As the (Customs and Trade) World Turns: July 2026

We are navigating an unpredictable and fast-changing trade landscape and what we are reporting today may change by tomorrow (or in the next hour). However, our team is regularly issuing reports and alerts to help our clients and friends stay up to date. Sign up here for regular updates and to receive this newsletter each month. 

This edition provides essential insights for sectors including international trade, national security, aluminum, steel, and copper industries, fashion and retail, automotive, life sciences, electronics, artificial intelligence, transportation, electric mobility, e-commerce, shipping and logistics, and compliance, as well as for in-house counsel, importers, and compliance professionals. 

In this July 2026 edition, we cover:

1. Canada Section 338 Tariffs: Trump imposed new 50% tariffs on Canadian dairy, auto, and alcohol goods effective August 19, using Section 338 for the first time ever.
2. BIS Suspends Anthropic Model: Anthropic pulled two AI models offline after a BIS export directive, then Commerce fully reversed course weeks later.
3. OFAC Iran Oil License Reversal: OFAC revoked its Iranian oil general license after just two weeks following renewed attacks in the Strait of Hormuz, leaving only a short wind-down window.
4. New Investigations Target Coal and German Drug Pricing: New Section 232 (coal) and Section 301 (German drug pricing) probes signal more tariff exposure ahead, with comment periods now open.
5. Section 301 Tariffs Fill the IEEPA Gap: As Section 122 tariffs expire, USTR is using multiple Section 301 actions (forced labor, Brazil, Vietnam, excess capacity, China review) to keep tariffs elevated.
6. USMCA Negotiations: At its first statutory review, the United States declined to renew the USMCA while Canada and Mexico backed extension, starting a decade of annual reviews.
7. Differential Pricing Analysis – CIT Decision: The CIT upheld Commerce’s new pricing test, letting a mere 2% price gap trigger zeroing and higher dumping margins.
8. DDTC Proposes ITAR Reporting Relief: The DDTC proposed higher reporting thresholds and a single annual report to ease ITAR political contribution and gift disclosure burdens.
9. BIS Eases UAE Export Controls: BIS loosened UAE export licensing rules, though advanced computing items still require approved end users.

1. President Trump Announces New Section 338 Tariffs on Certain Products of Canadian Origin 

On July 20, the president signed three proclamations targeting Canada’s dairy, motor vehicle, and alcoholic beverage sectors. A consolidated fact sheet covering all three investigations can be found here. 

President Trump announced additional 50% ad valorem duties on certain categories of Canadian-origin goods, effective August 19 pursuant to Section 338 of the Tariff Act of 1930. The various products subject to the tariffs are listed in Annex II of the proclamation and are far more expansive than the targeted sectors. The proclamations generally exclude goods already subject to Section 232 duties and certain civil aircraft and aircraft parts. The Section 338 tariffs will also not apply to energy, potash, fish, and critical minerals goods. Notably, however, goods that qualify for United States-Mexico-Canada Agreement (USMCA) preferential treatment are not exempt from these actions. 

The measures target Canada’s treatment of US cheese exports, US motor vehicles, and US alcoholic beverages, and are framed by the White House as a response to discriminatory treatment of US commerce. The dairy proclamation responds to Canada’s tariff-rate quota system for cheese, which the Administration says disadvantages US exporters relative to EU exporters under the Comprehensive Economic and Trade Agreement (CETA). The motor vehicles proclamation targets Canada’s tariff treatment of US vehicles, including duties on non-USMCA vehicles and non-US/Mexico content in qualifying vehicles. The alcoholic beverages proclamation responds to provincial and territorial restrictions on US alcohol sales that began in March 2025 in response to the new US tariffs and that the Administration says caused US alcohol exports to Canada to fall. 

And the Fox Says… These actions underscore the Administration’s willingness to leverage different statutory avenues to impose tariffs: Section 338 has never been used by a president to impose tariffs but provides authority for the president to take action in response to discrimination by foreign countries. During the 30-day period prior to implementation of the duties, importers should review their import profiles to understand whether their products are subject to the Section 338 tariffs, confirm whether exclusions apply, and monitor whether Canada responds with additional countermeasures. We are closely monitoring these developments, including whether the US Trade Representative (USTR) adjusts the list of products subject to the Section 338 tariffs and possible litigation. Keep an eye out for a subsequent alert with a comprehensive overview of the Section 338 tariffs and their potential impacts! 

Contributors: Lucas A. Rock, Nancy A. Noonan, and Angela M. Santos

2. Anthropic Temporarily Suspends Fable 5 and Mythos 5 Models Following BIS Directive Which Is Subsequently Lifted in Abrupt About-Face 

On June 9, Anthropic announced that it had taken its Fable 5 and Mythos 5 models offline after being informed by a letter from the US Department of Commerce’s Bureau of Industry and Security (BIS) that “a license is required for the export, reexport, or transfer (in-country), including deemed exports and deemed reexports” of the models “to all destinations worldwide and to all ‘foreign persons.’” Stating that it was not possible to limit access only to US persons, Anthropic suspended the two models entirely. 

BIS cited to its statutory authority to impose interim controls on “emerging and foundational technologies” and to Section 744.22 of the Export Administration Regulations (EAR), which restricts exports that support military-intelligence end use or end users in Belarus, Burma, Cambodia, China, Russia, Venezuela, Cuba, Iran, North Korea, or Syria. 

However, the restrictions were eased in the following weeks. On June 26, Anthropic reportedly secured permission to release Mythos 5 to an approved group of companies and government agencies. Then, on June 30, Anthropic announced that full access to both models will be restored because “the Department of Commerce has lifted export controls on Claude Fable 5 and Mythos 5.” 

And the Fox Says… Regulating access to artificial intelligence (AI) models departs from BIS’ longstanding guidance that providing computational capacity is not subject to the EAR if the service provider is not shipping or transmitting any commodity, non-publicly available software, or technology. While the EAR includes a license requirement for US persons’ “support” of military-intelligence end uses and users in the above-named countries, this provision was not mentioned in the Anthropic letter. These developments may portend a more aggressive BIS in the future, and Anthropic’s response illustrates that even where BIS’ authority is unclear, noncompliance in a sensitive area such as AI might be too costly for many companies. 

Contributors: Derek Ha and Megan Barnhill

3. OFAC Abruptly Closes a Short Window for Iranian Oil Transactions 

As we warned was possible in our June 24 alert, on July 7, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) revoked General License X (GL X), which had been issued on June 21 and temporarily authorized transactions ordinarily incident and necessary to the production, sale, delivery, or offloading of Iranian-origin crude oil, petrochemical products, or petroleum products. GL X was originally valid for two months, but it was cut short after only two weeks in response to further Iranian attacks on vessels transiting the Strait of Hormuz, according to the US government. 

In its place, OFAC issued a wind-down license, GL X1, authorizing transactions ordinarily incident and necessary to the wind down at the end of the day in Washington, DC, on July 16 of transactions previously authorized under GL X. GL X1 is notably limited to the winding down of operations; any new transactions on or after July 7, including purchases or loading of Iranian-origin crude oil, petrochemical products, or petroleum products are not authorized. 

Further, GL X1 does not authorize any payment to a blocked person (e.g., any entity of the Government of Iran (including any entity owned or controlled by the Government of Iran), any person on OFAC’s Specially Designated Nationals List (SDN List), and any person directly or indirectly owned 50% or more by one or more persons on the SDN List) unless made into a blocked, interest-bearing US account. Also excluded are transactions or activities otherwise prohibited as well as transactions involving any person located in or organized under the laws of North Korea, Cuba, or the Donetsk, Luhansk, or Crimea regions of Ukraine, or entities owned, controlled by, or in a joint venture with such persons. 

And the Fox Says… OFAC GLs have always been vulnerable to revocation, but perhaps GL X was issued too early in an attempt to encourage certain Iranian behavior before it was realistic to do so. The unfortunate result is that businesses reasonably may be less trusting of OFAC’s GLs in the future. Businesses should always carefully consider the implications of a GL being revoked before expanding business operations by relying on its terms. 

Contributors: Isabella Wellinghorst, Maya S. Cohen, and Matthew Tuchband

4. From Mines to Medicine Cabinets: New Investigations Target Coal and German Drug Pricing 

The Trump Administration is not slowing down on trade. Within weeks of each other, the Administration fired off two new investigations — a Section 301 probe into German pharmaceutical pricing practices and a Section 232 national security investigation into anthracite and metallurgical coal imports — signaling that tariff exposure continues to widen across industries and trading partners. Although each investigation follows its own statutory track, both carry the same bottom line: the potential for significant new tariffs. 

Coal in the Crosshairs: On June 29, the Secretary of Commerce initiated a Section 232 national security investigation into imports of anthracite coal (HTSUS 2701.11.0000) and metallurgical bituminous coal (HTSUS 2701.12.0010), framing both as critical inputs for domestic steel production and flagging their potential treatment as derivative steel articles for future Section 232 tariff coverage. Commerce distinguishes anthracite coal by its high carbon content (86–97%), low volatile matter, and superior heating value. Public comments either in support of or against the imposition of tariffs or other trade measures are due July 21. 

Germany’s Pharma Pricing: On June 18, the USTR initiated a Section 301 investigation into Germany’s “persistent underpayment” for innovative pharmaceuticals, building on the president’s May 12, 2025, Most-Favored-Nation drug pricing executive order (Executive Order 14297) and the USTR’s related May 30, 2025, request for comments on foreign drug-pricing practices. According to the USTR, US consumers pay roughly 3.9 times what German consumers pay for brand-name drugs, with Germany’s below-market pricing, including a 9% confidentiality-linked discount and proposed mandatory rebates on patented medicines (starting at 3.5% in 2027), shifting global research and development costs onto American patients. The USTR has opened a docket for public comments, and interested parties have until August 10 to submit comments. 

And the Fox Says… Companies and stakeholders touched by either investigation should consider whether to participate in the public comment process as these submissions can meaningfully shape the scope and outcome of each proceeding. Beyond the comment process, both investigations carry real tariff risk, and affected parties should ensure that mitigation and contingency planning is already underway rather than waiting for a final determination. Whether these probes culminate in new duties, negotiated concessions, or some combination of both, companies with exposure should be tracking developments in real time and preparing for multiple outcomes. 

Contributors: Collin M. Douglas, Mario A. Torrico, and Antonio J. Rivera

5. The Summer Tariff Wave: Section 301 Tariffs Take Effect

Section 122 global tariffs, imposed after the US Supreme Court struck down the International Emergency Economic Powers Act (IEEPA) tariff authority, expired on July 24 following their 150-day statutory limit. The Administration had previously signaled its intent to use Section 301 to preserve previous tariff levels. Treasury Secretary Scott Bessent stated that if Section 301 investigations succeed, “the tariff rates are going to go back to exactly where they were,” which was echoed in USTR Ambassador Jamieson Greer’s February press release. The following Section 301 investigations are ongoing and could significantly impact importers who source from the investigated economies. 

• Forced Labor: Section 301 forced labor tariffs were announced on July 23 and quicky took effect shortly thereafter on July 24. Tariffs are imposed on 60 economies, accounting for most of the United States’ annual import volume, for failing to implement or enforce forced labor import bans. There is a 10% tariff for economies with existing bans and 12.5% for all others, with certain nuances and exemptions. These tariffs immediately replace the expiring Section 122 tariffs.
• Structural Excess Capacity: Initiated on March 11, this investigation targets excess capacity and production of certain manufacturing sectors to address persistent trade surpluses or unused capacity in 16 economies, including the EU, China, Japan, Korea, India, and Mexico. Public hearings with the Section 301 Committee concluded May 5–8, but USTR has not yet issued its findings and proposed actions. 
• Brazil: The USTR found that Brazil’s conduct across digital trade, intellectual property (IP) protection, ethanol market access, and other areas is unreasonable and burdens US commerce and has taken action to impose an additional 25% tariff on most Brazilian goods effective July 22. 
• Vietnam IP Investigation: Initiated May 29, targeting online piracy, counterfeit goods, and enforcement failures. The public comment period closed on July 2. There have been no hearings or findings yet. 
• China Section 301 Four-Year Review: The second statutory review of the original China 301 actions (Lists 1-4) is pending. Absent continuation requests, those reviews will terminate on July 6 and August 23. 
• Potential Tariffs on Pharmaceuticals and Drugs: The USTR self-initiated an investigation on June 18 to address Germany’s persistent underpayment for innovative pharmaceutical products. Comments are due August 10, and hearings will be held on September 22. President Trump has also recently threatened tariffs on generic drugs imported into the United States.

And the Fox Says… With Section 122 tariffs expiring on July 24, the USTR quickly moved to lean on Section 301 as a mechanism to preserve or increase tariffs to IEEPA-levels. Importers should closely review the recent Brazil and forced labor final actions and monitor for proposed findings on excess capacity. Companies should also track the China four-year review for lapsing exclusions and monitor the remaining ongoing investigations for any proposed actions. Keep an eye out for our comprehensive alert covering recent tariff updates!

Contributors: Isabella Wellinghorst, Andrew McArthur, Lucas A. Rock, Nancy A. Noonan, and Angela M. Santos

6. USMCA Rides Off Into the Sunset? Not Quite Yet 

On July 1, the USMCA Free Trade Commission — composed of trade officials from the United States, Canada, and Mexico — met virtually to conduct a review of the USMCA. Not only was this the first statutorily mandated review of this free trade agreement, but it was the first statutorily mandated review of any trade agreement entered into by the United States. Without much surprise to committed observers of trade policy, US trade officials declined to renew the agreement in its current form, while Mexico and Canada supported extending the agreement. 

While all current trade benefits of the USMCA will remain in place through July 2036, the agreement enters a 10-year period of annual review during which the parties may agree to renew the agreement for another 16 years, re-negotiate the agreement, or any party, with six months’ notice, can withdraw from the agreement entirely. It is expected that over the course of the coming years, especially in the remaining years of President Trump’s second term, the United States will seek to improve the deal for key industries and sectors or leverage a withdraw to extract other concessions from the Mexican and Canadian governments. In particular, autos, agriculture, and other key industries are likely to be the focus of these negotiations.

This month, US and Mexican officials will meet in Mexico City for a third round of negotiations on improving specific articles within the USMCA regarding this bilateral relationship. The United States and Canada have not initiated their bilateral USMCA joint review process, as trade between the two major partners remains strained within certain sectors. 

And the Fox Says… Although the parties did not renew the USMCA on July 1, the USMCA remains in effect through 2036. Companies currently relying on USMCA preferential tariff treatment should evaluate their priorities for the near and long-term future. Annual reviews of the agreement, without a doubt, create uncertainty for heavily integrated North American supply chains. Now is the time to engage trade counsel on items such as potential tariff exposure and supply chain mapping, consider advocacy on your priorities for preservation or improvement within the USMCA, and evaluate alternative sourcing strategies for your business. 

 Contributors: Kelsey Griswold-Berger, Lucas A. Rock, and James Kim

7. Marmen Gives Commerce’s New Price Difference Test an Early Win

Last month, in Marmen Inc. v. United States, the Court of International Trade (CIT) sustained the Department of Commerce’s changes to its “differential pricing analysis,” increasing the likelihood of higher dumping margins through the use of zeroing. A sale is made at less than fair value when the US price is lower than normal value — typically, the price in the home market or an appropriate substitute. Sales at or above normal value would ordinarily offset those less-than-fair-value sales in the margin calculation. Zeroing negates that offset, increasing the dumping margin. The result is that relatively small price differences across a relatively small share of sales can produce a much higher margin. 

Commerce’s new differential pricing analysis, as sustained in Marmen, has three parts, but the most consequential one is the first: the price difference test. The new test allows Commerce to move toward zeroing based on a mere 2% difference between a company’s US prices and the average price for comparable sales. Commerce also changed the second part of the analysis by resorting to total zeroing if more than 33% sales differ according to the price difference test. Previously, there was a middle ground between total zeroing and not zeroing at all, and Commerce would only resort to total zeroing if prices differed for 66% or more of export sales. 

And the Fox Says… For foreign producers, the decision raises the stakes of ordinary pricing decisions in the US market. While Marmen can be further appealed, the CIT’s opinion gives Commerce green light to apply a test that can lead directly to zeroing and higher dumping margins in most cases. Producers that sell at varying prices across customers, regions, or quarters may therefore face a greater risk that Commerce will characterize normal commercial variation as a pattern supporting zeroing and higher duties. To understand what this new test means and how to avoid higher dumping margins, please contact the international trade team at ArentFox Schiff. 

Contributors: Tyler J. Kimberly and Diana Dimitriuc Quaia

8. DDTC Proposes ITAR Changes to Reduce the Regulatory Burden of Reporting Requirements for Political Contributions, Gifts, Fees, and Commissions

In an effort to streamline reporting requirements designed to facilitate anti-corruption enforcement, the US Department of State’s Directorate of Defense Trade Controls (DDTC) is proposing to amend part 130 of the International Traffic in Arms Regulations (ITAR). That part of the ITAR implements §39(a) of the Arms Export Control Act (AECA), which requires “timely reporting on political contributions, gifts, commissions and fees paid or offered or agreed to be paid” to foreign militaries or international organizations in connection with the sale or export of defense articles and services. 

The Department’s proposals to reduce part 130’s reporting burdens include the following. 

• Raising the threshold value that would trigger a reporting obligation from $500,000 to $1,000,000 for defense articles or services, from $5,000 to $10,000 for political contributions, and from $100,000 to $200,000 for fees or commissions. 
• Requiring one annual report instead of reporting on political contributions, gifts, commissions, and fees on each applicable export license application (or, for suppliers, within 30 days of a contract award). This would result in more accurate reports by reducing reliance on estimates and forecasted amounts. Parties who do not make (or offer or agree to make) qualifying payments during the reporting period would be exempt from filing an annual report. 
• The proposed rule would introduce a standardized form that would be accessible through the DDTC website. 

And the Fox Says… This policy follows Executive Order 14268, which called on the Department of State to reduce rules and regulations involved in defense trade to align with US foreign policy objectives. If the rule is finalized, applicants and suppliers would be relieved of reporting requirements but would need to adopt mechanisms to meet their new obligations, such as tracking and consolidating qualifying payment data to ensure accuracy of annual reports. Comments on the proposed rule are due August 14.

Contributors: Isabella Wellinghorst, Derek Ha, and Christopher H. Skinner

9. BIS Relaxes Export Controls on United Arab Emirates

In a July 10 final rule, BIS loosened license requirements on exports, reexports, and transfers to or within the United Arab Emirates (UAE). 

The UAE will be removed from Country Groups D:3 and D:4. This makes available several previously off-limits license exceptions — including License Exceptions TMP, GOV, and TSU — and removes end-use restrictions related to missile systems. 

Simultaneously, the final rule adds the UAE to Country Group A:5. Exporters can now use the powerful License Exception Strategic Trade Authorization (STA) — but with important caveats. STA will only be available for exports, re-exports, or transfers to or within the UAE if the ultimate consignee and end users are approved entities listed in the new Supplement No. 8 to Part 740 of the EAR. The current list includes UAE government agencies (but not state-owned enterprises or government contractors), two UAE companies, and several US-headquartered tech companies and their subsidiaries. 

The UAE similarly gets a partial reprieve regarding advanced computing items — i.e., items under Export Control Classification Numbers 3A090.a or .b, 4A090.a or .b, or equivalent .z paragraphs. BIS enforces classification-based license requirements for these items on Country Groups D:1, D:4, and D:5, excluding destinations in Groups A:5 or A:6. Nevertheless, a license will still be required to ship advanced computing items to or within the UAE unless the ultimate consignee and end-users are listed in Supplement No. 8 and specified as eligible to receive advanced computing items. 

And the Fox Says… The final rule opens the door for more items, software, and technology to go to the UAE, especially under a license exception. Exporters should carefully review transactions to confirm that license exception requirements are met and to identify any red flags that might indicate the involvement of restricted parties, prohibited end users or end uses, or potential diversion. 

Contributors: Megan Barnhill and Derek Ha