As the (Customs and Trade) World Turns: September 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 regularly issuing reports and alerts to help our clients and friends stay up to date. Sign up here for regular updates and 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 September 2026 edition, we cover:

1. Section 338 Tariffs: US imposed 50% duties on ~$20 billion of Canadian goods, sparking escalating retaliation.
2. CAPE Phase 3: CBP will deploy CAPE Phase 3 on October 6 to process refunds on finally liquidated entries subject to court-ordered IEEPA duty reliquidation.
3. Section 232 Drone Tariffs: Tiered 25–100% tariffs on imported drones and UAS components, with allied-country reductions.
4. Transshipment Scam Report: White House details massive illegal transshipment schemes and previews AI-driven enforcement.
5. BIS Drone Export Controls: Eased controls on commercial drones under three hours’ endurance; tightened rules for military-use UAVs.
6. Everlight Settlement: Taiwanese LED maker pays $5.15 million to resolve origin-fraud allegations tied to Section 301 tariff evasion.
7. Mining Roundtable: Trump announced more than $2 billion in investments to bolster US critical minerals and rare earth supply chains.
8. De Minimis Rescission Upheld: CIT ruled the president can rescind the $800 duty-free exemption under IEEPA.
9. UK Settlement Goods Ban: UK ban on West Bank settlement imports may trigger US antiboycott compliance obligations.
    

1. Stuck Between a Puck and a Hard Place: Section 338 Tariffs Escalate the US-Canada Trade War 

On July 20, President Trump signed three proclamations under Section 338 of the Tariff Act of 1930 responding to alleged Canadian discrimination against US alcoholic-beverage, dairy, and motor-vehicle exports. The resulting 50% duties applied to specified lists of Canadian-origin goods, rather than categorically to those three sectors. Notably, the United States-Mexico-Canada Agreement (USMCA) qualification, by itself, does not exempt covered goods from these duties. 

As set out below, these tariffs ignited a dramatic series of escalating trade actions, which remains a developing situation. After a three-day suspension and failed talks, the duties took effect on August 22. The September 8 revisions and September 29 entry bans make an immediate, product-by-product HTS review essential.

In addition, Trump has threatened in a social media post to impose tariffs on Canadian automobiles and auto parts beginning January 1, 2027. As an added measure, the president signed an executive order renaming Lake Ontario to Lake America. The escalation also complicates the ongoing USMCA joint review, as the United States has declined to renew the agreement and bilateral talks with Canada have not yet formally begun. 

And the Fox Says…: Importers should immediately review whether their Canadian-origin goods fall under any of the three Section 338 proclamations and prepare for additional 50% duty exposure. US exporters should likewise assess product-level exposure under Canada’s retaliatory tariffs, effective September 8. Given Section 338’s novel use and the pattern of legal challenges to other tariff authorities, importers should monitor for potential litigation and preserve refund rights where applicable. 

Contributors: James Kim, Tyler J. Kimberly, and Andrew McArthur

2. CBP Announces CAPE Phase 3 Deployment for October 6

US Customs and Border Protection (CBP) recently provided an update on its deployment of the Consolidated Administration and Processing of Entries (CAPE) Phase 3. On September 15, CBP Trade Programs Executive Director Brandon Lord filed a declaration in Freestyle World v. U.S. Customs and Border Protection (CIT No. 26-01088) confirming that CBP will deploy CAPE Phase 3 on October 6. Phase 3 will address finally liquidated entries of plaintiffs who have filed complaints with the Court of International Trade (CIT) and where the CIT has ordered reliquidation of International Emergency Economic Powers Act (IEEPA) duties. 

Entries Currently Eligible for CAPE Phase 3: Beginning October 6, plaintiffs who submitted a valid importer of record number to CBP by July 30 (most likely submitted through counsel) may file CAPE declarations for finally liquidated entries that are otherwise eligible. CBP has indicated that it will provide additional instructions to plaintiffs who submitted their importer of record numbers after July 30.

Phase 3 is limited to entries that have been finally liquidated and are subject to court-ordered reliquidation. As with prior CAPE phases, declarations must comply with all other CAPE requirements, including ACE file validation requirements. Filers should ensure that declarations contain accurate importer of record and filer information, correct entry numbers, and proper .CSV formatting. Further, the CBP Form 5106 (Importer Identity) on file with CBP must match the legal name of the importer as it was listed in the complaint for the IEEPA litigation. 

CAPE Progress to Date: As of September 11, 286,044 CAPE declarations have been submitted, with 201,293 passing file validations covering 27.2 million entries. Approximately $134.7 billion in potential and certified refunds have been accepted for processing, with roughly $122 billion already transmitted to the US Department of the Treasury for disbursement.

And the Fox Says…: Importers should assess how these developments may affect their IEEPA refunds, or whether a CIT case should be considered and the timing of such action. Importers should also continue to track liquidation and applicable 180-day protest deadlines. 

The CIT is still considering whether to certify a class on behalf of all importers whose IEEPA tariff refund claims remain ineligible for processing through the government’s CAPE program. The CIT’s decision on class certification could affect which importers may file CAPE declarations in Phase 3.

Contributors: Lucas A. Rock, Collin M. Douglas, Nancy A. Noonan, and David R. Hamill

3. Drones in the Crosshairs: Section 232 Tariffs Take Flight 

On August 13, President Trump signed a proclamation imposing Section 232 tariffs on unmanned aircraft systems (UAS) and UAS components, following a US Department of Commerce investigation that found US reliance on foreign-sourced drones and critical components creates supply chain vulnerabilities, cybersecurity risks, and constraints on defense industrial base capacity.

The proclamation establishes a tiered tariff structure:

• A 100% ad valorem duty applies to drones with a maximum takeoff weight exceeding 25 kilograms, drones integrating thermal imagers, drone docking stations, and certain critical components (Annex I), effective September 3. 

• A 25% duty applies to smaller drones weighing 25 kilograms or less (Annex II), also effective September 3.

• For additional UAS components (Annex III), a 25% duty effective February 9, 2027. 

• Companies on the US Department of Defense/War’s Blue UAS Cleared List, the Blue UAS Framework, or the FCC’s Conditional Approval List as of September 2 also receive a 180-day delay before tariffs apply.

Reduced Section 232 rates are available for certain trading partners: 

• A combined duty rate (including the Column 1 MFN rate) capped at 15% for products of the EU, Japan, South Korea, Taiwan, Switzerland, and Liechtenstein.

• A 10% additional ad valorem duty rate for UAS, their parts, and components that are the products of the United Kingdom.

• Importers that claim a reduced Section 232 rate based on the country-specific reductions must certify that substantially all critical components and technology originate in those countries or the United States. 

• The Commerce Department will also establish an onshoring program that provides preferential treatment for companies that commit to building new US manufacturing facilities for UAS and UAS components before January 20, 2029. 

And the Fox Says…: Importers of UAS and UAS components should immediately map their supply chains to assess tariff exposure and determine applicable effective dates. Companies that source products from jurisdictions eligible for lower duty rates should assess whether those products satisfy the origin certification criteria necessary to qualify for the reduced rates. The onshoring program offers meaningful relief for companies that are willing and able to invest in domestic production, but the January 20, 2029, construction deadline means planning should begin now. With Commerce authorized to add components to the tariff regime at any time, importers should monitor Federal Register notices closely and consider proactive engagement with counsel to mitigate exposure.

Contributors: Andrew McArthur, Lucas A. Rock, and Antonio J. Rivera

4. The Great Transshipment Scam: Key Takeaways 

A recent White House report titled “The Great Transshipment Scam” details the growth of illegal transshipment, which involves using third-country routing, relabeling, and minor processing to conceal the true origin of goods and evade US tariffs. The report lists more than 40 countries associated with elevated transshipment risk and sketches a global network of production hubs, logistics platforms, free-trade zones, and re-export centers through which China-linked goods enter the US market under a different national identity. 

The report cites to five independent analyses to estimate annual illegal transshipment flows anywhere from $40 billion to $303 billion, translating into an estimated $10 billion to over $100 billion a year in lost tariff revenue each year. Under the report’s mid-range estimate of $75 billion, the resulting economic effects could include about 450,000 displaced US jobs, $113–150 billion in annual GDP losses, and $19–26 billion in forgone federal revenue.

Central to the enforcement posture is an artificial intelligence (AI)-enabled “Detective Border” — an integrated platform designed to continuously ingest global trade data, use anomaly detection and link analysis to flag inconsistencies in declared origins and routing histories, validate production capacity against claimed outputs, and analyze container markings and non-intrusive inspection imagery. The technology remains under development, but enforcement is already intensifying: 

• CBP reports a 245% increase in shipments identified with post-release discrepancies and a 169% rise in associated revenue assessments under the second Trump Administration.

• New Agreements on Reciprocal Trade are intended to prevent benefits from flowing to third-country goods. 

• Executive Order 14411 directs US Department of Homeland Security (DHS) and CBP to tighten importer-of-record requirements, increase bonding and domestic-asset obligations, require ownership and business-affiliation disclosures, impose good-standing requirements, and strengthen penalties.

And the Fox Says…: Companies engaged in cross-border trade should anticipate heightened scrutiny of country-of-origin claims, supply-chain documentation, and transformation processes. Importers should review compliance programs, particularly around origin determinations and valuation practices, to ensure that they can withstand increased enforcement activity and evolving legal standards. The report signals that further legislative action on origin rules is under consideration.

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

5. BIS Rule Easing Controls on Certain Drones and Parts and Components

On August 14, the Bureau of Industry and Security (BIS) published a final rule easing export controls on many unmanned aerial vehicles (UAVs) that are widely available on the commercial market, while preserving tighter controls for UAVs incorporating sensitive equipment or designed for military use. 

The rule significantly revises Export Control Classification Number (ECCN) 9A012, which covers non-military UAVs, by eliminating wind-gust tolerance as a control parameter and raising the endurance threshold for restrictive national security controls from one to three hours. As a result, UAVs, with maximum endurance of less than three hours, are now generally subject to the lowest-level export controls. These UAVs, and the related software and technology, can be freely exported to nearly all destinations, assuming the absence of any restricted party or prohibited end use (such as military end uses/users in Belarus, Burma, Cambodia, China, Nicaragua, Russia, or Venezuela).

National security restrictions continue to apply to UAVs with a maximum endurance at or exceeding three hours, and to all UAVs incorporating specified more-sensitive items (e.g., certain thermal-imaging equipment, lasers, and inertial-measurement systems).

The rule also expands ECCN 9A610.a, which controls military aircraft not considered defense articles, to expressly include UAVs “specially designed” for military use. This reflects the evolution of UAV capabilities, especially the development of small UAVs useful in reconnaissance, surveillance, or combat support. BIS cautions that UAVs “designed or modified to meet the needs of a military customer” may fall in this ECCN. 

And the Fox Says…: BIS’ new rule acknowledges the recent growth in civil and commercial use of drones. Companies should revisit existing classifications to see if their UAVs, and associated parts, components, and software, qualify for less restrictive treatment. They should proceed with caution, however, if their UAVs incorporate sensitive equipment or customizations, however minor, for miliary customers.

Contributors: Derek Ha and Christopher H. Skinner

6. Everlight Electronics Settles Customs Fraud Allegations for $5.15 Million 

The US Department of Justice (DOJ) continues to wield the False Claims Act (FCA) as a central weapon in its trade enforcement arsenal. On August 5, the US Attorney’s Office for the District of Maryland announced that Everlight Electronics, a publicly traded Taiwanese LED manufacturer, and its Texas-based subsidiary, Everlight Americas, agreed to pay $5.15 million to resolve allegations that they evaded higher customs duties on LEDs imported from China by misrepresenting the country of origin on customs entry documents.

The government alleged that from July 2018 through January 2022, Everlight knowingly imported Chinese-manufactured LEDs that were transshipped through Taiwan and falsely declared Taiwan as the country of origin to avoid Section 301 tariffs imposed on Chinese goods. The alleged scheme continued in a different form from January 2022 through November 2025, when Everlight imported LEDs containing Chinese-origin dice without segregating them from Taiwanese-made components during manufacturing, again without paying applicable duties. The settlement also resolves a qui tam suit filed by Tao Wang, a former Everlight employee, who will receive $876,146 of the settlement proceeds. The case is United States ex rel. Wang v. Everlight Electronics Co., Ltd., et al., No. TDC-21-cv-1607 (D. Md.).

The claims resolved by the settlement are allegations only and there has been no determination of liability.

And the Fox Says…: The Everlight settlement fits squarely within the enforcement trajectory we have been tracking. The DOJ’s newly established National Fraud Enforcement Division has designated “Global Trade and Commerce” as one of its five principal enforcement pillars, with its August 2026 priorities memorandum expressly identifying illicit transshipment schemes and country-of-origin fraud among its top targets. Through the DOJ/DHS cross-agency Trade Fraud Task Force — which has surpassed $1 billion in civil and criminal recoveries, penalties, forfeitures, and charged losses in less than one year of operation — the government is clearly focused on systemic, high-impact noncompliance.

As with the Redi-Bag settlement reported last month, this case further illustrates the government’s use of whistleblowers as a detection mechanism, and that the government’s reliance on qui tam actions shows no signs of abating. Importers should heed this case’s warning and continue to audit country-of-origin verification procedures, ensure robust internal compliance training, and evaluate whether their supply chains present transshipment exposure.

Contributors: Rebekkah R.N. Stoeckler, Mario A. Torrico, Nadia Patel, and Jackson David Toof

7. President Trump Hosts Roundtable on American Mining Industry 

On August 7, President Trump convened an American Mining Industry Roundtable, announcing more than $2 billion in investments to strengthen US critical minerals and rare earth supply chains, plus more than $180 million for mining education and workforce development. The roundtable included Secretaries Marco Rubio, Doug Burgum, and Howard Lutnick, along with representatives of leading US and international mining companies. 

Second-Term Strategy

The announcement advances the Trump Administration’s second-term minerals strategy. Since 2025, the Administration has accelerated permitting, initiated a Section 232 national-security review of processed critical minerals, promoted offshore and seabed mineral development, and expanded international mineral partnerships. The focus extends beyond extraction to processing, refining, magnets, batteries, and advanced manufacturing — stages where China retains substantial dominance.

A Multi-Agency Approach

The initiative uses a multi-agency model: the US Departments of Energy and Defense/War are supporting education and workforce development; the US Department of State is leading international partnerships; the Department of Defense/War is financing strategic minerals, battery, and magnet projects; and the Export-Import Bank is supporting mineral development and processing. Major awards include $1.4 billion for Sila Nanotechnologies, $400 million for Sunrise Energy Metals, $150 million for Niron Magnetics, and more than $85 million for Strategic Bauxite.

Allied Country Participation

For resource-rich allied countries and their companies, the initiative creates opportunities across the value chain, from mines and processing facilities to advanced manufacturing and defense-related production. It also fits within a broader US and allied effort to reduce dependence on China for critical minerals and rare earths, especially in processing and refining.

And the Fox Says…: The roundtable signals that critical minerals will remain central to US industrial, national-security, and trade policy. Companies and governments in allied jurisdictions should assess where their assets, technology, and projects align with this expanding US strategy.

Contributors: Riyaz Dattu

8. CIT’s Opinion Upholding the De Minimis Exception Under IEEPA

In 2025, the president issued executive orders rescinding the de minimis exemption using his authority pursuant to IEEPA. That exemption had allowed duty-free entry of goods valued at $800 or less. 

On August 13, a three-judge panel of the CIT held that the president has the authority under IEEPA to rescind the de minimis exemption. The panel explained that IEEPA’s grant of authority to “nullify [or] void … exercising any … privilege” encompasses the de minimis exemption because US Congress (twice) described the exemption as a “privilege” in the underlying statute. Critically, the court distinguished this action from the president’s attempted use of IEEPA to impose tariffs which was struck down by the US Supreme Court in Learning Resources, Inc. v. Trump. The CIT reasoned that rescinding the de minimis exemption imposes no new tariffs. Instead, the power to rescind the de minimis exemption only subjects low-value goods to already-existing tariff rates. The court further held that agency actions implementing the rescission were ministerial and therefore not reviewable under the Administrative Procedure Act. 

While the appeals process plays out, it is important to remember that Congress will repeal the de minimis exemption via the One Big Beautiful Bill Act, effective July 1, 2027. So, in the unlikely event that the courts ultimately strike down the president’s rescission of the de minimis exemption, the exemption will still end. 

And the Fox Says…: Importers who have structured their supply chains around the hope that the de minimis exemption’s duty-free treatment of shipments under $800 would be reinstated should assess their exposure. The CIT’s ruling means the executive rescission remains in force and that importers must evaluate and adapt how the rescission will continue to affect shipping logistics, customs compliance, and pricing models. ArentFox Schiff is available to discuss how these developments may affect your entries.

Contributors: Tyler J. Kimberly, Chelsea J. Burkhart, and Nancy A. Noonan

9. UK Issues Ban on West Bank Settlement Goods and Services – How Will This Impact US Antiboycott Laws?

On September 8, the UK government announced a ban on the importation of goods originating from Israeli settlements in the occupied West Bank. The UK is not alone, as Canada, Denmark, Finland, France, Iceland, Ireland, Norway, Poland, Portugal, Spain, and Sweden have announced their intention to take similar steps, per a statement by the Canadian government. The UK government has also stated that it will bar companies from providing services to the settlements, including financing, construction, infrastructure, real estate, and advertising. 

The announcement drew a sharp response from US Ambassador to Israel Mike Huckabee, who warned that the UK could face a backlash from the United States if it followed through on its plan, stating “I don’t know if they’re really aware of the implications and how it’s going to affect Brits.” Shortly thereafter, on September 9, Congresswoman Claudia Tenney sent a letter to Secretary Scott Bessent of the US Department of the Treasury urging him to examine whether the UK ban and those like it “require or may require participation in or encouragement of an international boycott within the meaning of Section 999(a)(3),” and stating that if the criteria are met, these countries should be added to Treasury’s list of boycotting countries. 

Companies with international operations should take note. Under US antiboycott laws, which are administered by the Department of Commerce and Department of the Treasury, US persons are prohibited from and/or may be penalized for participating in or cooperating with unsanctioned foreign boycotts. These laws also impose reporting obligations on companies that receive boycott-related requests. The key question is whether the US government will treat these settlement goods bans as part of an “unsanctioned foreign boycott” of Israel. Given Ambassador Huckabee’s and Congresswoman Tenney’s pointed warnings, there is a risk that these restrictions could be characterized as boycott activity under US law, though the Trump Administration has not yet taken any official action. If the Trump Administration does take action, US companies doing business in or with the affected countries could face compliance obligations — including the duty to report boycott requests and to refrain from any actions that further the boycott. 

And the Fox Says…: Companies doing business with these markets should monitor developments closely and consult with trade counsel to assess whether updated antiboycott compliance measures are warranted.

Contributors: Maya S. Cohen and Sylvia G. Costelloe