As the (Customs and Trade) World Turns: May 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. In addition, information regarding navigating the new tariffs can be found here.

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. 

International Emergency Economic Powers Act (IEEPA) refunds are here! US Customs and Border Protection’s (CBP) Consolidated Administration and Processing of Entries (CAPE) tool officially launched on April 20 within the Automated Commercial Environment (ACE), giving importers a streamlined portal to reclaim duties paid under the IEEPA. Phase 1 covers certain standard entries that are unliquidated or within 80 days of liquidation, and refunds are expected within 60 to 90 days of an accepted CAPE Declaration.

Importers and their customs brokers should act promptly: ensure your company has an active ACE importer account, set up ACH bank information for electronic refunds, and compile a list of eligible entries for submission. Keep in mind that once a CAPE Declaration is filed and accepted, it cannot be amended, so entries should be reviewed carefully for accuracy before submission. Entries excluded from Phase 1, including those flagged for reconciliation, covered by an open protest, or subject to pending antidumping and countervailing duty (AD/CVD) liquidation instructions, will be addressed in subsequent phases. 

We will continue to monitor developments and provide updates as CBP expands the program.

In this May 2026 edition, we cover:

1. IEEPA refunds have started to be issued through the CAPE system. 

2. Section 301 hearings are ongoing for forced labor and excess capacity, with the goal of replacing the Section 122 tariffs expiring soon. 

3. The Department of Commerce has issued preliminary antidumping decisions for solar cells from India, Indonesia, and Laos, with certain affirmative findings of “critical circumstances.” 

4. Investors in critical minerals prioritize jurisdictions with long-term legal and fiscal stability over short-term incentives amid rising global export restrictions. 

5. Trump broadens ICTS authority beyond foreign adversaries while new Senate bill targets connected vehicle tech from China, Russia, North Korea, and Iran. 

6. The United States has begun USMCA negotiations with Canada focusing on rules of origin and securing the North American supply chain.

1. CAPE Takes Flight: Refunds Move From Portal to Payments

Since our April update (see here), CAPE has moved from launch-day troubleshooting to real refund processing. The CAPE system largely held up, despite some glitches reported early on after it was launched. Specifically, CBP reported the following metrics measuring the success of CAPE between April 26 and May 11. 

Note “Passed File Validations” refers to CAPE Declarations that have successfully passed CBP’s initial file format and technical validation checks within ACE. “Accepted Entries” refers to the individual import entries that have been approved for removal of IEEPA duties under the CAPE process. 

As the data shows, in just two weeks, CAPE saw a drastic acceleration. CBP estimated anticipated refunds and interest for those liquidated or reliquidated entries at approximately $35.46 billion. Public reports now indicate that initial IEEPA refunds are being issued to importers that submitted CAPE declarations. However, these reports indicate that the payments are only partial and are being reflected in ACE as “Processed.” 

CBP has also updated its CAPE FAQs to include error-message guidance and warned importers to avoid phishing or third-party refund scams. Phase 1 remains limited to certain unliquidated entries and entries liquidated within the prior 80 days, but will not process several types of entries, including entries that are subject to AD/CVD orders for which the US Department of Commerce has issued liquidation instructions and that are pending liquidation, reconciliation, or open or suspended protests. CBP has not announced timing for later phases that will accept entries that do not currently qualify under Cape Phase 1. For the entries not covered by Cape Phase 1, we are still waiting on updates from CBP; the next report to the Court of International Trade (CIT) is due on May 26.

And the Fox Says…: CAPE is no longer theoretical, but it is not “file and forget.” Importers should monitor ACE reports, cure validation errors, confirm ACH refund enrollment, review 4811 designations, and continue tracking liquidation and protest deadlines for entries that remain outside Phase 1. 

Contributors: Tyler J. Kimberly, Mario A. Torrico, and Antonio J. Rivera

2. Section 301 Investigations Update: Public Hearings Concluded, Results Expected This Summer

The US Trade Representative (USTR) has completed public hearings in both of its ongoing Section 301 investigations — forced labor and structural excess capacity and production — marking a significant milestone in two proceedings that could result in additional duties across dozens of countries’ imports. 

As we previously reported, the USTR initiated two Section 301 investigations in March. The first investigation targets structural excess capacity and production practices across 16 economies, covering sectors ranging from aluminum and steel to semiconductors and solar modules. The second targets 60 economies for alleged failures to implement or enforce forced labor import prohibitions.

Public Hearing Update

The forced labor public hearing began on April 28 and the excess capacity public hearing began on May 5. Supporters of the Section 301 investigations argue that tariffs are necessary to counteract unfair advantages from foreign subsidies, non-market overcapacity, and forced labor, and to level the playing field for domestic producers. Opponents counter that tariffs raise costs for consumers and businesses without meaningfully boosting domestic production, and that engagement and targeted approaches are more effective than broad punitive duties.

Results May Come Sooner Than Expected

For Section 301 tariffs to seamlessly replace Section 122 tariffs scheduled to expire July 24, pending results of the ongoing litigation regarding their legality, the Administration would need to complete investigation soon because a notice and comment period will be required for USTR to take actions based on any affirmative findings. For more information on the current status of Section 122 tariffs, please see our alert here.

This expedited schedule aligns with the Administration’s publicly expressed goal of leveraging Section 301 authority to impose tariff rates comparable to those previously enacted under the now stricken IEEPA. Should these timelines prove accurate, importers subject to the new duties would face a significantly narrowed period in which to prepare for their implementation.

And the Fox Says…: Given the potential for expedited action, importers should take immediate steps to map their exposure across supply chains related to any of the targeted economies. Companies should evaluate mitigation strategies now, review submitted comments and hearing testimony, and monitor for announcements from the USTR regarding investigation conclusions and proposed tariff actions in the coming weeks. Importers may consider submitting comments in response to any proposed USTR actions.

Contributors: Lucas A. Rock, Mario A. Torrico, and Angela M. Santos

3. The Sun Shines But the Duties Burn: Combined AD/CVD Rates for Solar Cells and Modules From India, Indonesia, and Laos Reach Nearly 250%

On April 23, the US Department of Commerce issued preliminary affirmative AD determinations on imports of crystalline silicon photovoltaic cells and modules, from India, Indonesia, and Laos. The preliminary AD margins are 107.77% for all Indian producers, 35.17% for all Indonesian producers, and 22.46% for all Laotian producers. These AD determinations follow Commerce’s preliminary affirmative CVD determinations issued in February, which set subsidy rates of 125.87% for India, 104.38% or 85.99% for Indonesia (depending on the manufacturer), and 80.67% for Laos. 

Combined, the total preliminary AD/CVD duty rates are approximately 248.91% for India, 139.55% for Indonesia, and 103.13% for Laos. 

Commerce also made preliminary affirmative findings of “critical circumstances” for certain producers. A “critical circumstances” finding occurs when Commerce determines that there were massive imports over a relatively short period, combined with exporter knowledge of dumping or the existence of export subsidies. The practical effect of a critical circumstances finding is significant. Normally, duty liability is only imposed from the date of the preliminary determination. Upon a critical circumstances finding, Commerce can apply duty liability retroactively to entries made 90 days before the preliminary determination. 

For importers, these preliminary determinations mean that CBP will require cash deposits at the rates specified above on all entries of subject solar cells from the three countries. Where critical circumstances apply, importers face retroactive duty exposure on entries made up to 90 days before the notice’s publication. Final AD determinations are expected as soon as July but may be extended to September. 

And the Fox Says…: Importers of solar cells and modules from India, Indonesia, and Laos should be aware that cash deposits at these rates are now required, and where critical circumstances apply, duty liability reaches back 90 days — meaning imports made as early as late January 2026 may be subject to these duties. Companies should review their sourcing strategies, consider bonding implications, and monitor the final determination timeline closely.

Contributors: Tyler J. Kimberly and Diana Dimitriuc Quaia 

4. Critical Minerals Supply Chains: Why Legal and Fiscal Stability Matters

As global competition for critical minerals intensifies, investors and mining companies continue to prioritize jurisdictions with clear, stable, and reliable legal and fiscal rules. Rather than seeking short-term incentives or measures such as expedited permits, capital will flow to jurisdictions offering long-term predictability and certainty — essential for projects with lifespans of 30 to 40 years. 

At the recent Securing America’s Future Energy (SAFE) Summit in Washington, DC, senior mining leaders underlined that predictable frameworks outweigh quick government subsidies for large-scale investments. The primary investment factor is a stable environment throughout a project’s lifecycle. 

Long-Term Legal and Fiscal Stability

Mining projects span decades and cross borders. Boards and investors focus on the consistency of legal and fiscal frameworks, including the assurance of unrestricted mineral exports. Sudden export bans, domestic processing mandates, or trade controls after investments have been committed or made threaten confidence and capital. 

Heightened Export Certainty Concerns

A very recent OECD study confirms a marked rise in export restrictions on critical minerals — bans, quotas, and licenses — implemented globally as governments aim to protect domestic supply. This increase is shaping project economics and supply chain security, making the investment environment more unpredictable for mining companies. Further details can be found at Critical raw materials face rising export restrictions, increasing risks to global supply chains.

Import Restrictions

Import restrictions and tariffs on mining equipment and material needed for mining and processing have increased operating costs and disrupted project timelines, reducing investor confidence and predictability. 

Fiscal Requirement for Investors

Investors agree that a predictable tax administration is vital. Mining companies increasingly face denied or delayed Value Added Tax refunds, retroactive tax changes, and enforcement practices increasing fiscal burdens without formal legislation. Adjustments to tax laws, royalties, or withholding taxes, implemented post-investment disrupt cash flow and long-term models. 

Requirements for Secure Supply Chains

Securing supply chains requires more than government incentives — it demands predictable legal frameworks, transparent fiscal administration, enforceable agreements, treaty-based protections, reliable dispute resolution, and ongoing diplomatic engagement. 

And the Fox Says…: Investors in critical minerals continue to be drawn to jurisdictions offering enduring legal and fiscal stability, not just short-term incentives. Investors need assurances that their projects will be governed by consistent rules and policies. 

Mining projects often cross borders and legal systems. Investors should seek early guidance from dispute resolution and international trade specialists who can help structure corporations to take advantage of investment protection treaties and provide contractual remedies to address regulatory risks. International trade experts can assist in navigating export controls and tariffs and provide legal mechanisms for ensuring long-term project viability amid evolving geopolitical risk landscapes. 

Contributor: Riyaz Dattu 

5. ICTS Authority Broadened Beyond Foreign Adversaries to All Foreign Countries as Senators Introduce Legislation Targeting Connected Vehicle Hardware and Software From China, Russia, North Korea, and Iran

On May 11, President Trump extended Executive Order (EO) No. 13873, which declared a national emergency under the IEEPA to address national security, foreign policy, and economic threats posed by certain information and communications technology and services (ICTS) transactions. Pursuant to this order, the Department of Commerce published the Connected Vehicles Rule, administered by the Office of Information and Communications Technology and Services (OICTS). We covered the initial rule here and the FAQs published by the Bureau of Industry and Security here and here.

The continuation of the national emergency does not simply extend OICTS’ authority but also removes all references to “foreign adversary” and replaces them with “involving a foreign country or foreign national.” This change has the potential to expand the scope of the national emergency, allowing OICTS to prohibit all foreign drones, connected vehicles, etc., rather than only those involving a foreign adversary such as China or Russia (as was previously done in the Connected Vehicles Rule).

Outside of OICTS, some members of Congress are similarly seeking to increase the prohibitions contained in the Connected Vehicles Rule. On April 29, US Senators Bernie Moreno (R-Ohio) and Elissa Slotkin (D-Mich.) introduced a bipartisan bill, the Connected Vehicles Security Act of 2026 (CVSA), to ban the importation, manufacture, sale, and resale of connected vehicles, software, and hardware linked to China, Russia, North Korea, and Iran. 

Key provisions of the proposed legislation include: 

1. Broader scope than the Connected Vehicles Rule, including manufacture and resale: Bans foreign adversary vehicles by prohibiting the importation, manufacture, sale, and resale of connected vehicles, software, and hardware linked to China or other foreign adversaries (including Russia, North Korea, and Iran).

2. Higher penalties: Commerce can impose civil penalties of no less than the greater of $1.5 million or five times the value of the transaction.

3. Ownership threshold: The bill introduces a 15% (for connected vehicles) or 25% (for covered software and connected vehicle hardware) direct or indirect threshold for determination of ownership by a covered country.

4. Effective dates: Restrictions on connected vehicles and connected vehicle software would take effect January 1, 2027, with hardware restrictions following on January 1, 2030.

5. Circumvention provision: The bill covers items “renamed, rebranded, restructured, or altered to circumvent the prohibition.” 

And the Fox Says…: The extension of EO 13873 and the introduction of the CVSA reflect a continued bipartisan commitment to restricting foreign involvement in US technology supply chains — a trend that has accelerated across both the Biden and Trump Administrations. 

Companies in the connected vehicle, drone, and broader ICTS supply chain space should be paying close attention. The expanded EO authority could serve as the basis for future rulemakings that go well beyond the current Connected Vehicles Rule, and the CVSA, if enacted, would impose stricter statutory prohibitions with significant civil penalties.

Contributors: Maya S. Cohen and Sylvia G. Costelloe

6. A Trying USMCA Joint Review Pre-Renegotiations

The clock is ticking on the United States–Mexico–Canada Agreement’s (USMCA) first-ever joint review, mandated for July 1. In March, USTR Jamieson Greer and Mexican Secretary of Economy Marcelo Ebrard formally launched bilateral discussions in preparation for the review, instructing negotiators to begin scoping discussions on reducing dependence on imports from outside the region, strengthening rules of origin, and enhancing the security of North American supply chains. 

Notably, the pre-review process has proceeded on bilateral tracks rather than trilaterally. Ambassador Greer has signaled that a “rubberstamp” renewal is not in the national interest, and the Administration is not prepared to recommend extension without meaningful changes — particularly to automotive rules of origin, dairy market access with Canada, and economic security provisions aimed at curbing non-market (i.e., Chinese) inputs into North American supply chains. On the US-Mexico track, formal bilateral negotiations are set to begin the week of May 25 in Mexico City. 

The US-Canada track, by contrast, has stalled. Last year, Canada made early concessions — rescinding its digital services tax and discussing softwood lumber quotas — while increasing defense spending commitments and pushing border security legislation through Parliament. Nevertheless, the Administration has publicly compared Canada’s retaliatory tariffs to those of China, and Deputy USTR Rick Switzer recently questioned whether there is a “grown-up” leading Canada. Near-agreement on a steel, aluminum, and energy deal reportedly collapsed in October 2025, and no formal US-Canada USMCA renewal talks have been scheduled. While progress appears to slow, Canada’s chief trade negotiator the United States, Janice Charette, has stated that she considers July 1 to be “kind of a checkpoint,” rather than a strict deadline.

If any party declines to confirm renewal, the USMCA enters a period of annual reviews and, absent resolution, expires in 2036. 

And the Fox Says…: Companies relying on USMCA preferential tariff treatment should begin stress-testing their supply chains against potentially tighter rules of origin, particularly in the automotive, steel, and dairy sectors. Businesses should also review their USMCA certifications of origin and assess exposure to any changes in regional value content thresholds or de minimis rules. With a clean extension by July 1 increasingly unlikely and the prospect of annual reviews introducing prolonged uncertainty, now is the time to engage trade counsel, evaluate alternative sourcing strategies, and prepare for a trade landscape that may look materially different by year’s end.

Contributors: Tyler J. Kimberly and James Kim