U.S. Trade Policy and Tariff Actions
- CAPE Phase 2 set for 29 June as IEEPA Phase 1 disbursements continue: On 9 June, the Executive Assistant Commissioner (EAC) for CBP, Susan Thomas, reported to the U.S. Court of International Trade (U.S. CIT) that Phase 2 of the CAPE system is anticipated to launch Monday, 29 June, and that Phase 3 may be ready to launch at the end of July. Additional details on scope of Phase 2 and 3 CAPE include:
- Phase 2: Covers entries flagged for reconciliation, which total approximately $28.7 billion in IEEPA duties (18% of the total $160 billion collected). Entries flagged for reconciliation are entries that were filed with certain elements estimated with the understanding that CBP will receive the actual information at a later date.
- Phase 3: Covers entries that have reached “final liquidation” which total approximately $11.4 billion in tariff payments (6.9% of the total $160 billion collected). Entries that have reached final liquidation are entries 180 days after liquidation. Please note that the Department of Justice (DOJ) is appealing that U.S. CIT cannot require universal payment of all IEEPA duties, citing entries that have reached that reached final liquidation, unless the importer of record has sued to recover money.
Phases 1, 2, and 3 of CAPE are anticipated to cover approximately 90% of all IEEPA duties paid. It is unclear at this time whether there will be additional phases past Phase 3 and how the remaining 10% of entries will be addressed.
- Trump signs Executive Order on Strengthening Customs Enforcement: On 3 June, Trump signed an Executive Order and subsequent Federal Register Notice requesting that the Secretary of Homeland Security revise importer eligibility regulations, guidance, and policies as well as additional customs reforms. PMMI members importing food processing and packaging machinery of 8422 and 8438 should work with their brokers to determine whether their supply chains are affected. The EO details many potentially high impact customs enforcement reforms including:
- Distinguishing between “U.S. IORs” and “foreign IORs” which will impact the level of compliance and scrutiny. For example, foreign IORS will be prohibited from filing informal entries
- Requiring that an IOR maintain a minimal level of domestic assets, bonding, or both to be compliant with U.S. customs and trade laws;
- Increasing the minimum required bond coverage for IORs;
- Requiring IORs to provide CBP with additional supply chain and due diligence data such as import volumes, year organized, ownership, business affiliations disclosures, and domestic asset disclosures, as well as undergo additional due diligence and certification measures;
- Require that IORs maintain a “good standing” designation with CBP based on history, payment and enforcement;
- Enhanced vetting procedures for all individuals and entities seeking to conduct activities related to the importation of goods, including foreign IORs, affiliates of IORs, customs brokers, custodians of bonded merchandise, and freight forwarders.
- Federal appeals court allows the Administration to continue implementing Section 122 tariffs: On 11 June, the U.S. Court of Appeals for the Federal Circuit ruled that the Trump Administration can continue collecting Section 122 10% tariff while litigation works its way through the courts. The Section 122 tariffs are set to expire on 24 July but are anticipated to be replaced by Section 301 tariff actions related to forced labor and structural excess capacity investigations.
Trade Policy Actions by Other Countries
- Thailand accelerates EU FTA negotiations to diversify away from U.S. and China: On 10 June, Thailand's Trade Representative confirmed Thailand is targeting conclusion of its EU free trade agreement by end of 2026, with the next negotiating round scheduled in Brussels this month. Thai officials have noted the accelerated negotiations are a result of efforts by Thailand to reduce reliance on U.S. and Chinese supply chains. Imports of food processing and packaging machinery are currently standard/MFN duty-free into Thailand and standard/MFN 1.7% into the EU. It is not yet known if the EU will provide preferential market access on Thai-origin machinery.
