Flexport: New Tariff Wave Could Replace Expiring Trade Duties by Late July

Why It Matters

The looming tariffs could raise costs for a broad swath of U.S. imports and reshape supply‑chain risk management, while the refund program offers critical cash‑flow relief for firms navigating past duties.

Key Takeaways

• Proposed Section 301 forced‑labor tariffs could hit 59 countries
• Tariffs may replace expiring Section 122 duties by July 24
• USMCA preferences stay active even if July 1 deal stalls
• CBP has processed $95 B refunds, $23.68 B already paid

Pulse Analysis

The United States is poised to introduce a new tariff regime that could overlap with the expiration of Section 122 duties later this month. Flexport’s latest webinar highlighted a Section 301 proposal aimed at countries deemed lax on forced‑labor enforcement, imposing a 10% duty on 13 nations plus the EU and a 12.5% rate on an additional 46. While the structure mirrors earlier trade actions, the breadth of coverage—potentially affecting 99% of import value—marks a significant escalation in protectionist policy, prompting importers to reassess cost structures and compliance programs.

Concurrently, the administration is softening Section 232 metal tariffs for specific sectors such as agricultural equipment, residential HVAC, and mobile industrial machinery, lowering the U.S.‑content threshold from 95% to 85%. These adjustments, coupled with continued USMCA preferences, provide a modest offset for businesses facing higher forced‑labor duties. However, uncertainty remains around the July 1 USMCA review and broader trade negotiations, leaving companies to hedge against both rising tariffs and potential relief measures.

Legal scrutiny is expected to intensify, with opponents arguing that the forced‑labor tariffs exceed congressional intent under the Supreme Court’s “major questions” doctrine. Meanwhile, the Customs Automated Processing Engine (CAPE) continues to process refund claims, having accepted nearly $95 billion and disbursed $23.68 billion to the Treasury. Phase 2 of CAPE, launching June 29, will expand coverage to reconciliation entries, offering additional liquidity for firms awaiting refunds. Navigating this complex landscape will require proactive engagement with trade counsel and strategic sourcing adjustments to mitigate cost volatility.