Tariff Trends 2026: Expert Insights on the Evolving U.S. Tariff Landscape

The below transcript has been generated by an AI system and may contain inaccuracies, errors, or omissions. While efforts have been made to ensure the accuracy of the content, the AI-generated transcript should not be considered fully reliable or definitive record.

Marcus Eeman

Hello. Good morning, and welcome to our Terrach Trends twenty twenty six webinar, for the evolving state of trade. If this is your first time for our webinar today, I'm gonna go over a few of our housekeeping items.

On your screen, you see a sidebar to the right of the main stage. That's where you can submit your questions.

At the end of our presentation, we always host a q and a. I always try to get through as many of these as we can.

So please be sure to get your question in early. In that same sidebar, you see a tab labeled docs.

This is where you can download a copy of today's slides and find other helpful resources like our tariff simulator and tariff refund calculator. Above your screen, you'll see a button labeled audit your customs broker.

This is one of our newest AI tools that runs a compliance audit on your historical customs entries. It can help identify entries with tear stacking issues and estimate duties you may have over or underpaid.

Click the button above your screen to get started. Okay.

Before we get going here, just a brief, legal note. Please keep in mind that all information provided in this session is based on the current situation at this current time as we as we probably found out at about 9PM last night.

So this may not be customized to your specific business needs. We always recommend reaching out to a Flexport expert to discuss your particular situation.

Okay. And joining me, in today's webinar a little bit later is my colleague and our head of trade advisory, Jen Park. She will talk, specifically kind of about a CAPE refund update here.

So I'm gonna talk a little bit today about the $2.32 tariffs and the $3.38 tariffs that have now been now been paused. We'll we'll get into that and go over a few more items, related to some additional announcements, pertaining to, importers of record, pertaining to transshipment, and some of the other pieces that have started to come out of the administration that have taken effect or may take effect and what they may mean for your particular business.

At the end, we'll talk about CAPE, and then go into a q and a. Okay.

So for the latest news here, we have a few different topics. And I think one is that we now have some more information, that came out of the executive order from June about, new kind of verification requirements for brokers, as it pertains to, CTPI validation for customs brokers.

What kind of checks do brokers need to do on nonresident importers of record or foreign importers of record? Second, we see there was a transshipment report.

So, the White House released a report documenting, transshipment and how much of a problem that was last year. There's a few implications for it.

Not a a ton right away, I think, for most of them to trade, but I think there's definitely gonna be some, directional aspects that we're gonna talk about. And we also got notification, yesterday about, importers of record who maybe have improper registration.

This is maybe something you set up once years ago called the form fifty one zero six. Maybe you've only updated as you change your corporate address, that sort of thing.

Customer's gonna be looking at these very closely, and they're going to be voiding or suspending import privileges for people that maybe completed those incorrectly. We're gonna get into that a little bit later.

We're also gonna provide an update on section two thirty two. We'll talk about, the metal inclusions that were proposed.

A little bit sort of a small change there, but just kind of the ongoing updates. The announcements on both the polysilicon investigation and the unmanned aerial system, the drone UAS, investigation into 232.

And no additional news on section three zero one overcapacity, but keep in mind that is something that's out there for most major US trading partners, EU, Argentina, Brazil, Canada, or excuse me, not Canada, Mexico, China, all of these have some of these, overcapacity investigations still going. Nothing to share, at this time on that.

But let's take a look at section three thirty eight. Last night, we heard, from the president that section three thirty eight, which was scheduled to go into effect today and would have made for a very timely webinar, was actually gonna be suspended three days.

As a refresher, what this mean is that this was for, Canadian policies and practices that have discriminated against the products in The US that is not applied to other countries. This came in a few different layers.

They were looking at what happened to US auto imports, did provinces stock alcohol on the shelves, what happened to US dairy imports, which has been a pretty long a long area. And these tariffs were a 50% rate, that was gonna apply to about 5% of Canadian products.

The target areas, like I said, that these tariffs would apply to were some food and agricultural products, some of the long running sore spots in trade, including softwood lumber, which goes back, I think, to the fifties, dairy, which goes back to the seventies, including some outerwear hockey gear, and alcohol products. We're really meant to kind of, be a little tit for tat, for customs.

They would have stacked on top of the three zero one duties. But they did avoid section two thirty two.

And so, we you know, existing, the two thirty two automotive headings, which I think means that this is both a credible threat, but maybe not something that either USTR Greer nor the administration really want to have happen. I think what this really what they're hoping to have happen is to create a sense of urgency to reach negotiation or to reach some agreement on a few other kind of points of trade, questions about dairy quotas, coming to United States, questions about two thirty two metals, tariffs that The US has placed on Canada.

This is something we've seen Trump do before where he uses a a threat a credible threat to try to, encourage negotiations to move along faster. It seems to be this is somewhat the case, but it is still very much in play.

I wouldn't say this is if nothing changes really in three days, I do fully expect these tariffs to go in place, 50% on the on the name products here. But it is going to be, I think maybe a secondary option.

I think the president and the administration, the USC are are hoping for maybe some, trade concessions from Canada. It's gotten a little bit harder, I think, for Canada.

You know, prime minister Cardi has maybe had to feels a little bit back then, or maybe he's already given away too much. So it's unclear what exactly the result's gonna be, but I think the point of these are going to be, to make it happen.

And if nothing does change over the next three days, I fully expect this to go into effect, come Friday. Okay.

Now we have, the other point I wanna bring up here as we talk about the origin rules and substantial transformation questions here. There is this possibility of, three thirty eights maybe applying to some other products and some other three zero one orders.

Didn't get any clarity on that, yet, but I am leaving on the slide because if you're if you have questions about it, if this is something that maybe you're concerned about based on kind of your global value chain extending to Canada and other countries, reach out. We can talk a little bit about how that could, how that could play out here.

Okay. Next, I wanna talk about the two thirty two news because we did have some some notable updates here. The first is that the metal tariffs, steel, aluminum, copper, there were some new inclusions that got proposed.

Some of these are mostly niche areas, things like the cylinders of propane tanks or oxygen tanks, cranes and agricultural cranes and lifting equipment, fire extinguishers, welding machines. But I think the one that might catch a lot of importers, out here is quite a few of the eighty five forty four cables that have already kind of been included.

Some are already included, under the copper tariffs, but this is another another set of six, tariffs. And the reason why this is tricky is this is kind of an intermediate component used in a lot of plates.

This is for articles of insulated wire with connectors on it. So think about anything that you maybe import that has wiring associated with it.

That, depending on exactly the specifications, could be within the scope here. So that $85.44 is kind of a a notable intermediary part that I think a lot of downstream manufacturers use, for these kind of electrical cables.

That is, proposed to be subject to the 50% rate. It is currently not in effect, but they're accepting comments through, August 27, from the BIS.

The other two orders that we had, these are some investigations. And, yes, I did manage to get all of our all of our, 232, investigations onto a single slide here.

We'll we'll talk about it. Still still there on one slide. But we did have minimum import prices on polysilicon.

And this was a very fascinating one, I think, for many, many reasons. This is a very different mechanism.

Whereas the metal process was saying, okay. If the product has at least 15% by weight of this metal content, entire value of the good is subject to 50% duty.

But that still changes something, right, where you say 50% of the value of the good. This is a different approach.

What this does is this sets a minimum price floor for some of these particles of polysilicon, things like doped wafers, things like pure silicon, and some solar modules as well. Not a ton of products, but it is a very interesting one.

It at least solves one sore spot, when it comes to enforcement and collection of two thirty two duties. Suppose for a minute, if you're listening in, that you are a, unsavory importer.

You play a little fast and loose. There's kinda three ways to maybe reduce your two thirty two duty liability.

You lie or change the origin. You lie or change the HS code.

And the third way is to say your value is less. And this would also be fully legitimate through a transfer pricing exercise, your first sale, programs.

There's many ways where where you might have a reduction in the value of your product. But by setting a minimum price floor, this closes that avenue.

Even if you've reached lower prices, through, legitimate means, this is going to increase your minimum declared value for import, which is a very interesting mechanism and at least kinda solves part of the equation that sometimes CDP worries about is, like, are we seeing, you know, what's happening to import prices, something that they've seen with aluminum prices, and we're gonna see with steel prices. They've seen, wow.

Import values have been falling even as import volumes have stayed relatively stable. How is this happening?

What's going on? And I think part of it is some pricing gains perhaps. This minimum import price on polysilicon is fascinating.

I'm gonna get into this in a couple of slides, go through a couple of illustrations here, but I do kind of expect to see maybe a little bit more of this in the future. The third order was one that was announced a couple days ago, on the unmanned aerial systems, UAS, or drone, duties here.

And it's 25% on smaller drones or a 100% on larger drones as defined as drones with a maximum takeoff weight of over 25 kilos or also on smaller drones that happen to have thermal imaging, as well as some of their associated parts. That is a 100% duty rate.

There are some exemptions that are in place for agricultural use drones, delivery drones, department of war, source drones, or companies with an onshoring plan. So companies that have committed to the department of commerce, hey.

We're going to, bring these things here, in The United States. We're gonna make them as well.

In addition, for drones that are maybe made abroad but use certain substantial components in whether it's the EU or any of these kind of trade agreement countries, they have their familiar 1015% capped rates, things from the EU, Japan, Taiwan, Korea, 15% capped, UK, 10% capped. But there is a vague a vague language there where they say substantially, you know, the substantial compote critical components.

Well, what are they? They don't know yet. What is a what is an acceptable onshoring plan to get an exemption from these duties?

We don't know yet. Hasn't really been defined, but the secretary of commerce has been instructed to to create this. This would be, effective, here on September 3 with some additional duties on some of these exempted products coming in, in February, a hundred and eighty days from the order.

So I wanna talk a little bit more about the, minimum import price because I think this is oh, actually, before I do that, I'm gonna go through my table here. Here's all the stuff I did.

I've used every ounce of margin here. Here are all the products currently updated.

This is in your slides, which you will get an emailed copy of if you if you don't have it yet, but, just as a quick, quick note here. Okay.

The minimum import price is setting an import floor. And when I say that I kind of avoid some of the pricing games here, I looked at the, ITC trade data.

So the International Trade Commission of US, keeps tracks of imports. They look at, you know, value and quantity, imported over time.

And this is a chart that goes all the way back to January 2024 through the most recent available of June 2026. And this is the price per kilo of this twenty eight zero four really pure silicon.

So if you're gonna make chips or you're gonna make photovoltaics, you need really, really high purity, high quality silicon, and this is the HTS code for that very high purity silicon. As you can see over time, it sort of fluctuates a little bit here.

There's been some spikes and some changes. Can't imagine what happened around April 2025, that maybe caused some of these surges or or some peaks and valleys.

But regardless, you can kinda see where this floor is here. There's a new price floor saying that if there's ever, an entered value that is less than $21 per kilo, there's gonna be duty assessed that brings the value of that product up to $21 per kilo in addition to the ad valorem duty placed upon the product.

So what this does is this will make sure that there is no kind of pricing game where somebody can have really low value, pure silicon wafers and chips here or, you know, chip precursors here. The point of this is to make sure that there is this kind of stability, probably so that domestic producers know that they won't necessarily be undercut.

As you can see for this one here, though, that hasn't really been a big problem. $21 per kilo of a minimum floor, even with some of the uncertainty and some of the spikes that happen in more recent months as FTZ and bonded warehouse volumes get imported and filled up and drawn down and and entered, we do still see most of it is above this $21 per kilo floor.

But that's not the case for all the products. And I'd highlight another example here of these are some solar modules, eighty five forty one forty three zero zero ten.

This has a minimum import price of 38¢ per watt. This is the same time period, right, January 2024 on the left all the way through June 2026 on the right.

And over time, the value's gotten a little bit cheaper, but it's basically stayed stable somewhere between 17 and 20¢, as a declared price per watt for this HTS code. But the minimum import price floor that's been set by this 232 investigation sets it at 38¢.

Meaning, before any of the ad valorem duties that get assessed on these photovoltaic cells, for instance, or these modules here, they are gonna be increased to a value of 38¢ and then duty placed upon it regardless of what was actually paid or payable. This is a very fascinating concept, but as you can see, this would really change a lot of the pricing here.

Right? If you're buying this maybe legally, correctly, at 20¢ per watt, you know, for these solar modules here, too bad. You're gonna have to pay, as though it were priced at 38¢ or more per watt of these photovoltaic, of these photovoltaic modules.

So that would mean that the two thirty two duty you pay is gonna increase because you're not paying, you know, 15% based on, 38¢. You're paying 15% based on 38¢, right, instead of the lower 18 or 20¢.

Likewise, a lot of this $85.41, you may run a foul of some active antidumping orders. And remember, all those antidumping orders are ad valorem duty.

So, very interesting to see how those things kinda interplay here. I don't know if the antidumping one will have that same effect.

They'll probably have a different statute. You can say, okay.

Well, I actually only paid 18¢, and so I owe 260% or a 150% based on this lower value rate. But I think it really does increase that that value assessed for the purposes of 232, and that's going to be, quite a burden.

I would expect to see this and the reason why I'm deep diving here is I expect to see this on a lot more products. I think this is maybe a trial balloon to see what happens here.

But you think about the steel and aluminum mill products. Right?

We've seen prices go down for, like, raw inputs, you know, bars, coils, wire wire rod, all these different kind of aluminum and and steel products, that have maybe seen some prices flat line or, you know, even slightly decrease over the last year and a half. This might be an interesting concept that the administration rolls out for some of those steel and aluminum mill products on the those two thirty two orders going forward.

There's a lot of pricing transparency for some of these steel and aluminum products. There's the London Metals Exchange.

There's very you know, various commodity exchanges where they can see what is the actual going rate for some of these metals on a certain date. They can see this historical data, and then apply it to see what's the spread.

I do wonder if this is a bit of a trial for how they may wanna do steel or aluminum mill products, going forward. Maybe not so much derivative.

That's hardly the source when you have, you know, aluminum spring and a spray bottle, but it it is an interesting concept. I would expect to see maybe more of this minimum price floor for some of these, some of these raw inputs, perhaps also the lumber order.

Not so much the finished $2.32 orders, but the input $2.30 twos could see something like this as well. Okay.

Little bit of a heavier slide here, but I wanna talk a little bit more about some administrative actions that have been happening behind the scenes. Number one is that, there's been some movement on this executive order for foreign importers of record, and and also for all importers of record.

And I think the first point here for everybody is starting on September 19, CBP is going to void importer record numbers, and that is to say they're gonna disallow you from importing if you registered incorrectly. So if you registered it as a PO box as your principal place of business, not just a mailing address, or if you have a service or process address, you know, from a previous webinar, you heard about some of these storefronts in Wyoming or some of these places in Delaware that are the official headquarters of all sorts of different LLCs, but maybe business isn't actually being conducted there.

It's not actually the brain or the nexus of where these decisions are made. CBP is gonna look at this, and they might start automatically deactivating or voiding some of these importers of record, starting on this information.

In addition, if you're missing a phone number, name, email address, or the broker's contact information is being used instead of an importer's, record information, this could also lead to in inactivation or deactivation. So something to watch for coming in around September 19, where CBP may start to be able to do this.

My guess is they have found a way to use their new data tools and automations that, you know, kind of developed over the last year to be able to make some of these changes very, very quickly. I would expect a little bit of, maybe some bumps around September 19, for maybe some importers that just haven't looked at what is their registered principal place of business lately.

Another email went out to, in a related matter to to brokers, instructing them on how to do business with forward importers of record. And I'll stress that right now, it only instructed us on forward importers of record.

But I would expect this to probably expand to all importers of record before too long. There's new guidances about how brokers can maintain their CTPAT status.

And they say, okay, brokers. If you wanna work with foreign based companies and maintain your CTPAT status, you need to start doing more documentation at time of onboarding for your customers.

You need to ask about the ownership structure of this foreign importer of record. Who are the affiliate companies of this foreign importer of record?

What US assets does this foreign importer of record have? In The US, they have real estate, financial accounts, that sort of thing.

We need you to assess their ability to pay duties, make sure this foreign imported record can actually pay CBP. And if you're not doing this customs brokers, your CTPAT status may be suspended or revoked.

So a lot more pressure on customs brokers is kind of this measure of enforcement. Probably some more questions are gonna be coming your way if you are a foreign importer of record.

Right now, this is just applying to foreign importers of record, but the way that some of these regulations were proposed in the executive order did have, broader implications, and I'll give you a summary on the next slide. The other piece in here that was interesting is brokers should be looking to assess the compliance history of a foreign importer of record.

How we can do that is a fascinating question. That is yet to be yet to be determined, but, we are we are reading this order.

We're digesting it. We're making a plan internally. If you're not using our customs brokerage services, I'd imagine your own brokers are deciding how they can comply, with this order as well and what their procedures are going to be.

Finally, I highlight there was a transshipment report. It was a 25 page document released by the administration to talk about, some of this version of fraud.

They highlighted a few particular things. And whether the number was 40,000,000,000 of evaded value or 300,000,000,000 in tranship value or cheating, I don't think that really matters so much as it tells us which way the administration is going on this.

It tells us which way, the administration is intending to enforce this. And they look at how they want to maybe have rules of origin be changed.

They maybe wanna move around from the substantial transformation standard. They there is a brief court issued predetermined use standard in totality of evidence, and there's a direct call to congress to codify a new standard.

What that new standard is is a little bit gray, and I'll talk about that, in a little in a couple more slides here. Well, my takeaway is for all of you is that, note that maybe the chaos of, like, the last few years is mostly focused around tariffs.

I think the chaos in the months and years coming ahead are probably gonna be more around who gets to import, when they get to import, and how they know what those countries of origin are. I think that's a lot more of where the focus is gonna be from customs when it comes to enforcement in addition to the the usual duty and, additional duty regimes that have been in place.

Alright. I'm gonna just leave this chart here. You can take a look at it, but this is a summary of the executive order, who it applies to, and my estimated date, if it not an actual date of when these things may be going into place because these things have to happen via rulemaking.

And so if it doesn't if it's not underlined, it's just an estimate, not gospel. So take a look at it very closely, though.

The origin alternative, is like, what do they wanna do to decide what is a country of origin? And in case you weren't sure and something that maybe was a little confusing if you read the document, because they said that, you know, they wanna have this kinda clarified by by customs well or by congress.

And customs has this already in the CFR about how they determine what a country of origin is. It's the gross of growth of production or manufacturer of a country.

But if it was further worked, then it takes on the country of origin of the place where it was substantially transformed, where it was changed as marked through a change in name, character, or use. And I started to wonder, okay.

Well, what are maybe some of the other alternatives that they could look for here? And one of them is this predetermined use standard a little bit here where they say, this was something that only existed kind of as a result of this Energizer battery case, in 2016 where they said, oh, if all of these components we know are gonna go into a flashlight, then the origin is in Canada where it was made.

It was the origin of all those components, and so it was China instead. Because we knew it was gonna be assembled into a flashlight in in Canada, then the origin is China.

The court said that was wrong and reversed this in 2023 under a different case called CyberPower and looked at more of, like, the totality of evidence here. But this is still maybe one where they look for it.

Say like, well, if you know you're gonna produce this in a foreign country to make this product, then it's the input components that maybe derive the origin. Another one that I thought about, okay.

Here's another angle that maybe customs wants to change their rules of origin or, you know, the way the administration wants it to go. It's kinda riffing on this ancient idea.

I say ancient. Sorry if you were born in the fifties, but, this older idea from the fifties here of, chief value or value add in. So back in the fifties, this essential character test wasn't really so much of a a well, you know, essential character wasn't really didn't have that same meaning today.

Instead, if you had a good with multiple components, they said, well, where is the chief value added from the component? And that was kind of the determining factor.

They look at value added. They say, which country is adding the most value to this product? And that derives the HTS.

Right? Which component is the you know, back then in the fifties, it was like, which component has the most value? And that component drives the classification.

Well, if you kinda play it a little bit different, maybe you say, well, which country provides more of the value? Maybe that country should become the country of origin based on value alone.

It's an interesting idea, but it it has a couple of problems, which I will point out on the next slide. And the third one is a bill of materials analysis, something similar to a free trade agreement.

If any of you have had the misfortune of having to do bill of material analysis and production changes for inputs of subassemblies for USMCA or any of the modern free trade agreements, I'm sorry. But I do worry if this could be something that customs looks for going forward.

Are they gonna set some broader widely applicable rules about tariff shift, you know, some review of value and processing and, you know, HTS changes and nonchanges? Is that how they're gonna look at, you know, origin going forward?

I'm leaning maybe yes as maybe their best one, but I'm gonna point out here that that's not necessarily the only factor. And something I I remember learning about that kinda maybe got me interested in trade was learning about how we think about the iPhone as this product that's been made in China.

And I know they're diversifying, but for sake of illustration, assume iPhones are still made in China a 100%. Various studies over the year have said that China is not adding a ton of value to the iPhone.

It's changed over time. They're probably adding more than they were back in 2012. But, ultimately, they said back in 2012 that most of the value of an iPhone was provided by Korea.

Right? Then they said back in, you know, 2019 that, again, most of it was provided by The US or Japan. IPhone components changed.

They had better cameras, etcetera. Right?

And even if you look at kind of the iPhone 13, which is kind of a recent one I could find here, there's still quite a about a lot of different sources for, like, where these components are made. Right?

The a 15 chip was a new set developed by Apple, made in The US. Right?

They had these other like, the Qualcomm modems. Right?

The five g connector, you know, things that your cell phone runs on. Those are made in The US too.

Some of these other parts were not made in The US, but it came to this question of like, okay. If I have a bill of materials to this iPhone, which one actually is where I say this is the country of origin?

If I look at this twenty twenty two, I see all these different cases here where I see, okay. This part's from The US.

This part's from Japan. This part's from The from Korea. The battery is necessary to run, but that comes from China.

Should I say that's the essential part? It's assembled in China.

Substantial transformation is imperfect, but I don't know that necessarily going to a bill of material style or any of these other alternatives that maybe the administration wants to see exactly satisfies every case they have. And they may have some very unusual cases where a 2012 iPhone, in fact, was made in China, but it was actually Korean origin.

The 2019 iPhone was all entirely assembled in China, the iPhone seven, but most of the value came from The United States. Was that product now made in US?

Like, I don't know. I don't think so. I don't think we quite know exactly what is that standard, that CBP or the administration really wants.

I think they want this mass, you know, reindustrialization of The US. But I don't know if they necessarily have all the things they need to make that happen yet.

And in the meantime, they're trying to sort out how they wanna do country of origin in ways that incentivizes this production in The US, but doesn't actually solve it. So I think this is something we're gonna keep iterating on and maybe keep finding in little pieces, over the next few months and years to say, okay.

This is how we wanna do origin going forward. It may even get trickier if congress does indeed flip to a democratic control, or CBP could try to regulate on its own.

But either way, I think we're gonna not done with questions about rules of origin. Something something to watch for, very closely.

But with that, we're getting back to everybody's favorite favorite topic here. Bring Jen on stage to talk about getting money back.

So, Jen, how how's it coming?

Jenn Park

Yeah. Thanks, Marcus.

Everyone. Nice to see you all again. I'll start with a cape update first.

So as you know, Brandon Lord had published his latest cape summary on August 4. So these numbers are reflection of as of July 31 in his report.

And so starting with phase one, we know that was launched back in April. It looks like there's about 128,000,000,000 of potential and certified refunds that had been processed and accepted, which is great.

With that, there is about a 100,000,000,000 that has been sent to treasury for disbursement. So that's roughly 60% of total refunds to date, which is great.

Phase two, with these are entries that were flagged for reconciliation, was launched at the end of June. We hear that now there's about 2,200,000 that has been filed and set for processing.

So it doesn't appear there's any, refunds that have been associated with phase two just yet. So that's something to keep in mind for, just kind of track going forward.

Phase three, I'll go into more detail on the next slide. But phase three, we heard last month that this will only be, eligible for those importers that have filed a civil suit.

We did find more get more information since mid July on phase three. So I'll kinda go into that in further detail in the next slide here.

So phase three. I know it's a bit disappointing that not all importers are gonna be eligible for phase three, and phase three is specifically for importers that have filed a civil suit and received import specific relief. If you recall back in mid July, there was, an blanket order that was issued by Judge Eaton where, for those 37 importers 3,700 importers that have filed a civil suit, he basically ordered that all five liquidated entries be refunded.

So since then, there has been progress. I know at the end of July, we've also seen some instructions being sent out to, plaintiff's attorneys.

And so what the process is for, on CAEP phase three is that the plaintiff's attorneys for those 3,700 plus importers received, instructions where the attorney had to provide their, importer information to directly to CP via email. So that would include the CIT case number, the importer record number, entry numbers, and that was supposed to be sent over via email, and it had to be accepted.

Once it's accepted, then you would get a window in terms of when you can upload those entries into CAPE. So you still CAPE is still part of the process.

So I believe there are it's a biweekly rolling basis. So if you receive your instructions at the end of July, I believe you had until July 30 to submit your information to CBP and get it accepted.

And then the first window to actually file CAPE was August twentieth to thirtieth. And what we heard from yesterday's update is that this launch date of August 20 is actually delayed.

CBP, during their final testing of CAEP phase three, realized that the tariffs or the were not being calculated properly. So what they indicate is that additional functionality need to be built into the CAPE system in order for the duties to be calculated correctly.

And so they are, delaying the launch date. It's still TBD on when this will happen.

They did say that they are deploying additional resources to make sure that this happens fairly quickly. But no no update yet in terms of an actual date on when this will actually be launched.

And so, yeah. So for cake phase three, there's nothing further to, other than for those importers that have filed a civil suit. I would say work closely with your attorneys if you are eligible to make sure that you are getting your information submitted to CBP on time so that you can get your cake filed on time when it does officially launch.

And so something that came up during this discussion of those importers that that are eligible phase three, as you recall, we there are, protests that have been filed, still being filed to help preserve the rights to those refunds on filing liquidate entry. So anything that was not eligible for phase one, so post eighty day liquidation date, I'm sure you've heard recommendations that you should file protests to help preserve your rights.

So keep those entries open until a final decision has been made by c CBP or CIT on how those refunds will be issued. What we're seeing from those importers that are eligible for phase three, they've been instructed by their attorneys that they should go ahead withdraw those protests that have been filed so that they can file cape when the date.

So August 20 was, like, one of the dates that were was gonna be, the filing date for an importer. They wanted to make sure that their protest was withdrawn before that date so they can successfully file cape on August 20.

I would say before you go ahead and start withdrawing your protest for those that are eligible for phase three, you may wanna consider whether your protest also included any additional corrections. So I know we had filed a bunch of protests.

Some importers had chosen to include additional elements such as section two thirty two, derivative calculation adjustments, or classification correction. So or even CAPE errors.

Right? HTS mismatch, you had to correct an error on that entry for that particular issue. If it does include any material changes, I would say consult your attorney before withdrawing telling your broker or whoever filed your, protest to with to withdraw it so that you're not also impacting the other issue that still that still should be corrected on that protest.

And for those that are not eligible for phase three, so if you did not file a civil suit, you did not get instructions from CBP, I would say hold off on withdrawing any protest. As you know, we're still waiting for further guidance from CBP and CIT on how these will be on how final liquidated entries will be refunded back to those importers.

So until then, until we get more guidance, I would say keep those protests in place and file those protests if for those entries that are come getting close to those protest deadlines. Alright.

Alright. And so I'm sure you're all wondering, for those that did not file a civil suit, what is what's next? Right?

What can what's gonna happen with our finally liquidated entries, and how will we get the refunds back? So there's two potential avenues right now.

There's nothing finalized. So it's something that we're tracking today. One is that we know that there is an actual, Court of Appeals suit right now on Judge Eaton's April 17 universal injunction order.

The government had appealed saying that universal injunction was not proper and that it import specific relief was required in order to get those refunds and finally liquidated entries. We are still pending a decision from the court of appeals, so that is one avenue.

Another one is the class certification cases. So I'm sure you've been hearing more and more about this recently.

There were two different cases that we're tracking today that were filed both in June. One was from VOS selections, and another one's from freestyle world.

And for these, they're progressing in the court. They're they're being litigated.

On August 6, there was an actual hearing with judge Eaton on, the VOS selections case. And so it there it's still being litigated at this time.

We know that there is more to to come in this month. But I think there's a lot of questions as to the timeliness of bringing the class action suit, that it was filed a little too late.

That's government's position is that it was brought a little bit too late. It was after the Supreme Court decision when it should have been brought earlier.

And there's a few other issues that are kind of just being disagreed on, but, we do anticipating here more from judging and how this will be issued. I personally don't know if there is a strong case for the class certification.

I am staying hopeful. I do hope that we can get these refunds, refunded as soon as possible. I'm sure you all are.

It just seems like it's the technical issue here shouldn't be a blocker for all importers to get the refunds. But, yeah.

So this is another avenue that potentially that other importers that did not file a civil suit could get their refunds. No updates yet, but we will be tracking these two and providing further updates as we hear more.

And so August 25 is that next real, target deadline that we're trying to track in terms of getting an update not only on the class certification case, but also, I believe that's when the next new cape update from Brandon Lord will be. So we'll hopefully provide more updates, after August 25.

Yeah. Alright. And so before we go into q and a, I wanna just kinda see let you know how, Flexport can assist. And so we'll go to the next page here.

And so first off, we have our free AI tool that runs a compliance audit on your historical customs entry to surface any mistakes, misclassifications, missed duty savings. So if you are interested, please click on the audit your customs broker on the top top right of your screen to get started.

We also have the tariff refund calculator and our tariff simulator. We really encourage you to use those.

And if you would like to contact the Flexport team, you can reach out to classcation@flexport.com for any class classification or due rate issues or questions. You can also contact, our customs b d at flexport dot com if you have any inquiries for our trade advisory team, drawback, or or any customs inquiries in general.

Yeah. Alright. I'll bring Marcus back up on stage so we can go to q and a.

Marcus Eeman

Yeah. Sounds good.

Alright. I got a couple here to start off. Has section one twenty two temporary import surcharge expired, and they no longer apply?

That's correct. They no longer apply. They expired, July 24.

So they've been replaced, though, most countries, by the forced labor issues. You're still probably seeing it.

This the 99 code is changed, but, some countries did have 12 and a half percent instead of the 10%. So correct no longer applies, but funk three zero one works very, very similarly.

The Select four tariff calculator factoring whether twenty twenty six USTR section 30110% tariff supply. Yes.

It does. The calculator is updated with that. It's updated with the two thirty two orders I talked about today, including the minimum price for on the polysilicon.

So that's a fascinating kind of fun piece to work around. We had to do some do some new new ideas here to try to make that that work.

Shout out to our tech team. But, they that is updated there.

But do remember that there's probably close to 2,000 HTS codes that are in some form or fashion excluded from the section three zero one duties. So whether it's because it's covered by two thirty two or it's on the former annex two unavailable products, it's pharmaceutical, it's civil aircraft.

So, yes, it is updated, but make sure you you check all the rules and the optional pieces here. I have a couple of questions on fifty one zero six.

I'm just gonna combine a few of these here. They asked me, how do you suggest we check we check our compliance with the registration?

How can we check the existing 5106 and see if we need updates? How can the IOR obtain a copy of its 5106 if the original form is not available?

Where can I see the IOR registration that was submitted? I think the the first step you can do is just ask your broker to query your importer record number.

And when they do that, they can show you whatever the address is that CBP has on file that CBP is going to use for updating. If there is any changes that need to be made, this is a great time to update and make sure it's fully accurate with contact information on that 5106.

So if you do have a new compliance stakeholder, you moved addresses, you have a new principal place of business, you wanna make sure that it's not your your Delaware LLC address, but the place where, you know, your CEO and your COO and your VPs all get together and make decisions, that is a a good time to do so right now. You have about a month until I feel like we're gonna see some of that that automated, enforcement.

I'm gonna send these over to Jen here, for a couple of questions here. Any word on IUPE entries with duty drawback for the filing date?

Jenn Park

Yeah. Unfortunately, no update there. Yeah.

Marcus Eeman

Yeah. A lot of people wondering about about that one. Yeah.

Okay.

Jenn Park

Alright. So I can take the next what if. we didn't file a suit at CIT?

Is there a phase four to claim the refunds? Yeah.

That's an interesting question. I actually had a conversation with a few of my attorney friends, whether phase three is only eligible for those that had filed civil suit. So it's 37 specific 3,700 specific importers, or would it be for everyone else who has started to file civil suit today?

Right? Would it apply? There is no clear guidance there, but I would say if you've filed your suit today or future and you started to you got your import specific relief from your from the courts, I would assume you would be part of phase three. I don't think they would create another phase just for those new, importers that have filed a civil suit.

I think it's more of, like, a timeline. It's more of you may have to wait a few weeks, months until you get your importer relief from the courts in order for you to actually file your CAPE.

So, hopefully, that answers your question. And then I have done a protest for AIPA on a premature final liquidation.

The next day, it was suspended by CBP. As I read, this is to preserve rights.

I'm not sure if I understand the question completely, but if you file a protest to preserve your rights to your refunds, what will happen is that your entry will be in suspended stage. So, like, you want that to happen so that, you know, it's remains kind of, like, open until there is that court decision, that CP decision on what's gonna happen with that entry.

Alright. Alright. Marcus, I'm going to come back to you. There's a lot of questions on three zero one overcapacity investigations.

Marcus Eeman

Yeah.

Jenn Park

K.

Marcus Eeman

Okay. Alright. Let's see this first one here.

I am getting many questions in my company about three zero one overcapacity questions. We have largely moved out of China to other Southeast Asian countries.

Are there investigations going on for all countries for overcapacity or starting with the countries that have the highest trade imbalances? Yeah.

So I believe this is 12 stand alone countries plus the EU 27, for the excess, you know, excess overcapacity. A lot of those countries that are on the excess overcapacity list are big ones.

And you asked from Southeast Asia. Vietnam is on that list.

Thailand is under investigation or is on that list. Cambodia is on that list.

Bangladesh is on that list. India is on that list. Malaysia is on that list.

Indonesia is on that list. So, basically, everything, I think, with the sole exception of Laos, or Burma, which that's another issue if you're importing a lot of stuff from there. Be careful if you're going to move to to Myanmar or Burma, for importing.

But, yes, most Southeast Asian countries are under investigation for this excess overcapacity. Yes.

I'm hearing that the three zero one excess capacity tariff report will be next Friday Friday or next Friday. Is that what I'm hearing, or something else?

That is what I have been hearing as well. Yes.

So there's another question about when do I expect any kind of time frame on this. I'm expecting sometime in September.

I am not on Calcio or PolyMarkets, so I'm not a betting man. But if I had to just guess here, for you and as let me emphasize, just guess, I would say September.

But, I hope to kinda have some kind of announcement one way or the other, what they're gonna look for, which countries are in or out, what kind of exclusions are gonna be in or out. The thing to watch, I think, most closely is kinda, I think, what happens with the EU.

Right? The EU has this deal where they get these 15% all in rates. This was part of some negotiations struck with them some months ago.

They're already kinda at, like, 10% here. They have 15% under most of their two thirty two tariffs.

So very curious to see how this excess capacity comes out for the EU. Is this gonna come in only at 5%?

Is it gonna be less? Is it gonna be, some sort of, like, 0% unless it's below 15% from other duties? I'm not quite sure, but, a lot of the big players, like I mentioned already, China as well, Japan, South Korea also included on those lists, also have trade deals.

We'll have to see how their overcapacity issues, get sorted out here. Let's see here.

I also see one other question about foreign importer of record, and then there's a couple more for you, Jen.

Jenn Park

K.

Marcus Eeman

I'm just gonna answer this one here. So we how can we determine whether our company is considered a foreign importer of record?

Not having any controlling beneficial owners who are US citizens or lawful permanent residents. Does not own real property in The US automatically make us an IOR?

Yes. And I will, I had this up earlier today. The actual, announcement from the order does make this clear.

They say that the term a US IOR means that is a a, a US citizen or lawful permanent resident, or if it's an entity, it's organized under the laws of The US, located in The US, has all its times controlling beneficial owners in The US who are lawful permanent residents, or in the case of an entity owns a significant amount of real property in The US as determined by secretary of commerce. And they say that a foreign IOR is any IOR that does not meet the definition of a US IOR.

So I guess based on your description here, if you're not having beneficial owners in The US who are not citizens or permanent residents and don't own real prep property, yes. That makes you a foreign IOR, for purposes of this order and how CBP is gonna enforce it.

Yeah. Okay.

Jenn Park

Alright. I'll take on I don't know if this is the last one. I know we're running over, but there is a question.

Is there a deadline for filing for AIPA refunds via Kate? So there is no deadlines.

Once it opens and you're eligible for phase one, phase two, you can you can file whenever you want. We know we have certain clients that chose to hold off in filing phase one because they wanna do audits or they're just reviewing their entries.

So it does not mean that there's, like, a set deadline for phase one or phase two to get those entries in. It's it just means it's open.

If you're eligible, feel free to upload whenever it meets your business needs. Yeah.

Marcus Eeman

Yep.

Jenn Park

Alright. I don't know if you wanna take on this one. What have you heard about congress passing new 100% Russian oil tariff?

Yeah. I know we. didn't really cover detail, but

Marcus Eeman

Yeah. That one, that one the reason why that's interesting and why I think maybe this person's bringing it up is because unlike most bills, this did not die in the senate.

This was actually created in the senate, as kind of the swan song of former senator Lindsey Graham, who kinda drafted this legislation. And this what this would do and that what passed the senate, I think it was, like, 90 to 10 or a pretty pretty substantial margin, would authorize the president to place duties up of a 100% on buyers or importers of Russian oil.

So the major buyers and importers of Russian oil are India, China, Turkey. Those are some of the major buyers of Russian oil.

If you wanted to ex if they I don't know the exact language if it specifies it specifically oil or if it also includes other energy products like national natural gas, because if it does, that would also still include the EU, who still buys a lot of natural gas from Russia. So I'm not quite sure if that's the case yet.

The house would still have to pass it, then the president would have to, you know, actually do something with it, but it would provide this other kind of, tool here. And there is at least I've heard some talk in the house about, like, well, how do we wanna maybe change the language slightly, modify it a little bit, rein it in a little bit, allow some kind of allowances for certain things.

Maybe we don't have it on natural gas. Maybe we say that they don't have to place it on countries that are friendly or have, like, an agreement in place.

There's all sorts of, like, different ways you can you can tweak through. But the fact that it passed the senate at such a wide margin, is positive.

But I would put it again in the kind of another context here. We are a few months away from an election where high oil prices in affordability are key issues for many voters in many states.

So we now have to go to our representatives who are all up for election as they are every two years and say you wanna vote for higher tariffs on everything right now. Maybe it's easier if it's because it's on Russian products, it's on Russian oil.

But still, there is at least some election, election period optics that are probably under consideration. So, it is notable that it passes in a wide margin.

There's probably a lot of support for it in the house, but they may wanna speak the language. We'll have to we'll have to see.

I didn't put it in here yet because I didn't quite feel confident enough to from the house side and also with the election going on, which way they wanna lean, but, that is that is something to watch. This has been proposed, I think, at least two for at least the last two years.

I think the first number was up to 500%. I think in, like, the previous year, they said you can do 500% secondary tariffs on these buyers of Russian energy products.

Now it's just a 100%, which is still considerable, but, yeah, something to something to watch, but I don't think any any news yet.

Jenn Park

Alright.

Marcus Eeman

Well, I think that's all we we have here today, and so I'm gonna call a call a wrap. That concludes our webinar today.

We will email a link tomorrow with the recording, as well as the slides are available. Thanks, everybody.

Have a great day, and we'll see you next time. Bye bye.