance. . . . Accepting as true every factual statement in Proclamation No. 11012 {of February 20, 2026}, the surcharge imposed by the Proclamation rests on the existence of a large trade deficit, a current account deficit, a negative net international investment position, and a deficit on the balance on primary and secondary income (which are part of the current account). . . . Nowhere does Proclamation No. 11012 identify balance-of-payments deficits within the meaning of Section 122 as it was enacted in 1974.”  Thus, the court concluded that the February 20th Proclamation is unlawful.

The remedy.  As a threshold matter, the court concluded that only the private importers and the State of Washington had standing to seek permanent injunctive relief on the basis that they face imminent injury due to Section 122 duty payments made or impending.  The other 23 state plaintiffs, however, did not have standing because they did not demonstrate duty-related injury (neither they nor their public instrumentalities were shown to be importers of record liable for such duties). 

For the private plaintiffs and the State of Washington, the court issued permanent injunctive relief. The court did not issue a universal (i.e., nationwide) injunction.  In other words, the court’s order applies only to the three prevailing plaintiff parties. The court declined to issue a universal injunction because (1) the private importers did not argue for a universal injunction, and (2) the state plaintiffs that urged a universal injunction did not have standing, except for the State of Washington, and the circumstances of Washington’s injury did not warrant universal relief.

How does this case differ from the IEEPA decision?  This decision differs in several notable ways from the legal and remedial issues presented in the IEEPA tariff litigation.  First, in the IEEPA litigation, the Supreme Court found that the IEEPA statute never allows the imposition of tariffs.  In contrast, here, the court found that while Section 122 does allow for tariffs, the stated basis for the specific presidential action at issue did not meet the standard for the imposition of tariffs under that law. 

Second, unlike the initial IEEPA tariff decision, the court here did not issue a universal injunction. To the extent the state plaintiffs – who had argued in favor of that form of relief – decide to appeal the remedy, they will also have to appeal and first prevail on the question of standing. 

Third, the scale of the tariff programs in terms of the duties at stake differ, and perhaps significantly.  The IEEPA tariffs, while initially held at 10%, eventually increased on a country-specific basis to as high as 50%.  Moreover, the IEEPA tariffs had no expiration date, whereas the Section 122 tariff – currently at 10% and which cannot exceed 15% – will terminate by operation of law on July 24, 2026.  The exemptions provided from the Section 122 tariff, however, largely track those provided under the IEEPA tariff program. 

What next?  As was the case during the early stages of the IEEPA tariff litigation, there are still many unknowns ahead. 

• Importers may attempt use this decision to file post-summary corrections (“PSCs”) (i.e., normal and permissible changes to documentation and claims on entry) for entries subject to Section 122 duties that have not yet liquidated by removing the Section 122 tariff line.  An important caveat here is that while PSCs are normally pro forma and do not require CBP action to take effect, CBP may reject PSCs that are filed based on this court decision.  That is because the court did not issue a universal injunction (meaning that the remedy does not apply to any importer except the two private plaintiffs and the State of Washington), and because the litigation is not final (meaning it can still be appealed). 
• There is time to see how this plays out without relinquishing rights to future refunds.
  • First, other individual importers who may want to file their own lawsuits would do so under the court’s “residual” jurisdiction, which carries a two-year statute of limitations period.  Section 122 duties went into effect on February 24, 2026.  The right to appeal remains available until February 2028.
  • Second, if CBP does not allow PSCs, entries may take up to 314 days to liquidate.  That is not true for every entry, but it will be true for most. Thus, most entries will still be in pre-liquidation status and readily refundable in the coming months. 
  • Third, once entries liquidate, importers have 180 days from the date of liquidation to file an administrative protest of that entry with CBP, and any protest does not need to be filed until the end of that period.  That adds six months of time, even after specific entries liquidate (which could take many more months from now for any given entry subject to Section 122), to understand how the litigation is unfolding and whether individual tariff recovery lawsuits will be necessary.
• The Administration may take action outside of the litigation in response to this decision.  That may be anything from an early termination of the Section 122 tariffs to a modification of the proclamation to correct the legal errors identified by the court.  In the latter case, perfection or reissuance of the Section 122 tariff action may moot the ability of other importer’s to rely on the court decision as a basis for tariff recovery (either administratively with CBP or through individual lawsuits).
• Importers should monitor the universe and status of their entries on which they have paid or will pay Section 122 tariffs.  There are two key timelines to monitor: (1) the right to file a lawsuit seeking refunds with the Court of International Trade under its residual jurisdiction (two years), and (2) the date of liquidation of relevant entries so that protests can be filed toward the end the protest period if there is still insufficient guidance coming from action in the courts and/or by the Administration. 

As always, the attorneys in our International Trade practice are available to discuss how this may apply to your specific situation.

In his April 7 Order, Judge Eaton directed U.S. Customs and Border Protection to refund all IEEPA duties, regardless of whether the entry has been liquidated and whether the liquidation was final.  This was the exact language the court used in the March 27 order in Atmus, discussed in our March 30 advisory, indicating the intent that Euro-Notions pick up right where Atmus left off.

The deadline for the U.S. Government to appeal this order has been pushed back to June 8, 2026.  This has shifted from the prior date because the deadline is calculated from the CIT’s April 7 Order in the Euro-Notions case.  Like the last order issued in Atmus, the April 7 Order in Euro-Notions makes clear that it does not address whether there was statutory authority to use the IEEPA to remove de minimis treatment for small value entries.

Prior to dismissal of the Atmus case, the CIT had ordered CBP to provide another status update by noon on April 14, in advance of a closed conference that afternoon.  A similar order in Euro-Notions was entered on April 8, signaling that CBP’s development of the IEEPA refund mechanism will continue on track.

According to USTR's Federal Register Notice, the lack of effectively enforced forced labor import prohibitions threatens domestic producers who must compete with foreign goods produced with an artificial cost advantage and may harm U.S. workers and citizens through distorting competition and the purchase of goods produced under exploitative conditions.

The agency's announcement - which came less than three weeks after the U.S. Supreme Court struck down President Trump's IEEPA tariffs - was widely-anticipated, as the Administration has said it would use Section 301 investigations, and potential remedies, as part of its effort to quickly rebuild the President's tariff regime.

What Is Section 301?

Section 301 of the Trade Act of 1974 provides a statutory means for the U.S. to impose trade sanctions against foreign countries that violate a U.S. trade agreement or engage in acts, policies, or practices that are "unjustifiable," "unreasonable," or "discriminatory," and burden or restrict U.S. commerce.

The statute defines "unreasonable" acts, policies, and practices to include "a persistent pattern of conduct that…permits any form of forced or compulsory labor."

USTR may initiate a case based on a petition from any interested person or, alternatively, can "self-initiate," as it did in this instance.

The Section 301 process is led by USTR, in coordination with an interagency "Section 301 Committee."  The Committee will solicit and review public comments, conduct public hearings, and make recommendations that will inform the final decision(s) by the USTR.

If USTR makes an affirmative determination to take action "to obtain the elimination of such act, policy, or practice," such action must be implemented within 30 days, unless USTR exercises its discretion to delay implementation (by no more than 180 days) under certain specified circumstances.  The action(s) taken can affect any goods, services, or other aspects of the trade relationship with the target country, subject to any "specific direction" of the President.

Once an action is in place, Section 301 allows USTR to modify or terminate the action if, for example, the foreign conduct that is the subject of the action "has increased or decreased" or "is no longer appropriate."  Section 301 action may continue indefinitely but is subject to termination at the end of four years if the domestic industry benefitting from the action does not request continuation of the action.  If a continuation request is submitted before the end of the four-year period, USTR will conduct a review of the efficacy and economic effects of the action before deciding on continuation.

Which Remedies Are Available?

Section 301 authorizes the USTR to: (1) impose duties or other import restrictions (with a preference for duties), (2) withdraw or suspend trade agreement concessions, or (3) enter into a binding agreement with the foreign government to either eliminate the conduct in question (or the burden to U.S. commerce) or compensate the United States with satisfactory trade benefits.  Should tariffs be imposed, the statute allows for, but does not require, an exclusion process.

President Trump used Section 301 during his first term to impose sweeping tariffs on Chinese-origin imports after USTR's affirmative determination regarding discriminatory intellectual property rights-related trade and economic practices on the part of the People's Republic of China (PRC).  Those tariffs, covering $370 billion in Chinese imports, remain in place today.

What is the Timeline?

Generally, USTR must finish an investigation within 12 months of initiation.  In this case, Ambassador Greer has pledged to move on a much quicker timeline.  The investigations may be concluded by July 24, 2026, when the temporary Section 122 tariffs are set to expire (see our blog post on those tariffs here).

Is the Action Industry-Specific?

In its May 12 Federal Register Notice, USTR focuses on the absence of enforced forced labor import prohibitions in the 60 economies included within the scope of the investigation. While the notice references the existence of forced labor in various industries - including cotton used to produce garments, textiles, thread and yarn; critical minerals used to produce solar products or auto-parts; fish used to produce fish oil and fish meal; and palm fruit used to produce kernel or palm oil used in various cooking oils and biofuels - the investigation centers on the failure of countries to implement and enforce forced labor import prohibitions to stop the entry of such goods into their markets.  The investigation does not focus on the presence of forced labor in any particular industry. 

Which Trading Partners Are Covered? 

Trading partners subject to the investigations are:  Algeria, Angola, Argentina, Australia, The Bahamas, Bahrain, Bangladesh, Brazil, Cambodia, Canada, Chile, China, Colombia, Costa Rica, Dominican Republic, Ecuador, Egypt, El Salvador, the European Union, Guatemala, Guyana, Honduras, Hong Kong/China, India, Indonesia, Iraq, Israel, Japan, Jordan, Kazakhstan, Kuwait, Libya, Malaysia, Mexico, Morocco, New Zealand, Nicaragua, Nigeria, Norway, Oman, Pakistan, Peru, Philippines, Qatar, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Sri Lanka, Switzerland, Taiwan, Thailand, Trinidad and Tobago, Türkiye, United Arab Emirates, United Kingdom, Uruguay, Venezuela, and Vietnam. 

Haven't Some of These Governments Implemented, or Committed to Implement, Forced Labor Import Prohibitions?

Yes.  Canada and Mexico implemented forced labor import prohibitions pursuant to commitments to the United States to do so in the United States-Mexico-Canada Agreement.  The European Union adopted a forced labor regulation prohibiting imports, exports, and domestic sales of forced labor goods that is scheduled to be fully applied in December 2027.  Several listed countries also committed to implement forced labor prohibitions in their recent Agreements on Reciprocal Trade with the United States, including Malaysia, Cambodia, El Salvador, Guatemala, Argentina, Bangladesh, Taiwan, and Indonesia. 

USTR's inclusion of these countries within the scope of this Section 301 investigation indicates that USTR expects countries not only to commit to adopt forced labor import prohibitions or to adopt them, but to effectively enforce those measures as well. 

What Information Is USTR Seeking?

USTR is specifically seeking feedback regarding:

• Whether any economy subject to these investigations maintains or is in the process of establishing a forced labor import prohibition, and whether any such import prohibition is being effectively enforced.
• The extent to which the failure of any economy to establish and effectively enforce a forced labor import prohibition is unreasonable, discriminates against U.S. goods, or constitutes a persistent pattern of conduct that permits any form of forced or compulsory labor.
• The extent to which the failure of any economy to establish and effectively enforce a forced labor import prohibition has negatively affected U.S. commerce, such as through lost U.S. exports or economic output, lower prices for U.S. goods, or lower wages for U.S. workers.
• What action, if any, should be taken to address these issues, including:

- The level and scope, if any, of duties on products of any economy subject to these investigations.

- The level and scope, if any, of import restrictions on products of any economy subject to these investigations. The appropriate aggregate level of trade to be covered by any additional duties on products of any economy subject to these investigations. 

• Nothing precludes a stakeholder from commenting in support of action for one or more trading partners and, at the same time, in opposition to action relative to others.

How Can Companies, Industries, and Other Stakeholders Engage?

USTR is soliciting written comments and will hold public hearings beginning April 28, 2026.  Given the breadth of the investigation, we anticipate the hearings may last multiple days.  USTR has said they will continue, as necessary, until May 1, 2026.

The agency opened a formal docket for public comments on March 12, 2026.  Written comments and requests to testify at the public hearing are due April 15 and must be submitted via the agency's docket. Further instructions are included in the Federal Register Notice.  Rebuttal comments will be accepted for seven days following the last public hearing day.

Are Additional Section 301 Investigations Expected?

Yes.  In a February 20 public statement, Ambassador Greer announced that the Trump Administration would be initiating several Section 301 investigations that it expected "to cover most major trading partners and to address areas of concern such as industrial excess capacity, forced labor, pharmaceutical pricing practices, discrimination against U.S. technology companies and digital goods and services, digital services taxes, ocean pollution, and practices related to the trade in seafood, rice, and other products." 

The two Section 301 investigations initiated by USTR this week relate to the first two subjects referenced by Ambassador Greer.  See our post on USTR's Section 301 investigations regarding industrial excess capacity and production here.

According to USTR, this excess capacity and over-production leads to persistent trade imbalances and poses serious challenges to the U.S. economy, undermining investments in domestic manufacturing and threatening American jobs.

The agency’s announcement — which came less than three weeks after the U.S. Supreme Court struck down President Trump’s IEEPA tariffs — was widely-anticipated, as the Administration has said it would use Section 301 investigations, and potential remedies, as part of its effort to quickly rebuild the President’s tariff regime.

What Is Section 301?

Section 301 of the Trade Act of 1974 provides a statutory means for the U.S. to impose trade sanctions against foreign countries that violate a U.S. trade agreement or engage in acts, policies, or practices that are “unjustifiable,” “unreasonable,” or “discriminatory,” and burden or restrict U.S. commerce.

USTR may initiate a case based on a petition from any interested person or, alternatively, can “self-initiate,” as it did in this instance.

The Section 301 process is led by USTR, in coordination with an interagency “Section 301 Committee.” The Committee will solicit and review public comments, conduct public hearings, and make recommendations that will inform the final decision(s) by the USTR.

If USTR makes an affirmative determination to take action “to obtain the elimination of such act, policy, or practice,” such action must be implemented within 30 days, unless USTR exercises its discretion to delay implementation (by no more than 180 days) under certain specified circumstances. The action(s) taken can affect any goods, services, or other aspects of the trade relationship with the target country, subject to any “specific direction” of the President.

Once an action is in place, Section 301 allows USTR to modify or terminate the action if, for example, the foreign conduct that is the subject of the action “has increased or decreased” or “is no longer appropriate.” Section 301 action may continue indefinitely but is subject to termination at the end of four years if the domestic industry benefitting from the action does not request continuation of the action. If a continuation request is submitted before the end of the four-year period, USTR will conduct a review of the efficacy and economic effects of the action before deciding on continuation.

Which Remedies Are Available?

Section 301 authorizes the USTR to: (1) impose duties or other import restrictions (with a preference for duties), (2) withdraw or suspend trade agreement concessions, or (3) enter into a binding agreement with the foreign government to either eliminate the conduct in question (or the burden to U.S. commerce) or compensate the United States with satisfactory trade benefits. Should tariffs be imposed, the statute allows for, but does not require, an exclusion process.

President Trump used Section 301 during his first term to impose sweeping tariffs on Chinese-origin imports after USTR’s affirmative determination regarding discriminatory intellectual property rights-related trade and economic practices on the part of the People’s Republic of China (PRC). Those tariffs, covering $370 billion in Chinese imports, remain in place today.

What is the Timeline?

Generally, USTR must finish an investigation within 12 months of initiation. In this case, Ambassador Greer has pledged to move on a much quicker timeline. The investigations may be concluded by July 24, 2026, when the temporary Section 122 tariffs are set to expire (see our blog post on those tariffs here).

Which Industries Are Covered?

In its May 11 Federal Register Notice, USTR highlighted industries “plagued by excess capacity and production,” including: aluminum, automobiles, batteries, cement, chemicals, electronics, energy goods, glass, machine tools, machinery, non-ferrous metals, paper, plastics, processed food and beverages, robotics, satellites, semiconductors, ships, solar modules, steel, and transportation equipment.

This “illustrative list” does not preclude stakeholders from commenting on other manufacturing sectors, nor does it preclude USTR from making findings related to other sectors.

Which Countries Are Covered? 

Trading partners subject to the investigations include: China, the European Union, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India.

USTR states that these economies “appear to exhibit structural excess capacity and production in various manufacturing sectors, such as through large or persistent trade surpluses or underutilized or unused capacity.” For each economy, USTR provides illustrative examples of manufacturing sectors where it believes these conditions exist.

What Information Is USTR Seeking?

USTR is specifically seeking feedback regarding:

• The acts, policies, and practices of each investigated economy creating or maintaining structural excess capacity or production in specific sectors. The Federal Register Notice describes certain “policy interventions” that may contribute to structural excess capacity that include, for example,
  • production and export promotion untethered from market principles;
  • domestic wage suppression;
  • non-commercial activities of state-owned or -controlled enterprises;
  • sustained market access barriers;
  • lax or inadequate environmental or labor protections or social safety net;
  • subsidized lending; and
  • financial repression and “currency practices.”
• Whether the acts, policies, and practices are unreasonable or discriminatory.
• Whether the acts, policies, and practices burden or restrict U.S. commerce, and if so, the nature and level of the burden or restriction (e.g., economic assessments).
• Whether the acts, policies, and practices are actionable under section 301(b) of the Trade Act, and what action, if any, should be taken, including tariff and non-tariff actions.
• Whether there are additional considerations for assessing acts, policies, and practices that contribute to structural excess capacity or production in manufacturing sectors.

How Can Companies, Industries, and Other Stakeholders Engage?

USTR is soliciting written comments and will hold public hearings beginning May 5, 2026. Given the breadth of the investigation, we anticipate the hearings will last several days. USTR has said they will continue, as necessary, until May 8, 2026.

The agency will open a formal docket on March 17, 2026. Written comments and requests to testify at the public hearing are due April 15 and must be submitted via the agency’s docket. Further instructions are included in the Federal Register Notice. Rebuttal comments will be accepted for seven days following the last public hearing day.

Are Additional Section 301 Investigations Expected?

Yes. In fact, Ambassador Greer also announced on March 11 that a separate investigation concerning forced labor may be announced as soon as March 12. The investigation will cover “about 60” countries that have not adopted or enforced forced labor import prohibitions.

They will walk through:

• How to identify and calculate previously paid tariffs
• Steps companies can take now to prepare for potential electronic refund processes
• What the Court of International Trade’s ruling means for importers, including possible appeals and implementation timelines
• Key commercial contract considerations
• Latest tariff-related developments from federal agencies

This session will help companies understand the emerging refund framework and position themselves to act quickly as the process develops.

Register here.

The Administration has also announced the following actions to be taken:

1. Initiate several investigations under Section 301 to deal with “unjustifiable, unreasonable, discriminatory, and burdensome acts, policies, and practices by many trading partners.” At their conclusion, these investigations are likely to result in the imposition of more-enduring tariffs to replace the time-limited Section 122 tariffs discussed below.

2. Continue ongoing Section 301 investigations, including those involving Brazil and China.
3. Maintain tariffs currently imposed under Section 232 (e.g., steel, aluminum, copper, autos), and conclude ongoing investigations.

 Here are the key takeaways from the Presidential orders:

IMMEDIATE: Rescission of the IEEPA tariffs (Executive Order)

• The following IEEPA tariffs “shall no longer be in effect and, as soon as practicable, shall no longer be collected.”
  • Canada Fentanyl-Trafficking (currently 35%)
  • Mexico Fentanyl-Trafficking (currently 25%)
  • China Fentanyl-Trafficking (currently 10%)
  • Venezuelan Oil (not yet imposed on any country)
  • Global Reciprocal (varies by country)
  • Anti-Corruption (Brazil) (currently 40%)
  • Russian Oil (India) (rescinded effective Feb. 7, 2026)
  • Cuban Oil (not yet imposed on any country)
  • Iranian Support (not yet imposed on any country)
• CBP issued a message on its Cargo Systems Messaging Service (“CSMS”) confirming that it will stop collecting IEEPA tariffs (de-activate all IEEPA-related tariff codes) effective 12:01 a.m. EST on Tuesday, February 24, coinciding with the start of the Section 122 tariffs. CBP’s message did not address refunds.
• Any other non-tariff measures taken under these previous executive orders, and all related “national emergency” declarations, are not affected and remain in effect.
• The President is directing agencies to “immediately begin taking steps to effectuate this order and, as soon as practicable, terminate the collection” the abovementioned tariffs. This includes modification to the U.S. Harmonized Tariff Schedule (HTSUS) as necessary.
• This order does not affect any other tariff actions, including those taken under Section 301 and Section 232.

SHORT-TO-MEDIUM TERM: Temporary 10% tariff for 150 days under Section 122 (Proclamation)

• Effective period: 12:01 am on February 24, 2026, through 12:01 am on July 24, 2026, unless “expressly suspended, modified, or terminated on an earlier date,” or “extended by an Act of the Congress.”
• In-transit exemption for goods loaded before 12:01 am on February 24, 2026, and entered before 12:01 am on February 28, 2026.
• General exemptions to the 10% tariff are outlined in Annex I (modifying the HTSUS to implement) and Annex II (listing the exempt HTSUS codes with “scope limitations,” as applicable) and are summarized below. If any exception is found to be “invalid in whole or in part,” only the exception – and not the entire proclamation – will be treated as invalid and the required application of the tariff will apply only prospectively.
  • USMCA-qualifying goods.
  • Goods currently or in the future subject to a Section 232 action.
  • CAFTA-DR free trade agreement-qualifying textiles and apparel.
  • Certain goods in defined sectors: critical minerals; currency and bullion; energy and energy products; national resources and fertilizers not sufficiently available in the United States; agricultural products; pharmaceuticals and pharma ingredients; electronics; vehicles (types of trucks, buses, and passenger vehicles); and aerospace products.
  • Information materials, donations, and personal baggage.
• Tariff applies on top of “any other duties, taxes, fees, exactions, and charges applicable to such products,” except Section 232 tariffs. 
  • If the Section 232 tariff applies to only a “part” of a product (such as a derivative product), the 10% tariff under Section 122 applies to the remaining (non-232) “part” of the imported good. 
  • This appears to echo the way the Section 232 and Global Reciprocal tariffs had stacked for derivative products. Note that there is currently considerable debate, without official CBP guidance, regarding how importers should determine the value of the “content” of the imported good subject to Section 232 tariffs (e.g., steel content of a steel derivative product).
• The Section 122 tariff will be treated as a regular customs duty, which means it should be deducted from U.S. price in antidumping duty calculations (like Section 232 tariffs).
• The U.S. Trade Representative (USTR) is charged with monitoring the “fundamental international payments problems,” and will inform the President of circumstances that “might indicate the need for further action by the President, including under section 122” (separate from suspension, modification, or termination of the tariff).

BRIDGE TO PERMANENT: Continued suspension of de minimis treatment of shipments valued at less than $800 (executive order)

• This clarifies an open question regarding the effect of the SCOTUS decision on de minimis suspension actions taken alongside tariffs actions in prior IEEPA executive orders.
• Effective, February 24, 2024, all articles from all countries and regardless of method of entry, except international postage, are subject to all applicable duties and fees and must make formal entry.
• International postage network shipments may enter duty fee, without formal entry by CBP, except that a duty equal to the Section 122 balance-of-payments tariff (10%) must be collected by carriers and remitted to CBP. The duty is in effect for international postage until the Section 122 action expires, or “until the effective date of the new entry process for postal shipments established by CBP,” whichever comes first.
• Recall that Congress has already permanently repealed de minimis treatment, effective July 1, 2027.

The two agreements share some common features.

• The date of entry into force is TBA, as detailed in Article 7.5 of each ART.  For Taiwan, the ART will enter into force “the day following” the written notification of both parties that “internal procedures required for entry into force of this Agreement have been completed.”  For Indonesia, the ART will enter into force “90 days after” the exchange of written notifications from each party “certifying completion of their applicable legal procedures or on such other date as the Parties may decide.”
• Each ART includes a tariff schedule specifying how each party shall modify various duties and tariffs rates for imports of goods of the other party.
  • Taiwan
    • General Note 5 to Schedule 2 (in the Text) provides that for Taiwan-originating goods other than those specifically listed on Schedules 2A or 2B (discussed below), the total duties paid shall be either 15%, inclusive of the IEEPA Reciprocal Tariff rate, or the MFN (general) duty rate, whichever is greater (currently 20%).  For example, if an imported good has an MFN rate of 6.5%, the IEEPA Reciprocal Tariff rate will be 8.5%.  If the general MFN duty is 15% or higher, the Reciprocal Tariff rate will be zero.  Note: this is structured in the same way as the U.S. reciprocal tariff agreements with the EU and Japan.
    • Annex I, Schedule 1 lists the agreed-upon preferential Taiwanese rates for U.S.-origin goods going to Taiwan.  The rates reductions are scheduled to take effect at different times, which are “staged” in categories.  For example, HS codes marked “EIF” will be reduced to zero when the agreement goes into effect.
    • Annex I, Schedule 2A reduces to zero the IEEPA Reciprocal Tariff rate for certain Taiwan-origin goods entering the United States.  This is a relatively limited list of select products derived from the  “Potential Tariff Adjustments for Aligned Partners” Annex issued by Executive Order 14346 of September 5, 2025.  Most, but not all, Reciprocal Tariff exemptions on this list carry various scope limitations, meaning the imported merchandise must meet the specific limitation to be eligible for the tariff exemption.
    • Annex I, Schedule 2B reduces to zero the IEEPA Reciprocal Tariff rate for certain Taiwan-origin agricultural products entering the United States, consistent with the standalone agricultural product Reciprocal Tariff exemptions in Executive Order 14360 of November 14, 2025.
  • Indonesia
    • General Note 4 to Schedule 2 (in the Text) provides that for Indonesia-originating goods except those specifically listed on Schedules 2A or 2B (discussed below), the IEEPA Reciprocal Tariff rate shall be “no higher than” 19% (currently 19%).
    • Annex I, Schedule 1 lists the agreed-upon preferential Indonesian rates for U.S.-origin goods going to Indonesia.  The rates reductions are scheduled to take effect at different times, which are also “staged” in categories.
    • Annex I, Schedule 2A reduces to zero the IEEPA Reciprocal Tariff rate for certain Indonesia-origin goods entering the United States.  This is a relatively limited list of select products derived from the  “Potential Tariff Adjustments for Aligned Partners” Annex issued by Executive Order 14346 of September 5, 2025.  Many of these Reciprocal Tariff exemptions on this list carry scope limitations.
    • Annex I, Schedule 2B reduces to zero the IEEPA Reciprocal Tariff rate for certain Indonesia-origin agricultural products entering the United States, consistent with the standalone agricultural product Reciprocal Tariff exemptions in Executive Order 14360 of November 14, 2025.

Beyond tariff reductions, these ARTs cover many topics seen in more traditional free trade agreements, including – on the part of Taiwan and Indonesia – the elimination of non-tariff barriers affecting U.S. exports. Additionally, both Taiwan and Indonesia committed to a number of policy changes to better align with existing U.S. policy, such as implementation of a forced labor import ban and enhanced intellectual property protections. But that also means the “internal procedures” to approve the agreements, triggering their entry into force, may be long and complex (particularly in Taiwan and Indonesia as those countries’ commitments are somewhat more substantial). In the United States, the internal or legal procedures required also remain undefined; while the Administration contends the ARTs do not require Congressional approval, many Members of Congress disagree.

Finally, the tariffs that the United States has agreed to modify in Schedule 2 of each of these ARTs inherently rely on IEEPA authority.  The Supreme Court just issued an opinion finding that law does not provide the President with the necessary authority (more on that soon).  Thus, the concessions the United States has made to reduce or eliminate those tariffs are likely rendered moot to the extent the tariffs themselves evaporate in whole or in part.  This also raises a question about the survival of the other terms reached by the United States and its trading partners in exchange for those Reciprocal Tariff rate reductions (e.g., auto quotas, purchase and investment commitments, import licensing, regulatory acceptance, agricultural barriers to trade, intellectual property, labor, taxes, environment, etc.).  Taiwan or Indonesia may seek to abrogate their respective agreements under those circumstances, but we should expect the United States to use other points of leverage, both tariff-related and otherwise, to ensure the rest of the deal stays in place.

On February 10, 2026, to supplement an earlier General License (“GL”) authorizing certain activities involving Venezuelan-origin oil (see our previous blog post on Venezuela GL No. 46), OFAC issued GL No. 48, which permits “all transactions prohibited by the Venezuela Sanctions Regulations, 31 CFR part 591… that are ordinarily incident and necessary to the provision from the United States or by a U.S. person of goods, technology, software, or services for the exploration, development, or production of oil or gas in Venezuela.” The new GL specifically permits activities involving the Government of Venezuela, sanctioned energy company Petróleos de Venezuela (PdVSA), and entities in which PdVSA holds, directly or indirectly, a 50% or more interest.  As described in GL No. 48, certain conditions apply and companies relying on this OFAC authorization must be very careful to ensure that they adhere to those conditions because penalties for non-compliance can be significant.

This GL will be especially important to U.S. companies that supply equipment for oil production and related activities - and it has wide-ranging implications for a wide variety of other U.S. companies and industries that support oil and gas production. An example of transactions authorized under GL No. 48 include transactions for the maintenance of oil or gas operations in Venezuela, including the refurbishment or repair of items used for oil or gas exploration, development, or production activities. The new GL also authorizes transactions related to the processing of payments, arranging shipping and logistics services, including chartering vessels, obtaining marine insurance and protection and indemnity coverage, and arranging port and terminal services.

On the same day, OFAC also amended GL No. 46 to clarify that payments for local taxes, permits, and fees do not need to be made into the Foreign Government Deposit Funds (see GL No. 46A, which replaces GL No. 46). In addition, OFAC issued GL No. 30B to update a long-standing license authorizing certain transactions involving Venezuelan ports and airports, to remove previous language that discussed a restriction on diluents to Venezuela. This change was necessary as a result of  GL No. 47 issued on February 3, 2026, which permits the sale of U.S.-origin diluents to Venezuela.

On February 13, 2026, OFAC issued GL No. 49 and GL No. 50. GL No. 49 authorizes negotiations and entry into “contingent contracts” for new investment in oil or gas operations in Venezuela.  These contingent contracts subsequently require a separate authorization from OFAC for the performance of such contracts, to ensure that the proposed contracts advance the interests of the American and Venezuelan people. GL No. 50 permits certain companies (BP PLC, Chevron Corporation, Eni S.p.A., Repsol S.A., and Shell PLC) and their subsidiaries that already have oil or gas operations in Venezuela to engage in transactions involving the Government of Venezuela, PdVSA, and entities in which PdVSA holds, directly or indirectly, a 50% or more interest. On February 18, 2026, OFAC amended GL No. 50 with GL No. 50A to add Établissements Maurel & Prom SA to the list of companies covered by the general license.

The Licenses include many restrictions and reporting requirements, similar to the ones outlined in our previous blog post on Venezuela GL No. 46. 

Please contact our Export Controls and Economic Sanctions team if you need assistance navigating these latest developments.

*Legal Assistant Sean Church contributed to this blog post.

The License states “all transactions prohibited by the Venezuela Sanctions Regulations, 31 CFR part 591…that are ordinarily incident and necessary to the lifting, exportation, reexportation, sale, resale, supply, storage, marketing, purchase, delivery, or transportation of Venezuelan-origin oil, including the refining of such oil, by an established U.S. entity” are now authorized by OFAC, provided that new contracts are governed by the laws of the United States and any monetary payment to a blocked person is made into the Foreign Government Deposit Funds. The purpose of the License is to authorize transactions involving the Venezuelan government, state-owned energy company Petroleos de Venezuela (PdVSA), or any entity majority-owned by PdVSA, which were previously blocked by U.S. sanctions. 

The most notable limitations of these transactions are below and not authorized by OFAC: 

• Payment terms that are not commercially reasonable, involve debt swaps or payments in gold, or are denominated in digital currency, digital coin, or digital tokens issued by, for, or on behalf of the Government of Venezuela, including the petro.
• Any transaction involving a person located in or organized under the laws of the Russian Federation, the Islamic Republic of Iran, the Democratic People’s Republic of Korea, the Republic of Cuba, or any entity that is owned or controlled, directly or indirectly, by or in a joint venture with such persons.
• Any transaction involving a blocked vessel.

Additionally, any person that exports, reexports, sells, resells, or supplies Venezuelan-origin oil to countries other than the United States pursuant to this general license must provide a detailed report to OFAC. These reports are due ten days after the execution of the first of such transactions and every 90 days thereafter while such transactions are ongoing.

Finally, on Monday, February 2, 2026, OFAC also authorized all transactions related to, the provision of financing for, and other dealings in the Petróleos de Venezuela, S.A. 2020 8.5 Percent Bond that would be prohibited by subsection l(a)(iii) of Executive Order (E.O.) 13835 of May 21, 2018. 

With so many conditions attached to doing business related to Venezuelan oil, we recommend any clients doing so to contact our Export Controls and Economic Sanctions team to ensure transactions are within the scope of what is now authorized by OFAC. 
 

Filed in November 2025, after the Supreme Court heard oral argument in the VOS Selections case, AGS – and the many cases consolidated under that caption – involves claims by multiple U.S. importers similarly challenging the lawfulness of the IEEPA tariffs. Notably, AGS is pending before the same three-judge panel (Judges Katzmann, Reif, and Restani) that initially decided VOS Selections. 

On January 14, 2026, the CIT denied the Government’s motion in AGS to adopt certain case management procedures.  As the Government explained in its motion, “From October 2025 to the present, over 900 cases have been commenced challenging the IEEPA tariffs,” indicating that case management procedures such as automatic stays, a plaintiffs’ steering committee, a consolidated filing and service mechanism, and a universal stipulation on reliquidation would ease the burden of mass litigation.  The requested procedures largely reflected the CIT’s and parties’ experience in the mass China Section 301 tariff litigation, In Re Section 301 Cases, Ct. No. 21-00052-3JP.  The CIT panel in AGS declined to adopt the Government’s proposal, although it did so “without prejudice,” meaning that parties may file a similar request in the future should circumstances change.

In its paperless order denying the motion, the CIT made two critical statements:

1. The court confirmed “that the Government's stipulation regarding reliquidation applies to all current and future similarly situated plaintiffs.” This refers to an earlier December 15, 2025, order in AGS in which the CIT denied the plaintiffs’ motion for preliminary injunctive relief in the form of suspended liquidation of entries on which IEEPA tariffs had been assessed.  The court concluded there is no irreparable harm to plaintiffs if the affected entries are allowed to liquidate because “where jurisdiction {under 28 U.S.C. § 1581(i)} has attached, this court has authority to order reliquidation, and the Plaintiffs cannot claim that they would be denied a refund of tariffs paid in the event that the challenged Executive Orders are ultimately deemed unlawful by the Supreme Court.” Importantly, the Government stipulated that it will not object to the court ordering reliquidation in the future if the IEEPA tariffs are found to be unlawful, and the CIT held the Government is judicially estopped from claiming otherwise after the Supreme Court decision issues.

Key Takeaway: Setting aside whether non-litigants (i.e., U.S. importers affected by the IEEPA tariffs that do not currently have cases pending before the CIT) will have to file lawsuits in the future to preserve refund rights, the CIT is reiterating that is has the legal authority, acknowledged by the Government, to order reliquidation of entries for purposes of issuing appropriate refunds. 

Notably, the CIT’s reference to “future similarly situated plaintiffs” indicates that the court will hold the Government’s stipulation to apply to non-litigants that may be plaintiffs in the future – meaning that companies do not need to be current plaintiffs, already having filed a legal action invoking the court’s 1581(i) jurisdiction, to be eligible for an order of reliquidation if appropriate following the Supreme Court’s decision.

2. The court explained that it “will implement additional case management procedures as may be necessary following a final, unappealable decision in V.O.S.” 

Key Takeaway: There has been wide speculation as to exactly what the mechanism will look like for affected importers to obtain refunds should the Supreme Court hold any aspect of the IEEPA tariffs to be unlawful. That could vary widely, from an administrative application process designed and driven by Customs and Border Protection (CBP), to a court-ordered application process, to an automatic refund mechanism, to litigation by individual importers.  The path forward will likely depend on the nuances of the outcome in VOS Selections and how the Government (including CBP), current litigants, and CIT approach a solution, and if it is one that is universally applicable.

The language in the AGS court’s order is highly relevant because with it, the CIT panel is signaling its intent to craft and implement structured case management procedures at a future date, after the SCOTUS decision.  While there is still significant uncertainty as to exactly what that will look like, it is now reasonable to expect the court will offer guidance and rules to thoughtfully address and manage litigation to the extent it is necessary – it will not be a “free for all” if the court can avoid it.       

The Federal Circuit’s September 25 judgment triggered two options for the plaintiffs/appellants to litigate further: either file with the Federal Circuit a petition for rehearing or rehearing en banc (by the full court) within 45 days of judgment (by November 10, 2025) or file with the U.S. Supreme Court a petition for writ of certiorari (“cert petition”) within 90 days of judgment (by December 24, 2025).  The plaintiffs/appellants did not request rehearing by the Federal Circuit and the Federal Circuit mandate (i.e., certified judgment and opinion representing the final notification of the court’s decision) issued to the CIT on November 17, 2025.  The plaintiffs, however, still have time and the option to appeal the case to the Supreme Court. 

Following a videoconference status hearing before the CIT including the lead plaintiffs (importer HMTX Industries LLC and its co-plaintiffs), the U.S. Government, and the Plaintiffs’ Steering Committee (on behalf of other parties with an interest in the master litigation), the CIT panel overseeing the case (Chief Judge Barnett and Judges Kelly and Choe-Groves) issued a procedural order outlining the path forward for the litigation.  According to the December 3 order:

• The lead plaintiffs are required to notify the CIT whether they have filed a cert petition with the Supreme Court within seven (7) days of such a filing, or within seven (7) days of the deadline to do so if no cert petition is filed (i.e., plaintiffs do not intend to seek further judicial review).
  • On December 4, 2025, the Supreme Court granted the lead plaintiffs an extension of the deadline to file a cert petition from December 24 to February 20, 2026.    
  • Notably, in requesting an extension of time, the plaintiffs asserted that an extension was supported by good cause because it would allow time for Supreme Court’s ruling in the IEEPA case (Trump v. V.O.S. Selections, Inc.) on the significant statutory construction and constitutional questions that are presented in that case, which may have a bearing on this one.
• If a cert petition is filed with the Supreme Court, the automatic stay of all related cases (over 4,000) filed by other parties and other procedural orders will remain in effect.
• If a cert petition is not filed (or the lead plaintiffs notify the CIT before the deadline of their decision not to appeal to the Supreme Court), the CIT will issue procedural orders governing further proceedings in the stayed cases.  If the plaintiffs in those stayed cases have specific additional claims raised in their complaints that they wish to litigate, they will be given an opportunity to do so.  Absent further litigation, the CIT will also establish a “streamlined” (and likely automatic) procedure for dismissing stayed cases.

If your company filed a complaint at the CIT challenging the legality of the China Section 301 tariffs that is currently stayed, you have two near-term options:

You may choose to do nothing.  Your case will remain stayed pending the lead plaintiffs’ decision regarding an appeal to the Supreme Court.  If the plaintiffs file a cert petition, your case will remain stayed pending further instruction from the CIT – presumably depending on the course and outcome of litigation at the high court. 

Or you may choose to voluntarily dismiss your CIT case according to standard court procedures, prior to any other process established by the CIT to govern all the related cases in the future.  Specifically:

• For cases filed before April 1, 2021, any voluntary dismissal by the plaintiff(s) must be accompanied by a stipulation by all parties who have appeared, including U.S. Government defendants, pursuant to USCIT Rule 41(a)(1)(A)(ii) and Standard Procedure Order Nos. 21-01 and 21-04.
• For cases filed on or after April 1, 2021, the plaintiff(s) may file a notice of dismissal (without a stipulation from all parties) in accordance with USCIT Rule 41(a)(1)(A)(i) and Administrative Order No. 21-02 (specifying that such cases are unassigned and stated without further action).

Please let us know if you would like more information or assistance in managing your company’s participation in this litigation as it continues. 

The orderModifying Duties Addressing the Synthetic Opioid Supply Chain in the People’s Republic of China reduces from 20% to 10% the fentanyl-related IEEPA tariffs first imposed on Chinese imports into the United States in February 2025 (the tariffs were initially imposed at a rate of 10% before President Trump doubled them a month later). The reduced rate of 10% is effective with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. EST on November 10, 2025.

The orderModifying Reciprocal Tariff Rates Consistent with the Economic and Trade Arrangement Between the United States and the People’s Republic of China further suspends for one year the scheduled increase in China’s Reciprocal Tariff rate from 10% to 34%. The United States will maintain the current 10% Reciprocal Tariff rate until 12:01 a.m. EST on November 10, 2026. 

Both orders direct the President’s trade and economic team to monitor conditions and developments and provide that the President may modify the orders – and, thus, the tariff rates – as necessary should the PRC fail to implement its commitments.

Under the bilateral arrangement, the United States has also agreed to: extend until November 10, 2026, certain Section 301 tariff exclusions previously set to expire on November 29, 2025; suspend until November 10, 2026, the implementation of the U.S. Commerce Department Bureau of Industry and Security’s interim final rule titled Expansion of End-User Controls to Cover Affiliates of Certain Listed Entities (the so-called “Affiliates Rule,” which we have previously written about here); and suspend until November 10, 2026, the implementation of its remedy in response to the Section 301 investigation on China’s Targeting the Maritime, Logistics, and Shipbuilding Sectors for Dominance. We are awaiting formal notice and implementation of these commitments.

For its part, the PRC has committed to a number of actions including, but not limited to: stopping the flow of fentanyl precursors into the United States; eliminating global export controls on rare earth elements and other critical minerals; suspending or removing many retaliatory tariffs and non-tariff countermeasures taken against the United States; removing measures imposed in retaliation for the U.S. Section 301 shipbuilding remedy; and purchasing U.S. soybeans and other agricultural exports. 

Additional details can be found in the Fact Sheet published by the White House on November 1, 2025.

Kelley Drye’s International Trade and Government Relations teams continue to monitor the Trump Administration’s trade actions. Please reach out if you have questions about the impact to your company from these or other announcements.

Tariff Coverage

The 232 Wood tariffs will take effect at 12:01 a.m. EDT on October 14, 2025, with certain rates set to increase on January 1, 2026. The covered products and tariff rates are as follows:

• A 10% global tariff on imports of softwood lumber.
• A 25% global tariff on certain upholstered wooden furniture, which will increase to 30% on January 1.
• A 25% global tariff on kitchen cabinets and vanities (and parts thereof), which will increase to 50% on January 1.
• The full list of covered HTS codes is available in the Annex to the Proclamation.

Reduced tariff rates will apply to covered imports from countries with whom the United States has already reached trade and tariff agreements. Specifically:

• Tariffs applied to imports of wood products from the United Kingdom shall not exceed 10 percent.
• Tariffs applied to imports of wood products from the European Union and Japan shall not exceed 15 percent (inclusive of Most-Favored Nation rates).
• Ongoing and future negotiations with other trading partners may lead to similar alternative arrangements.

The 232 Wood tariff will apply to the full entered value of the product. This is unlike the implementation of the Section 232 Steel and Aluminum tariffs as applied to derivative products. In that case, the Section 232 tariff is only applied to the value of the steel and/or aluminum content and the IEEPA Reciprocal tariffs are applied to the balance of the product’s value.

Interaction with Other Tariffs / Duties

If imports are already subject to the Auto 232 tariffs, then the Wood 232 tariffs do not apply. 

For products covered by the 232 Wood tariffs, the IEEPA Reciprocal tariffs, Brazil Corruption tariffs, and India Russian Oil tariffs do not apply.  Similarly, the Canada and Mexico Fentanyl tariffs only apply if the Wood 232 tariffs do not apply.

The 232 Wood tariffs will “stack” on top of Section 301 (China) tariffs and any existing AD/CVD orders.

Duty drawback will be available.

Additional Details

No Exception for Products Made with U.S.-Origin Wood: The Proclamation does not provide an exception for derivative products produced outside of the United States using U.S.-origin timber / lumber.

Possible Increase in Tariff Rate for Lumber: The Proclamation directs the Commerce Department to provide a report to the President by October 1, 2026, with an update on relevant import and economic conditions. At that time, the President may determine to impose additional duties on imports of timber / lumber and derivative products.

Possible Coverage of Additional Products: The Proclamation includes a clause directing the Commerce Department to establish a process for including additional wood products within the scope of the tariffs. Additions would be based upon national security and other considerations.

Threat of Undervaluation: The Proclamation includes a clause directing the Commerce Department to establish a process for determining whether there is a threat of undervaluation of wood product imports subject to the tariffs. If the Secretary finds that there is a risk of undervaluation of any particular class of imports of wood products subject to tariffs, additional tariff actions are authorized.

Possible Future Adjustments: All HTSUS Chapter 44 tariff codes are removed from Annex II of the Reciprocal tariff order (meaning they are now subject to the Reciprocal tariffs unless the Wood 232 tariffs apply). But a Chapter 44 code can remain on Annex II if two conditions are met: (1) it is on the "potential negotiation" list (Annex III to Executive Order 14346 of Sept. 5, 2025) and (2) it is not a tariff code inclusive of products subject to AD/CVD duties. In other words, certain HTSUS tariff codes will remain exempted from the Reciprocal tariffs as long as they are currently covered (at least to some extent) by AD and/or CVD orders and they continue to be the subject of bilateral negotiations (e.g., implementation of the U.S.-EU Framework Agreement issued last week).

Kelley Drye is continuing to monitor changes to tariffs as they occur. Should you have any questions regarding how tariffs may impact your business, please reach out to our International Trade or Government Relations teams

The tariffs stemmed from the Office of the United States Trade Representative’s (USTR) investigation and determination in April 2018 under Section 301 of the Trade Act of 1974 that China had engaged in unreasonable and discriminatory conduct burdening or restricting U.S. intellectual property rights, innovation, or technology development.  In response to China’s unlawful conduct, and after a public comment period and hearing, USTR determined in June 2018 to impose 25 percent tariffs on a list (“List 1”) of U.S. imports from China that enter under specific subheadings of the Harmonized Tariff Schedule of the United States (HTSUS).  That prompted retaliatory tariffs imposed by China on U.S. goods, which in turn prompted USTR to issue various additional lists – including Lists 3 and 4 – of modified, higher tariff rates for specified HTSUS subheadings. 

Companies that imported affected products from China challenged the legality of these Lists 3 4A tariffs imposed and modified between September 2018 and January 2020 (List 4B tariffs were indefinitely suspended in December 2019).  The CIT consolidated the more than 3,500 lawsuits from parties who contended, among other things, that the tariffs were unsupported by statutory authority and imposed in violation of procedural requirements mandated by the Administrative Procedure Act (APA).  The main issue was whether the statute could be correctly interpreted to permit USTR to impose the higher tariff rates via Lists 3 and 4A. 

In a unanimous decision, the three-judge CAFC panel affirmed the CIT’s decision issued in March 2023 upholding the Lists 3 and 4A tariffs.  The CAFC agreed with the CIT that the authorizing language of Section 307 of the Trade Act of 1974 permitting USTR to “modify” Section 301 action also allowed the agency to increase the tariffs, and that USTR had complied with the CIT’s earlier decision to demonstrate USTR’s compliance with the APA’s requirements. 

While the CAFC agreed with the CIT that Section 307 allowed the modification of the tariffs, the appeals court found that an increase in the tariff rate was authorized by a provision within the law other than that relied on by the lower court and the Government. The CAFC reasoned that the statutory use of “modify” in this instance is open-ended and does not “exclude” any particular action, meaning the law is “indifferent” as to both the degree and direction of change.  In other words, Section 307 authorizes USTR to alter initial action taken under Section 301 in either a trade-restricting or trade-liberalizing manner, and that USTR has wide leeway and “substantial discretion” to adjust in either direction its discretionary measures imposed.   Nonetheless, the CAFC observed that modifications of initial Section 301 measures must still “be tailored to achieve Section 301’s statutory goal of eliminating the investigated conduct” and that the law does not permit USTR “to raise tariffs for any reason or by an amount that exceeds what USTR believes to be appropriate” to achieve the ends of its discretionary action under Section 301. Ultimately, the CAFC concluded that the Lists 3 and 4A tariffs were, therefore, lawful because USTR adequately demonstrated that the tariffs were related to USTR’s initial action and were intended to influence China’s offending behavior. 

In addition, the CAFC held that Congress did not unconstitutionally delegate to USTR the authority to decide whether and to what extent to modify certain Section 301 measures. The appeals court also concluded that unlike in its recent decision addressing IEEPA tariffs, the major questions doctrine articulated by the Supreme Court did not apply in this instance.  As explained, the “Lists 3 and 4A tariffs may, at best, be a new use of USTR’s regulatory authority, but they do not involve a transformation of USTR’s regulatory authority,” in contrast to the unprecedented IEEPA tariffs imposed by President Trump in 2025.  Lastly, the CAFC also agreed with the CIT’s holding that USTR was not excused from complying with APA requirements under the “foreign affairs exception,” and that USTR’s elaboration, upon remand, of the procedures followed in making the modifications at issue satisfied the APA’s requirements.

The litigants in this case, HMTX Industries LLC v. United States, may still appeal the CAFC’s decision either to the full CAFC (by filing a petition for rehearing or rehearing en banc) within 45 days after the entry of judgment, or to the Supreme Court within 90 days after the entry of judgment.  In the meantime, the Section 301 tariffs remain in effect, as they have throughout the pendency of this litigation.  Kelley Drye’s International Trade team will continue to monitor this case and other litigation over tariffs. 

Read the full client advisory here and subscribe here to receive advisories like this in the future.

The most notable amendments to the EAR by this rule include (but are not limited to) authorizing exports and reexports to Syria of all items designated EAR99 – the lowest level of classification, adopting a presumption of approval licensing policy for certain end uses, and the removal of now obsolete provisions in the EAR related to Syria. Consumer communications devices and certain items related to civil aviation may also generally go to Syria without an export license. BIS announced they will continue to restrict exports when the end-users of items are malign actors, including certain Syrian individuals and entities that remain subject to sanctions, noted below.

These changes to BIS’s policy toward Syria follow similar changes announced by the U.S. the Department of the Treasury’s Office of Foreign Assets Control (OFAC) earlier this summer, which implemented the President’s Executive Order “Providing for the Revocation of Syria Sanctions,” (Syria EO) which removed certain U.S. sanctions on Syria, effective July 1, 2025, while maintaining sanctions on former president Bashar Al-Assad, his associates, and other destabilizing regional actors under the Syria EO. Our blog post covering the OFAC Syria changes can be found here.

Please contact our sanctions and export control team if you need assistance navigating these latest developments.

The new rate will not apply to articles subject to Section 232 duties or exempt from the reciprocal tariffs and will come into effect 12:01 EST on August 27, 2025. Articles that are in transit on a water vessel prior to August 27, 2025 and not transloaded will not be subject to the new tariff rate, so long as they are entered before September 17, 2025.

The new order would seem to dash hopes of a deal between India and the United States, at least for the moment. Much like the White House’s previous order on Venezuelan oil, the order grants the Secretary of State the power to recommend additional tariffs be imposed on other countries “directly or indirectly” importing oil from the Russian Federation. The Administration has not yet used the order regarding Venezuelan oil to impose any tariffs.

Kelley Drye is continuing to monitor changes to tariffs as they occur. Should you have any questions regarding how tariffs may impact your business, please reach out to our International Trade Team.

On July 31, 2025, President Trump issued an executive order modifying the so-called reciprocal tariffs implemented under IEEPA. Country-specific rates, originally announced on April 2 through Executive Order 14527, have been adjusted to, the order states, reflect ongoing negotiations with various countries. These new rates range from 10 percent to 41 percent, with the majority of the affected countries subject to 15 percent tariffs. The order states that these rates will be adjusted once trade negotiations are completed and new executive orders issued. Goods of any country not listed in Annex I to the order will be subject to 10 percent tariffs. Annex I is included at the end of the order. The order explicitly does not affect current tariff rates on products of China; 34 percent tariffs on Chinese-origin products are set to go into effect August 12.

The new IEEPA reciprocal tariff rates are scheduled to come into effect at 12:01 EST on August 7. An in-transit exemption applies for merchandise loaded prior to August 7 and entered before October 5, 2025.

The new order takes a novel approach to tariffs on products from the European Union. Whether or not tariffs will apply is contingent on the most-favored nation (“MFN”) rate that currently apply to each product based on their classifications. MFN duties are the “normal” duties that apply to products imported into the United States regardless of country of origin and are determined based on the classification of the product and the rate identified in Column 1, General Rate of the Harmonized Tariff Schedule of the United States. For products where the MFN duty rate is less than 15 percent, additional duties are to be applied until the total duty rate is 15 percent. For products where the MFN is currently at or higher than 15 percent, no additional duties will be applied.

The order also answers some questions about how the Administration is defining “transshipment.” A change to the definition has not been effectuated; rather, the order allows CBP to impose 40 percent tariffs, along with fines and penalties under 19 U.S.C. § 1592, on products that it determines to have been transshipped using its current framework. Notably, this 40 percent tariff is in lieu of rather than in addition to the country-specific rates. CBP is also directed to publish a list of offending countries and companies every 6 months.

The order directs key agency heads and other officials involved with implementation and enforcement of the tariffs, specifically naming, among others, the Secretary of Commerce, the United States Trade Representative, the Secretary of State, the Secretary of the Treasury, and the Chair of the International Trade Commission, to take all actions within their powers to do so. The Department of Commerce and USTR are directed to monitor the actions of trading partners and report to the President should they take actions that would warrant changes to the country-specific tariff rates, whether such actions are retaliatory or conciliatory.

Increases on Canadian Products

The White House also issued a fact sheet to accompany an upcoming executive order that is expected to increase the tariff rate on Canadian-origin products from 25 percent to 35 percent, effective 12:01 EDT on August 1. The fact sheet cites Canada’s “inaction and retaliation” as the reason for the increase and does not include an in-transit exemption. USMCA-qualifying goods remain exempt from the tariffs and lower rates on potash and energy products have not been impacted. The fact sheet also indicates that the accompanying order will authorize CBP to impose 40 percent tariffs, in lieu of the 35 percent tariffs, on goods the agency has determined to have been transshipped, in line with the executive order on reciprocal tariffs.

Pause on Tariff Increases for Mexico

President Trump announced on social media he would not increase tariff rates on products of Mexico as threatened and leave in place current rates for an additional 90 days. Products of Mexico remain subject to 25 percent tariffs imposed earlier this year by the President under IEEPA, with potash and energy products subject to 10 percent and USMCA qualifying products duty free.

Section 232 on Copper Products

The executive order on copper imposes a 50 percent tariff on imports of semi-finished copper products and certain “copper-intensive derivative products” based on the copper content of the article. Semi-finished copper products include, for example, pipes, wires, rods, sheets, and tubes, and “copper-intensive derivative products” include, for example, pipe fittings, cables, connectors, and electrical components. Such tariffs will apply only to the copper content of the products; the non-copper content of the products will be subject to any applicable reciprocal tariffs and IEEPA fentanyl tariffs. The new 50 percent tariff is effective 12:01 AM EDT on August 1, 2025.

The order specifically excludes application of the 50 percent copper tariff to upstream copper materials including copper ores, concentrates, mattes, cathodes, anodes, and scrap. These materials are also exempt from reciprocal tariffs because they are included in Annex II of Executive Order 14257. The order also directs the Department of Commerce to determine by June 30, 2026 if imposing duties of 15 percent on refined copper products is warranted. Such duties would come into effect January 1, 2027 and increase to 30 percent January 1, 2028.

In terms of tariff stacking, the executive order provides that if a product is classified in a provision subject to Section 232 tariffs on both copper and automobiles/auto parts, the 25 percent tariff applicable to automobiles and auto parts applies and not the tariffs on copper.

The executive order references a forthcoming annex that will provide a comprehensive list of semi-finished copper products and “copper-intensive derivative products” that will be subject to 50 percent tariffs on the noted deadline. The order also directs the Commerce Department to establish, within 90 days, a process for interested parties to request inclusion of additional derivative articles on the annex.

The executive order also indicates that the Secretary of Commerce recommended a number of actions under the Defense Production Act to support the U.S. copper industry, including: a domestic sales requirement for copper input materials starting at 25 percent in 2027 (and increasing to 30 percent in 2028 and 40 percent in 2029); a domestic sales requirement of 25 percent for high-quality copper scrap; and an export licensing requirement for high-quality copper scrap. The order instructs the Secretary to take all appropriate action to implement the recommended domestic sales requirements but does not mention the Secretary’s recommendation on export controls.

Additional information is also available in the fact sheet published on the White House website yesterday afternoon. Several other Section 232 investigations on imports of lumber, semiconductors, pharmaceuticals, trucks, critical minerals, commercial aircraft, polysilicon, and unmanned aircraft systems (drones) are ongoing.

New Tariffs on Imports from Brazil

In support of a new 40 percent tariff on imports from Brazil, President Trump declared a new national emergency under IEEPA regarding the Government of Brazil’s unusual and extraordinary policies and actions harming U.S. companies and free speech in Brazil. The executive order also specifically targets Brazilian Supreme Court Justice Alexandre de Moraes for the imposition of fines on U.S.-headquartered companies and the ongoing trial of former president of Brazil Jair Bolsonaro, which the order states is based on “unjustified criminal charges.”

The 40 percent tariff will be effective 12:01 EDT August 6, 2025 and will be in addition to the 10 percent rate currently in effect on goods from Brazil under IEEPA. The tariffs will not apply to products that are subject to Section 232 duties.

The executive order exempts a large number of tariff categories covering silicon metal, iron, civil aircraft, alumina, tin ore, precious metals, energy products, orange juice, and fertilizers. A full list of exempt subheadings is included in the executive order. An in-transit exemption applies to merchandise loaded prior to August 6 that is entered for consumption before 12:01 EDT on October 5, 2025.

The executive order and the fact sheet were published on the White House website yesterday afternoon.

Suspension of De Minimis

The new executive order suspends so-called de minimis treatment of low-value shipments effective 12:01 a.m. EDT on August 29, 2025. De minimis treatment currently allows packages from all countries valued under $800 to enter the United States duty-free. The Administration previously suspended the provision for packages of Chinese-origin; this new executive order makes no distinction based on country of origin. All packages would therefore be subject to applicable ad valorem duties. Suspending de minimis procedures has long been a policy issue considered by the Administration, as well as the Biden Administration, as we discussed in a previous blog post.

For packages valued under $800 sent through international postage, the executive order also allows importers to choose to pay either the applicable IEEPA tariff rate (reciprocal or IEEPA fentanyl) or a flat rate based on the country of origin of the merchandise. This option will only be available for the next six months.

The executive order and fact sheet were published on the White House website yesterday afternoon.

Should you have any questions regarding how these actions may impact your business, Kelley Drye’s International Trade Team is happy to help.