Articles August 7, 2026 7 min read

Recent Trade and Tariff Updates: USMCA, IEEPA Refunds and New Tariff Actions

Marina Gentile

Mukul Chhabra

Global Transfer Pricing Strategies

International Services

Industrial and Consumer Products

Manufacturing and Distribution

Transportation and Logistics

Several notable trade and tariff developments have emerged in recent weeks, affecting businesses engaged in cross-border commerce throughout North America and beyond. Key changes involve the United States-Mexico-Canada Agreement (USMCA), International Emergency Economic Powers Act (IEEPA) tariff refunds and new tariff actions that could have operational and financial implications for importers and exporters.

U.S. Declines USMCA Renewal

The USMCA took effect on July 1, 2020, replacing the North America Free Trade Agreement (NAFTA). As part of a required review process, the U.S. recently announced that it will not agree to a 16-year renewal of the agreement in its current form, prompting further negotiations with Canada and Mexico.

Background

Goods imported into the U.S. from Canada or Mexico are generally exempt from tariffs if they meet the USMCA Rules of Origin. To qualify for this 0% duty, the item must be produced entirely within the USMCA region using eligible materials or undergo a specific amount of regional processing under the USMCA Rules of Origin.
Over 85% of all trade between the U.S., Canada and Mexico operates without tariffs because it qualifies for USMCA benefits. Most traded goods that benefit from the USMCA, including textiles and apparel, automobiles and parts, electronics and most agricultural produce.
The total U.S. bilateral goods trade with Canada and Mexico has grown from roughly $343 billion to over $1.6 trillion as of 2024 – a 374% increase since the implementation of NAFTA in 1994. It also accounts for around 30% increase since the inception of the USMCA in 2020.

Current Status

While day-to-day import and export operations are unaffected, qualifying goods still qualify for preferential tariff treatments and will continue to cross borders duty-free.
Both Canada and Mexico have formally requested the full 16-year renewal, but negotiations are tangled in sectoral disputes regarding automobiles, lumber, steel and coordinated tariffs.
Barring a formal withdrawal by any of the three nations (which requires six months’ notice), the USMCA will officially expire on July 1, 2036, unless a 16-year renewal is agreed upon before then.

What to Expect Next

While the USMCA remains in force, this shift changes the political economy of the agreement from a relatively predictable review cycle into a prolonged period of uncertainty.
For globally integrated industries like North America’s automotive sector, the USMCA’s value extends beyond preferential tariffs. The $280 billion yearly automotive intra-USMCA trade volume represents a 38% increase in automotive trade flows since 2021 and is highly dependent on deeply integrated supply chains and a high degree of interdependence among the three countries.
Common rules on origin, transparent customs procedures and regulatory coherence are critical to promote long-term investments and enable just-in-time production systems to function across borders.
However, the U.S. decision not to renew the USMCA in its current form does not cancel the agreement. Instead, it triggers a 10-year countdown of mandatory annual reviews. The current rules, tariffs and dispute systems are expected to continue as normal until 2036, barring a complete withdrawal from any of the three countries.
With Canada and Mexico both open to continuing talks to resolve issues related to the USMCA agreement, bilateral agreements could become more important than the trilateral deal; however, they would be unlikely to match the trading strength and volumes under the USMCA.

IEEPA Tariff Refund Process Expands

On June 29, 2026, the U.S. Customs and Border Protection (CBP) announced in a notice that it has completed enhancements to Phase 2 of its Consolidated Administration and Processing of Entries (CAPE) system for processing IEEPA tariff refunds to include entries for shipments that are awaiting reconciliation of their final duty calculations.

The CAPE update plans to expand the number of entries that can be submitted in the portal. The CAPE system will now accept entries flagged for reconciliation (entry types 01, 02 and 06) for which the reconciliation entry (type 09) has not yet been filed. Consistent with Phase 1, only “unliquidated” entries and entries “within 80 days of liquidation” are eligible.
Once a flagged entry is accepted on a CAPE declaration, the importer may then file the reconciliation entry. CAPE removes IEEPA duties from flagged entries prior to reconciliation filing, separating refund calculations from the entry.
CBP will treat acceptance of a CAPE declaration as confirmation that all associated CAPE declarations were filed and accepted once the reconciliation entry is submitted. Importers whose reconciliation filing deadlines expire within 30 days should prioritize filing the reconciliation before submitting it to CAPE.
The next phase, which is targeted to be completed by the end of July, will include functionality for processing finally liquidated entries. After the completion of the next phase, about 95% of all entries that faced IEEPA tariffs will be eligible for refunds, while the remaining entries covered by drawbacks, under protest or filed through improper channels would require additional work.
As per the latest filing before the CIT on July 13, 2026, CBP confirmed that approximately $121.75 billion (of the roughly $166 billion of IEEPA tariffs due to be refunded) in both potential and certified refunds have been accepted for processing in CAPE. Of this total amount, refunds (duties plus interest) of approximately $86.3 billion have been completed using the CAPE Refund component and sent to the U.S. Treasury for disbursement.

New 50% Trade Discrimination Tariffs Target Key Canadian Imports

On July 20, 2026, U.S. President Donald Trump signed three proclamations targeting different sets of Canadian imports with an additional 50% tariff in response to separate areas — motor vehicles, alcohol and dairy.

The administration claimed that it is imposing the additional tariffs in response to alleged trade discrimination against multiple U.S. products and industries.
These new tariffs, which fall under Section 338 of the Tariff Act of 1930 (Section 338), are set to take effect 30 days after the signing date, i.e., August 19, 2026.
Section 338 gives the president the power to impose tariffs of up to 50% on the goods of countries found to be discriminating against the U.S.
The new tariffs shall apply to all covered goods, regardless of whether they are otherwise covered under the existing free trade agreement between the U.S. and Canada.

Section 122 Tariffs End, Section 301 Tariffs Begin

The Trump administration has implemented a new round of tariffs, either 10% or 12.5% on 60 trading partners, effective July 24, 2026. The action marks a transition from the temporary Section 122 global import surcharges to a new tariff framework established under Section 301 of the Trade Act of 1974.

USTR Jamieson Greer announced fresh duties on July 23, 2026, following an investigation into trading partners’ enforcement of forced labor import bans. These tariffs were first proposed on June 2, 2026. Additional background is available here: Recent Tariff Developments – Status of IEEPA Refunds and Fresh Tariffs Proposed by the Trump Administration
The new wave of duties affects 60 major economies accounting for over 99% of U.S. imports, including the UK, China, Japan and the European Union.
Countries deemed to have inadequate bans on forced labor, such as China and Japan, face the higher 12.5% rate. Nations with active enforcement mechanisms, including the UK and Canada, face the lower 10% rate.
Essential commodities like oil, gas and fertilizer, and goods already covered by existing steel or aluminum national security tariffs under Section 232 are exempt.
The new Section 301 tariffs effectively succeed and transition the legal basis from the temporary Section 122 global import surcharges that expired on July 24, 2026.

Together, these developments highlight the continued evolution of the U.S. trade landscape, from ongoing discussions about the future of the USMCA to new tariff measures and customs administration updates. Businesses engaged in cross-border trade should continue monitoring regulatory developments, assessing potential cost and compliance implications and evaluating how changes in trade policy may affect their supply chains and operations.

Withum’s Global Trade, Supply Chain, and Tariff Mitigation Strategies team is here to support. Feel free to reach out with questions on the IEEPA tariff refund process, Section 122 tariffs, the expanding Section 232 or 301 tariffs or any new tariffs under consideration. It’s a great time for a complimentary 30-minute health check on transfer pricing and tariff mitigation strategies that may be available for your business. We are assisting multinationals to ensure they are declaring the correct dutiable customs value to CBP, which includes only product-related (along with Assists) costs.

Have Questions or Need Guidance?

For more information on this topic, please reach out a member of our Global Transfer Pricing Services Team.

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