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.
Jenn Park
Hello, everyone, and thank you for joining today's tariff trends webinar. My name is Jen Park, and I'm the director of the trade advisory team here at Flexport. Alright. We have a lot of content to cover, but before we begin, I'd like to go over a few housekeeping items. On your screen, you will see a sidebar to the right of the main stage where you can submit questions. At the end of the presentation, we will host a q and a, and answer a few audience questions. Be sure to get your questions in early. In the same sidebar, you will also 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, our tariff refund calculator. We also have a link to register for our fall tech release on September 29, where we'll announce new AI and technology resources like our tariffs technology products to help our current trade environment. And then above your screen, you'll notice 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 tariff stacking issues and estimate duties you may have over or underpaid. Click on the button above your screen to get started. Now a brief legal note. Please keep in mind that all information provided in this session is based on the situation at this current time and may not be customized to your specific business requirements. We always recommend reaching out to a Flexport expert to discuss your particular situation. Joining me later today is my colleague, Calum Coulter, the senior trade advisory associate. And the agenda for today, we'll start with the latest news. We'll cover The US Canada tariff landscape, talk a little bit about CBP enforcement, and then hand it off to CAPE and IEEPA, and then we'll end with some resources and q and a. And then we can begin with the latest news. So the headlines for today, we wanted to start with IOR validation. This is something that was discussed previously in our other webinar, but we wanted to call out starting this Friday, September 18. CBP is going to go ahead and start voiding any IORs with inaccurate and incomplete information on your CBP 5106 forms. And for those that are not familiar with the 5106, that's the document that you had submitted previously to CBP to become an importer of record and to make entry into The US. And so we highly encourage you to take a look to make sure that information is accurate prior to Friday, including the physical address, email address, and phone number, and other information that's contained in the document. I'll cover a little bit more about this during the CBP enforcement section later on. Next is the 301 overcapacity. We're still pending a decision on this. We were hoping to get something back in August. Haven't heard anything. We anticipate hearing maybe something in the next month, but we will keep you posted. For those that are unfamiliar with the overcapacity issue, this is USTR's investigation across, I believe, 16 countries where these countries are producing more than what their market demands. And what The US position is that this overproduction is pretty much displacing US domestic production and preventing any sort of investment in the expansion of US manufacturing. So I hope to get a discussion on this maybe in the next month, but we'll be tracking this closely. Next, for 232 tariffs. There's nothing new for the 232s. These were announced last month, but I just wanted to call this out and put this on your radar for the polysilicon. Nothing is gonna be implemented until December, so we still have some time there. As for the UAS, though, we do see that there were some tariffs that were implemented earlier this month, September 3 to be exact. And so for those that are impacted by this, I'm sure you've already seen these, as your brokers are clearing your entries, but also there's going to be additional tariffs that are being implemented later in February 2027. Before we dive into section 338, which seems to be the hot topic, with the back and forth between US and Canada, I also wanted to briefly highlight something that's not on here, which is The US Russia sanctions bill. And so now this is called the Lindsey Graham Sanctioning Russia and Iran Act of 2026. So the name has changed. This has passed the senate. It is pending the house vote, I believe, this week. And this is the tariffs that are implemented on the countries that are purchasing Russian oil. And so this gives the president up to, I think, 100% tariffs that can be leveraged and also up to 500% on Russian direct imports. So if this passes, you'll see that countries like India and China may be impacted by potentially an upwards of 100% tariffs on imports. So something to keep an eye on. We'll keep you posted as we hear more about how the house decides on that bill. So with that, I will hand it off to Calum to talk more about the section 338 tariffs.
Calum Coulter
Hello, everybody. My name is Calum Coulter. I'm a senior trade advisory associate here at Flexport, and I'm going to be talking to you today about The US Canada tariff landscape and the trade relationship. There's obviously been a ton going on over the last couple of months, and we have quite a bit to discuss today. So let's go ahead and dive right in. So first up, we're gonna take a look at the timeline of the escalations over the past couple of months between The US and Canada. And so really where we're starting here today is on July 20, president Trump issued an executive order imposing the very first section 338 duties via executive order, in response to Canada's tariffs on products in dairy category, alcoholic beverages, and motor vehicles. What's notable here is this is the very first use of section 338 to impose duties on another country since this law was enacted back in the nineteen thirties. And so that was on July 20. It set a thirty day timeline, and so these tariffs were due to go into effect on 08/19/2026. However, the very day before that, so on August 18, we saw there was another executive order that was issued that suspended the section 338 duties for three days. At the time, there were pretty intense negotiations going on between Canada and The US trying to iron out the disagreements and get to a deal. And so when we saw the suspension roll out, it looks like everybody was quite confident about how this was going. It looked like we had a deal. There were a couple comments made from both negotiating sides, indicating that there were a couple final pieces to iron out, but everything was looking like they were gonna get a deal. That said, three days later on August 21, the trade talks fell apart. There was no deal. I think some red lines emerged, and both sides started trading blame for the negotiations falling apart. And there was some accusations being traded, and things got pretty ugly pretty quickly. And the very next day on August 22, the section 338 duties took effect. These are 50% tariffs on Canadian origin goods, again, in response to Canada's actions, which were seen as retaliation for the IEEPA duties last year, again, kind of responding to Canada's position on dairy products, alcoholic beverages, and motor vehicles. The scope of these tariffs is quite a bit broader than that. Merchandise of all sorts of categories, which we will get into in a little bit. So that was August 22. A couple of days later on August 26, Canada announced their retaliatory tariffs. Prime minister Mark Carney announced that they were gonna implement dollar for dollar retaliation, and this was going to go into effect on September 8. The tariffs would be imposed on US origin goods, dairy products, wood products, flooring, wearing apparel, steel and aluminum goods, kitchen wares, exercise equipment, etcetera. Again, the scope of the tariffs is pretty broad, and we will take a look at that in a little bit. The very next day on August 27, president Trump responded with another executive order officially changing the name of Lake Ontario to Lake America, seemingly in response to Canada's retaliatory tariffs, which obviously ruffled some feathers on both sides of the border. After that went into effect, September 8 hit, and this was a busy day on both sides of the border. So first, the Canadian retaliatory tariffs took effect. Those are the previously mentioned categories, dairy, wood products, flooring, wearing apparel, etcetera. And the same day, The US issued an update to section 338, which actually imposed import bans on a smaller category of goods. This is another action that section 338 authorizes. In addition to imposing tariffs, they can just outright ban the importation of goods under that law. And so on September 8, the president imposed that import ban on motorcycles greater than 800 cc's, whey products, molasses products, nonalcoholic beer, and various other alcoholic beverages in packages less than four liters. The same day, there was another modification to section 338, which actually added some products to the list of 50% duties and then removed a couple of other products. This was interesting to see. There had obviously been some pushes going on behind the scenes to get some products excluded, whether we don't have access to them domestically or they were somebody had in here and they made that play. So there were several products that were included, furniture, golf carts, steel, and aluminum products. And then the excluded products were things like salt, cement products, fishing rod parts, and accessories, among other merchandise as well. That was going to go into effect on September 15. So we saw that hit just yesterday. So the section 338 list expanded with those 50% tariffs. And then the import ban is going to go into effect on September 29. So we got about two weeks before that hits. So like I said, September 15, the section 338 product additions and removals took effect. That was just yesterday, and so we saw that roll out. What is coming up next is September 29. Again, the 338 import bans are going to take effect. This is obviously a pretty significant escalation. We've not seen import bans like this in recent history. There's been plenty of additional tariffs imposed over the last year and a half, but the import bans is another step entirely. Okay. With that, gonna jump ahead into the next slide. And so this is a very real depiction of me getting prepared for the webinar today, going through all the materials, catching up on what other folks in the industry are saying, just gathering everything together. And I was listening to this webinar of, like, well respected professionals, and they mentioned something about president Trump threatening 100% tariffs on Niagara Falls. And so I'm going down this rabbit hole trying to figure out if this is real. How does one actually impose duties on a waterfall? And at this point, I never really thought this is what my life would come to, where I am in public trying to explain how we are imposing additional duties on a waterfall on the border, and it turns out this is not real. This was a hoax on the Internet. And so let's jump back into reality. So let's take a look at where the actual tariffs are, not on the waterfall. So on the left side of the screen, there's a list of the products with additional 50% tariffs from section 338. These are dairy cheese products, iron, steel, structural shapes, columns, beams, aluminum profiles, bars, rods, tubes, base metal fittings, golf carts, engines, outboard motors, wood furniture products, lots of different seats, oxidized modified animal vegetable or microbial fats and oils, and then various leather and fur products. So that's where the 50% section 338 tariffs come into effect. There's a couple lines there that are listed in bold. And why those are called out specifically is because that is where the section 338 50% duties on Canadian products are going to stack with the section 232 steel and aluminum tariffs, also at 50%. So there are a couple categories here where we are looking at well over 100% duties for these products when they are imported into The US from Canada. So it's certainly worth being aware of. If you are transacting in these goods, obviously, stay up to date, look at your options, and discuss with a professional. On the right side of the screen, again, this is products that have been banned for import into The US. So these are Canadian origin motorcycles, including mopeds and cycles, larger than 800 cc. Again, whey proteins, concentrates, invert sugar and other molasses, nonalcoholic beer, and then various alcoholic beverages in containers less than four liters. With that said, I wanna circle back a little bit. I know we always receive quite a few questions about the stacking, so I wanna address that in advance. So we're dealing with section 338 duties today. This is 50% tariffs on Canadian origin goods. Do these 50% tariffs stack with the section 232 metal tariffs, steel or aluminum? Yes. They do. Section 301 forced labor tariffs. Do they stack with 338? Yes. They do. Section 232 auto. This one was interesting because we didn't see that there was much of a crossover at all between the products on the section 338 list and the products on the section 232 auto parts list. There were a couple of HTS codes within the seats, and there's one other, but the scope is pretty minimal. And I see that as intentional. I think as we saw the trade talks fall apart, the red lines were clarified on both sides of the border, and there was a lot of discussion around auto parts trade in North America, as well as the medium and heavy duty truck vehicles. So it was pretty much excluded from section 338. With that, there were a couple other things to address, drawback. Are section 338 duties eligible for recovery via drawback? Yes. They are. So if you have an active drawback program going on, you are importing Canadian origin goods that are hit with the 50% 338 tariffs when imported into The US, and you subsequently export them or destroy them, work with your drawback provider because you can recover these duties via a drawback claim. Chapter 98 eligibility. Yes. The section 338 duties are eligible for valid chapter 98 claims. So if you are exporting goods from The US abroad for repairs or alterations, you would have to pay additional duties on the value of the repairs performed abroad, but you can still make those claims under chapter 98. Okay. With that, let's keep going. Let's take a look at what comes next. So, like I said before, on September 29, The US import bans will begin to take effect. There's a number of different categories of goods, motorcycles, whey products, etcetera, where this is going to take place. Canadian whiskey is one of these. And like I said before, we've seen a lot of tariffs imposed over the last eighteen months. No real tariff bans, and so time will tell how this actually plays out. I can see it going a number of different ways. It could be successful and broad, or, alternatively, we could see there's a sort of niche specialty category. Does Canadian whiskey become the new Cuban cigars where it is the hot commodity everybody wants? Time will tell. With that, both sides indicated in the past several days that they're open to coming back to the table. I saw president Trump was interviewed on the sidelines of a golf tournament this past weekend, was in a good mood, and indicated that The US has a good relationship with Canada and expects that a deal will come soon. And on the other side of that, Canadian prime minister Mark Carney gave an interview with Bloomberg where he indicated that Canada does want a deal. They just want it to be a mutually beneficial deal that works for everybody. They don't wanna be put on a leash, and they don't wanna be taken advantage of, but they're happy to negotiate and want to get back to the table to get a deal soon. Like I stated before, when the trade negotiations did fall apart, it seems like the red lines on both sides were clarified a little bit more, which I think will be helpful for future negotiations between The US and Canada. The Canadian red lines that were identified and clarified were obviously the medium and heavy trucks having reduced 232 duties. They were under the impression this was going to be the case with the trade deal they were negotiating. And when that didn't happen, it's obviously a red line for them, and they want concessions made for future negotiations. Another red line for them is sovereignty to sign other trade deals with other partners around the world. They don't wanna be put on a leash and wanna maintain their Canadian sovereignty to pursue deals that work for them. And lastly, another red line for Canada is the French language discoverability. I think we saw quite a bit of movement on here. I think the Canadian negotiators were under the impression that The US was really pushing back on this and was gonna cause quite a stir. But as we saw the trade talks fall apart, August twenty sixth and twenty seventh, it seemed like The US negotiators were a little softer on that position and willing to make some concessions. And so I think we'll see some progress there. From there, just in the last couple of days, it was Monday and Tuesday of this week, prime minister Mark Carney hosted the inaugural Canadian Investment Summit, really looking to attract additional foreign investment into Canada, and was really emphasizing the stability of Canada and the opportunity to participate with other partners around the world, which I think was fascinating to see. I think the timing of this summit is obviously telling, and we'll see where that goes. They are also aggressively pursuing additional trade deals around the world. In that same interview with Bloomberg that I mentioned previously, Carney made a comment where presently Canadians have access to 1,500,000,000 consumers through trade deals, and they intend to double that number over the next six months. Obviously, that would be huge, and so we're gonna continue to monitor the space and see what other deals they're pursuing and where this actually goes. Immediately after the trade summit, Carney is headed to Europe to work with the European partners and looking to strengthen and deepen the relationships overseas. I saw just this morning the EU president made a comment that Canada was going to be granted associate membership into the EU, but we don't yet really know what this means. Obviously, there's a lot of alignment on values, and they want to continue tightening those relationships. What it means to be an associate member is not yet clear. But, again, we'll be monitoring this, and we'll let you all know shortly. One concrete area where that will take effect though is the EU defense procurement arrangement called SAFE. So Canada does have access to that, and they want to participate essentially as a country of the EU, trading in defense materials, arms, etcetera. So there's a lot coming up next. Trade negotiations are obviously continuing and will be ongoing for quite a while. And I think as we take a big step back, there's an obvious contrast here as we look at The US and Canada trade relationship compared to The US and Mexico trade relationship. USMCA negotiations have been going on for the past several months, and we're seeing a divergence here. Mexico clearly wants to come to the table and have a seat at the table where we are seeing Canada pursue additional trade deals and trade relationships abroad. They're looking elsewhere, whereas Mexico is looking to stay tight with The US. And so how this progresses, time will tell, but we're certainly monitoring this. Okay. With that, I'm going to bring Jen back onto the stage to talk about strengthening CBP enforcement.
Jenn Park
Great. Thanks, Calum. Alright. I think with last week's trade security summit, it's only relevant that we spent a little bit of time on CBP enforcement. I know everyone has been busy with tariffs, with IEEPA refunds, and that kind of has taken a priority for a lot of companies. But in the background, there is strengthening of CBP enforcement happening. In 2026, I think we all knew it was going to happen, but we weren't really sure what to expect. But with the June 3 executive order, strengthening customs enforcement, all the way to last week's trade security summit, I think we're seeing the same messaging from CBP and the administration is that there's gonna be stricter customs enforcement in order to protect national security. I think that's said over and over that national security seems to be the priority for customs and the administration. And so there's also reasons why, which is to promote lawful trade and also to weed out any bad actors. I think at the trade summit, they kept focusing on bad actors, bad brokers. And so there is gonna be a lot more strict requirements coming. And so I wanted to spend some time highlighting some of the sources that have come out in the past few months and to provide more insight as to what we can expect and provide some practical considerations on what you can do to prepare, if you haven't done so already. And so as from the first slide, I already spoke about the IOR validation. This all started with the executive order from June 3, where CBP and DHS were pretty much directed to create new rules within forty five days, ninety days, and hundred and eighty days to create stricter rules around importer of record, foreign importers of record, to create a qualifying criteria for companies that can import, stricter vetting procedures, increased, tougher enforcement penalties. And so what we're seeing is that the administration is looking to really overhaul the customs policies to make sure that we're closing the loopholes, we're catching the bad actors, and making sure that we're really staying on top of this. I think pretty much historically a lot of companies were just kind of really focused on the finished good being imported, what they're paying, and they weren't really keeping track of what their suppliers, vendors, business partners were doing. But I think overall the message is, know your business, know your supply chain, know where your products are coming from, know your products, but also the manufacturing of them. Right? And so I'll quickly go through three of the different sources. One is that executive order. The IOR validation is something that came up in there, and we actually see it happening today. The federal register notice was published in August, and then starting September 18, like I mentioned, they are gonna start voiding those importers of record that have inaccurate, incomplete information. And this is in order for CBP to properly identify an importer based on that document. They wanna make sure it's most accurate. And so what will happen is that if your importer of record happens to be voided because it contains incomplete information, in that register notice, it does say that CBP will reach out to you, provide instructions on how to reestablish your importer of record number, but it doesn't say the timeline. So it could take months. And so in order for you to avoid this impacting your importing history, to be able to import your products, I would say just take those one, two days before September 18 to get this in order. For a foreign importer of record, I think this is a huge change. This is customs really cracking down and closing the loopholes here. I think some changes that are called out in the executive order for a foreign importer of record, which is important, is that no longer filing informal entries. And for filing formal entries, what was needed was a continuous bond, but they're saying that's no longer the threshold. Now you actually have to be CTPAT validated or you have to use a CTPAT validated broker. And so this is gonna be a big change for those foreign importers of record wanting to import into The US. And I'm pretty sure those customs brokers are now not as happy because the responsibility is now increasing and making sure that if they're working with a foreign importer of record, they have to vet and make sure that this foreign importer of record complies with The US regulations, that they actually are an entity, they have a legal identity, that they have ownership, that they have US assets, and also that they actually have the funds to pay the duties and tariffs. Right? And so this is something that the brokers were not really used to, didn't really have to do, but this is changing the game in terms of now what kind of role a broker will play for foreign importers of record going forward. There are no specific rules that have been established just yet on this. There is about hundred and eighty days since the June 3 date to publish them. And so that deadline is around November 30. So we can expect some changes happening in the next few months. The next document is a trade fraud task force. They published a memo in July that basically outlines what they're targeting. And they're specifically saying that CBP enforcement is important to pretty much level the playing field, but also identify who those bad actors are and weed them out. And what they've really focused on is importers of record are ultimately responsible for the information that you provide to customs on those customs entry documents, and that liability cannot be contracted away. It stays with you. It doesn't stop at the border, but it could go beyond that. So if you have wholesalers, distributors, brokers that are knowingly helping you violate customs laws, those actors will also be criminally held liable. They are being very strict, but this document really focuses on what are the trade priority issues that they're focusing on today. With the higher tariffs that are happening, you see a lot of companies getting creative in order to reduce their tariffs. Right? And even for service providers, we're saying, hey, could we help you mitigate your duties. Right? But we're obviously doing it in a compliant way, legal way through maybe tariff engineering, through origin shifts. But what we see is that there are companies that are doing it the good way. They're making sure they're doing their due diligence. So if they're shifting their country of origin, we're having companies really diving into their supply chain, understanding where the raw materials are coming from, whether there is an actual substantial transformation happening. And so in order for it to be fair for them, we wanna make sure that we catch the bad actors where there's companies that are just using misclassifications just so that they can lower their duties, that they're changing their country of origin just so that they can have lower duty rates, when they're transshipping through a third country, or even just using certain values by double invoicing. There are schemes that are being set up by these bad actors and what customs is saying, it's really hard to target and understand who these bad actors are from those that are compliant. And so in order for us to be able to identify that, what we're gonna be doing is really targeting and looking at more and more. And I think it really shows from the statistics from CBP on the CF 29s. They said that there was a 148% increase in the number of CF 29s that have been issued from q one of 2025 to q two of 2026. From my side, I 100% agree with it. The number of CF 28s and 29s that I see clients coming to us and asking for our assistance has significantly increased. And the amount of PSC, CF 28s and 29s coming out of corrections, if you're filing a post summary correction protest, I also see that happening. So I do agree with this that they are having stricter requirements, but also that they're really targeting these companies that are changing their classifications, their countries of origin. And so if you are looking at potentially changing your classification or country of origin, make sure you are taking the time to document everything, doing the due diligence because it is possible that customs will look at it and say, hey, why are they changing their classification? Let's dive into it. Let's issue a CF 28 and get some information. The best case scenario is that you have all that documentation prepared, and you are able to submit within that twenty day timeline that's there for CF 28, and you can pretty much prove your case. And so what you don't want is scrambling last minute to gather the information that's required for a country of origin validation, which customs will require, bill of materials, production records, production processes. All of that takes a lot, especially if you're working with a vendor that is not as helpful. So gathering that documentation will be harder. And what we're also seeing is CBP has changed their demeanor. They're saying we're not gonna be lenient with our extensions. So on CF 28 and 29, we're not gonna be really extending and approving those. But also, if we don't receive the information that we requested initially, we're gonna take it as you cannot provide it, and we're gonna just deny what you're trying to prove. Right? So you just don't wanna be in that position. So I think right now what we're advising is, customs is coming. They're looking at every single data point, especially classification, origin, and value as that will dictate your duty rates and tariff rates that you pay into The US. So make sure those are accurate. Audit your classifications, audit your countries of origin, but also audit your brokers. Make sure that they're declaring your entries correctly based on the SOPs you've provided them because you just don't know what's happening on the back end. So hopefully you're doing post entry audits to make sure that your brokers are clearing your entries correctly as well. The last one is the transshipment. I'm sure you've heard of the great transshipment scam that was published by the White House, and it shows that there is about 40 to 300,000,000,000 in transshipment fraud. And so what this is saying is that since the 301 tariffs have been implemented, there are a lot of companies that have started routing their Chinese origin goods to other countries, and they specifically identify 40 countries where goods were being funneled to Thailand, Korea, Vietnam for simple assembly, repackaging, relabeling, which is not really substantial transformation. Substantial transformation, as you know, is the country of origin test here in The US, and that is required in order for customs to say, hey, your raw materials from China did undergo a significant change here in this third country, so the country of origin should now be this new third country. Without that test, you really can't prove that your country of origin did change. So even if you're relabeling in Vietnam or Thailand, your country of origin should still be China, and so that's what you should be declaring. And what these companies or bad actors are doing is ultimately rerouting their goods through these third countries in order to change their country of origin to pretty much change the duties and tariffs that they're paying here in The US. And I think in the trade fraud task force, if you look at that memo, there was a company that had to pay a settlement of, I think, about $550,000,000 because they pretty much circumvented the anti dumping and countervailing duties on aluminum extrusions through this process. And so you just don't wanna be caught up in it. And if you are, once again, what we're advising is that map out your supply chain. If your products are being rerouted, if they're going through multiple countries, make sure you understand what raw materials are being passed around, where the sourcing is, what kind of production process is being done within each country before it comes into The US as a finished good. Customs is going to be looking at that very closely. And I know it's very hard even working with clients today. They're like, I can't get manufacturing overview. I think it's gonna be very important now that you reestablish your relationship with your vendors. They are gonna be your best friends to prove that your country of origin is actually accurate or the classification is accurate because they're the ones that hold your data and the information that customs is looking for. So you're gonna wanna start documenting everything if you haven't already because customs only gives you twenty days generally from a CF 28 to provide that information, and gathering all that does take time. And a lot of times it may not be in English. And what customs wants is everything to be translated in English, so that takes more time. So what we say is be prepared, document everything, start mapping your supply chain for all your products that are being imported. I know it's impossible, but I think it's good to start the conversation and know what types of documents should we start preparing, should that instance come when CBP does come knocking for more information. So yeah. And with that, I'll just hand it off to Calum for the most exciting part of the webinar, which is IEEPA and CAPE.
Calum Coulter
Thank you, Jen. Okay. Everybody's favorite topic. Let's talk about tariff refunds really quickly. So I'm sure there's a ton of questions as there always are. So quick reminder here, if you have questions about CAPE, about CBP enforcement, or about anything else we've discussed today, go ahead and throw your questions into the chat, and we will try to address as many of these as we can. And with that, let's take a look at the numbers. So we saw Brandon Lord at CBP release his most recent update just yesterday. And so the numbers we're looking at today are accurate as of September 11. And so 286,044 CAPE declarations have been submitted. And of those, 201,293 have passed the actual file validations. Including those 201,000 CAPE declarations is 27,200,000 entries that have been accepted for the removal of IEEPA duties. We've actually seen some movement on 19,900,000 entries, where these have been liquidated or reliquidated without regard to IEEPA duties. So refunds are certainly moving forward. This whole process has gone smoother than I think many of us expected, which is great to see. And so of all the entries accepted and approved for processing, we've seen $135,000,000,000 worth of refunds accepted. Of that 135,000,000,000, $122,000,000,000 in refunds has actually been transmitted, either to importers or sent to treasury for disbursement to the importers, which is fantastic to see. We continue to see this number rise every month we look at it, which is just great. Love to see importers getting their refunds. That said, not all refunds are successfully arriving in importers' bank accounts. There are 20,184 refunds that have been rejected because the importer of record did not have the ACH information on file in their ACE accounts. Please check your ACE account. If you're submitting entries into CAPE, if you wanna get refunds, check your ACE account. If you have any doubts that the ACH information might not be on there, might not be accurate, please take a few minutes and go ahead and check that now. Of those 20,184 refunds that have been rejected, that accounts for $1,300,000,000 of refunds that importers have not received yet. The good news here is that we've actually seen these numbers go down since our last update last month. So in August, I think it was 22,170 refunds had been rejected due to ACH issues, accounting for $1,700,000,000. And so we're continuing to see this chip away, $400,000,000 in previously rejected refunds now sitting with the importers of record. It's great to see. We wanna see this number go to zero. So, again, please check your ACE account. If you're having any issues with that, reach out to the ACE support desk, and continue to follow up. If you have any doubts at all, please verify that, or have somebody like a trusted partner do so on your behalf. With that, I also wanted to mention there was a letter signed by several different members of congress that was sent to CBP commissioner Scott, really just encouraging him to take swift action to ensure that American importers were receiving the IEEPA refunds, as demanded by law and as expected. The timelines that were set by CBP was once accepted into CAPE, refunds would take place within sixty to ninety days. For the most part, that's happening, but it doesn't happen in every case. There's not been a lot of explanation as to why. And so members of congress are certainly pushing on CBP to facilitate these refunds and ensure that this process continues to move forward as smoothly as possible. I know there's been a lot of issues with folks who didn't previously have an ACE account getting access to an ACE account, and there's been quite a few administrative delays. There's a lot of people and a lot of importers trying to get an ACE account set up these days. And so we're seeing sixty, ninety day delays even just to get an ACE account so that you can then submit your entries into CAPE and wait for refunds. So there's a lot of pushing from all sides to make sure importers are getting these refunds. With that, let's take a look ahead at CAPE phase three. So at the very bottom of Brandon Lord's update yesterday, they announced that phase three will now be launched on October 6. We saw this previously announced. The initial launch date for phase three was going to be August 20. However, a couple days before that date, we saw that this was delayed. It seems like there were some duty calculation errors that were identified as they were going through the final testing within CBP, and so they delayed the launch, really just to build some new validations and ensure that there were no other changes being made, that no duty calculation errors were being made, and to ensure accuracy and make sure this was all being accurately reported. We hadn't seen any updates for launch dates after that initial delay back in August. And so it's great to see. October 6 is just a couple of weeks away, and we are expecting this to go live as expected. That said, details are minimal thus far. And so with that, let's take a look at the next slide, and let's talk about eligibility first. So CAPE phase three is going to be limited to importers who filed suit at the Court of International Trade and received importer specific orders of relief. Okay? So if you filed suit at the CIT and you're working with a trade attorney and you received an importer specific order of relief, you as an importer will likely be eligible for CAPE phase three. If you didn't file suit at the CIT and you haven't received an order of relief from the CIT, you will not be eligible for CAPE phase three and will need to either file suit or continue to wait for additional phases of CAPE to be opened up for the additional categories of entries that are still ineligible for submission into CAPE. Let's talk about the scope of entries included in CAPE phase three. So CAPE phase three is going to include finally liquidated entries, again, for these eligible importers. So when this was being launched back in August originally, there were some details that were going around, and we need to make a split here between eligible importers and eligible entries. Because if you filed suit at the CIT, you are an eligible importer that is eligible for submission in CAPE phase three, but that does not necessarily mean every single one of your entries is also eligible for submission into CAPE phase three. What we're seeing is phase three will be for finally liquidated entries, but will not include all the other categories that have previously been excluded. So let's say you've filed suit at the CIT, you've got your order of relief, but all of your entries are associated with a drawback claim. As far as we know now, those entries will not be eligible for submission into CAPE within phase three. Even though you're eligible as an importer based on filing suit at the CIT, the entries themselves have a different eligibility validation, and so you wanna be aware of those details. If you filed suit, work with your legal counsel, make sure they're fully aware of the different entry types and categories that you're dealing with so that you can take action accordingly. Okay. From there, let's talk about the submission process really quickly. Again, we are working with some details that were from the initially expected launch back in August, because we haven't seen a ton of these details released thus far. And back in August, we saw submission details released to plaintiffs' legal counsel, but not released publicly. So that's what we're working with today until we receive additional details. But it does look like phase three is going to be a window based process. And so if you filed suit at the CIT, your legal counsel will need to submit importer of record details to CBP who will then do some work on the back end to open up your ACE account and make you as an importer eligible for submission in CAPE phase three for those finally liquidated entries. In the announcement yesterday, Brandon Lord confirmed that plaintiffs who provided those importer of record details to CBP prior to 07/30/2026, in advance of the August 20 initial launch date, they will be included in the first submission window that opens up on October 6. Plaintiffs who submit the importer of record details after that have to wait for additional details coming in the near future. So keep your eye out for these details coming in. Work with your legal counsel and make sure they're submitting these to CBP on your behalf if they haven't done so already, and you should be receiving those instructions from CBP directly. Okay. Let's talk about refund monitoring really quickly here because I know we are running out of time. I'm not gonna go too deeply into this. I know we addressed it pretty heavily over the last couple of webinars, so I would encourage you to circle back to those webinars, take a look at the materials and the resources. The ACE reports that we discussed on previous webinars are still accurate and valid. We're still working with the same ones, and I would encourage you to do the same. And so there's a quick list. The ES-022, that's the CAPE entry summary report. Fantastic report. Gives you full details about what's been submitted to CAPE, what's been accepted, what refunds have been issued, and it helps to break down the actual principal amount of the duties paid, as well as the interest calculated per entry. So take a look at that one. The REV-603 is a trade refund report. Also has quite a bit of helpful details in there. The REV-613 is the ACH rejected report. So if you haven't received refunds but you think that you should have, check the REV-613. If you're doubting that you have ACH details on file in your ACE account, check the REV-613. This will show where CBP or treasury has attempted to issue refunds to you, but it failed, likely because you do not have ACH details on file. So go ahead and check that one, and especially if you have been expecting refunds but haven't received anything. There's also the REV-615. This is the CAPE detailed refund report. Also has a lot of good details in there. The one nuance with this one is you also need to submit, when you're downloading the report from ACE, you need to provide the refund ID reference number, which you would need to gather from either the ES-022 or the REV-603. So if you're looking for additional details, check the REV-615, but you have to split it out by refund ID. You can't just gather all of the details for all of the different CAPE submissions or all of your refunds and look at it all at once. You have to split this out by refund ID. Okay. So with that, let's proceed ahead, talk about resources really quickly. So before we jump into the q and a, again, submit all your questions into the q and a. Let's talk about a couple different ways Flexport can support you. So first off, we have a free AI tool that runs a compliance audit on your historical customs entries to surface mistakes, misclassifications, or any missed duty savings. So click on the button labeled audit your customs broker above your screen to get started. We also encourage you to use our tariff refund calculator and our tariff simulator. And I will make another plug in here for the tariff simulator, as we're talking about section 338 duties and the import bans. If you have products that are going to be impacted by an import ban, there is a banner that is reflected on the Flexport tariff simulator for those products. So if you have any question about it, go ahead and take a look at that. You'll need to add in the HTS code, the country of origin, and the entry date. And so if you're looking at this, make sure the entry date is after September 29 when the import ban will actually go into effect. Lastly, if you wanna get in touch with the Flexport team, go ahead and email us at classification@flexport.com for your classification and duty rate questions and customs BD for questions related to trade advisory, duty drawback, or brokerage inquiries. And with that, I'm gonna welcome Jen back onto the stage for some q and a.
Jenn Park
Alright. I know we are past the time, but we will stay on for a little bit longer to answer some audience questions. Also, we'll open up our feedback survey at this time. Please share your feedback on today's webinar so that we can continue to curate great content for you. And with that, we'll dive into our first question. So there was one on the 301 overcapacity investigation. The question is, is the expected focus sector by sector or broader at the country level? So the 301 tariffs will not be at the broad country level. It will be sector by sector. And what we've seen is that for this investigation, the key manufacturing sectors are focusing more on the steel, automotive, electronics, semiconductor, solar modules. So, like I mentioned, it's not gonna be an overarching tariff on the entire country. Alright. And then I have a question for you, Calum. So it says for the Canadian tariffs, do those only apply to US origin goods, or would those apply to, for example, Chinese origin goods imported into Canada from a US company that sourced the products in China?
Calum Coulter
This will be for US origin goods going both ways. For the Canadian retaliatory tariffs as well as The US section 338 tariffs, this is all based on the country of origin of the items in question. The country of export is not terribly relevant for the additional duties.
Jenn Park
Okay. There was a question. Does the CTPAT requirement go into effect on September 18 as well? And I think that's alluding to this foreign importer of record being required to be CTPAT validated or working with a CTPAT validated broker. No. It does not go into effect on September 18. This is just the IOR validation on the 5106. So still waiting to hear more from CBP and DHS in terms of what types of requirements are gonna be required for the foreign importer of record. And like I mentioned, it's a hundred and eighty day timeline to put that together. So November 30 is that deadline so we can anticipate hearing more in the next few weeks, months, until then. Alright. And then it says, what documentation should I ask the origin suppliers to provide to prepare for a CBP audit? So I assume this is based on a country of origin audit. It's a lot. I'm not sure if you've ever received a CF 28 or 29 when customs is inquiring, looking into the country of origin of the products or your FTA qualification. It's generally the same information, but what they're looking to see is can you validate your country of origin? So they're gonna start with the bill of materials. So all of the components that go into your finished good, where are all those raw materials sourced from? So that bill of materials should have the source. Also, where is the manufacturing being completed if there is? And then I think the key thing that we've seen across a lot of the conversations we're having today in CBP enforcement is supply chain mapping. I think supply chain mapping was something that initially started from the forced labor investigations, and that became a thing. And companies were freaking out. Like, it's impossible for us to map our entire supply chain. We have no idea where the raw materials are coming from. Now customs is saying this is a basic requirement. You should understand where all your components, raw materials are coming from that's producing your finished good. So supply chain mapping is literally, I know it's a customs term, but they say it's dirt to shirt, is literally understanding where is the initial raw material coming from all the way to the finished good. So being able to identify that. So production records, manufacturing, assembly process overview, step by step on what's happening, what is being done to those raw materials to become the finished good. And also, there's significantly more in terms of I've even seen time cards for specific manufacturers. Like, how can you prove that someone was in this manufacturing facility producing this part of your finished good? It's pretty intense in terms of the amount of information that they generally request. I know we've had scenarios where clients are like, we literally can't provide all 50. It's not 50, but it's more like 15 or so. But we would say start with the bill of materials, start with mapping your supply chain, understanding who your manufacturers, suppliers, vendors are, where they're located. Do they actually have facilities in those locations? But I think the big thing is you're wanting to work with the vendor who's gonna be able to help you to build all these documents together. I think it's gonna be impossible for an importer to understand the full process. You're gonna have to rely heavily on your vendors, manufacturers, distributors to really understand the whole map of your products from raw material to import. Alright. It says for CAPE phase three, will there be a different option from CBP if we don't file suit? Calum, that's a question for you.
Calum Coulter
Yeah. It's a good one, and it's one that we've received quite a bit these days. Frankly, at this time, we don't know what that's going to look like. There's a couple of possible ways this could play out, and we're still waiting for future phases of CAPE to be announced. And so there's a couple of entry categories that haven't yet been addressed. These are entries that are associated with a drawback claim, entries that are associated with an open protest, among several others, and the finally liquidated entries have not yet been addressed. And so we're still waiting for some additional phases of CAPE. We do not think CAPE phase three will be the very end of it. This is going to continue into phase four, phase five, etcetera. And alongside that, if you choose not to file suit for whatever reason, there's a couple different ways this could move forward. I know judge Eaton currently has a motion for class certification on his desk, essentially going to certify a mandatory class for importers who paid IEEPA duties but have not yet received the refunds for those. And so if that moves forward, it would essentially move this all into phase three, with what we know today, because then they would issue an order against that class, and every importer that was a part of that class would receive the order of relief accordingly. There's also an appeal that's open. CBP's position here is that they do not have the authority to issue refunds on finally liquidated entries where there's not an importer specific order demanding they do so. That appeal is currently ongoing, and the litigation continues. So it's possible that this will play out and that refunds will be opened up to all importers, but it's not guaranteed, and we just don't quite know what that's actually going to look like. I would encourage you to discuss with your legal counsel, take a look at the opportunities available to you for your specific situation, and proceed accordingly.
Jenn Park
Alright. I know we're over time, but one more question since it's kind of related to phase three. It says, in a recent announcement about CAPE phase three, it included a statement, plaintiffs who submitted a valid importer of record number to CBP by July 30 will be able to file CAPE declarations for phase three as of 10/06/2026. What does this mean? When and how were we supposed to submit our IOR number?
Calum Coulter
It's a good question. So if you filed suit at the CIT and have been working with a trade attorney to do so, discuss with your legal counsel. They would have received instructions from CBP about how to proceed with that submission. And so they have those details. I would certainly encourage you to bring it up to them to ensure that they've done so, to get you in the queue for eligibility for CAPE phase three. They would have those details, and so definitely discuss with your legal counsel. If you haven't heard anything, that would be a red flag to me, and I would certainly bring it up. If I was in your shoes, the details were provided to the plaintiffs' counsel, and that is pretty much it. So go talk to your attorneys and ensure they're taking action accordingly. It's a good question.
Jenn Park
And just to add on that, I think in order for you to file CAPE phase three, so if you filed a civil suit and you wanna upload your entries into CAPE for your CAPE phase three refunds, I think that initial step is that your plaintiff's attorney had to respond back to CBP with your importer of record number, your CIT number, or the entry number. So that had to be submitted and accepted in order for now you to be eligible for the second part, which is uploading into CAPE. And they would give you a timeline and time frame in terms of when you would be up for queue to upload into CAPE. So make sure if you did file a civil suit, you are working with a plaintiff's attorney and they have reached out to you with these instructions. If you haven't heard back, constantly reach out because you just don't wanna miss that timeline and keep getting delayed in terms of getting your CAPE phase three. Alright, and I think with that we're going to conclude today's webinar. We will email everyone a link to the recording tomorrow morning. Thank you again and have a great day.
Calum Coulter
Thank you.
