Tariff & Trade Update

By SPESA

Trade policy continues to move at a pace that leaves importers and sourcing teams managing several overlapping risks rather than one clearly defined tariff regime. Since SPESA’s last update, the federal government has appealed the scope of IEEPA tariff refunds, new legal challenges have been filed against the Section 301 forced-labor tariffs, another round of Section 301 duties may be coming, and legislation targeting purchasers of Russian energy has created a potentially significant new threat for Indian suppliers. Meanwhile, the United States and Canada have temporarily stepped back from another major tariff escalation — but only for now.

IEEPA Refunds: Who Is Entitled to Relief Is Back in Court

The federal government is appealing a Court of International Trade order requiring Customs and Border Protection (CBP) to refund invalidated IEEPA duties to all affected importers — including companies that did not file their own lawsuits. Government attorneys argue that the court exceeded its authority by extending relief to non-parties and that importers whose entries have been finalized should pursue individual litigation if the normal administrative refund process is no longer available.

CBP has already processed and certified approximately $100 billion in refunds, but the appeal is especially significant for importers with liquidated or finalized entries that fall outside the ordinary administrative process. The practical question is no longer whether the IEEPA tariffs were unlawful; it is whether every importer will receive relief automatically or whether some companies will have to pursue separate claims in court.

Resources:

• Government Fights Trade Judge’s Order for Tariff Refunds to All Importers — Associated Press | August 11, 2026

• Can Tariffs Be Fought in Court? — Vogue Business | August 17, 2026

Section 301 Tariffs Face New Litigation — and More Duties May Be Coming

Twenty-five states filed suit on August 3rd challenging the administration’s Section 301 tariffs of 10% or 12.5% on imports from 60 economies. The complaint argues that the forced-labor investigation was rushed and that the resulting tariffs function as a replacement for duties previously imposed under other authorities. The administration maintains that Section 301 is an established and legally durable trade tool. The tariffs remain in effect while the litigation proceeds.

A separate USTR investigation into structural excess manufacturing capacity also remains pending. That investigation covers 16 economies — including Bangladesh, Cambodia, India, Mexico, and Vietnam — and could result in additional country- or product-specific tariffs. Trade attorneys quoted by Sourcing Journal expect USTR to release proposed remedies, followed by another public-comment process, with final action potentially coming later in 2026. Unlike the temporary Section 122 duties, any resulting Section 301 tariffs could remain in place for years and be adjusted as trade negotiations evolve.

Resources:

• More Section 301 Tariffs Are Coming. What Should Businesses Do To Prepare? — Sourcing Journal | August 7, 2026

• 25 States Sue Over Trump’s New Tariffs — Associated Press | August 3, 2026

• USTR Section 301 Investigation into Structural Excess Capacity (hearing transcripts)— Office of the U.S. Trade Representative

Just Style offered this opinion piece on the topic. We are including because t raises a relevant question for the textile and apparel industry: whether new mechanisms linking favorable tariff treatment to purchases of U.S. textile inputs could begin to shape sourcing volumes and supplier-country allocations in ways reminiscent of the former quota system.

India Faces a Potential 100% Tariff Threat

The U.S. Senate voted 86–11 to approve legislation targeting Russia and the countries that continue to purchase large volumes of Russian oil and natural gas. The legislation would authorize, but not automatically require, the president to impose tariffs of up to 100% on goods from the five largest buyers of Russian energy, potentially including India and China. The bill still requires House approval and a presidential signature, meaning a new 100% tariff on Indian goods is not currently in effect.

Nevertheless, the threat is already influencing supplier strategy. Indian apparel and textile manufacturers interviewed at Sourcing at MAGIC said that a 100% tariff would effectively close the U.S. market to many Indian products, prompting suppliers to consider redirecting capacity toward Europe and other markets. The situation illustrates the fragility of sourcing diversification strategies: India has become an important alternative to China, but it now faces a separate geopolitical tariff risk tied to energy trade rather than apparel production itself.

Resources:

• With 100% Tariffs Looming, Indian Suppliers Lay Plans To Pivot Away from the U.S. Market — Sourcing Journal | August 14, 2026

• U.S. Senate Passes Russia Sanctions Bill — The Guardian | August 7, 2026

• Russia Sanctions Bill Eases Tariff Threat to Maximum of 100% — Reuters | July 14, 2026

Canada Tariffs Are Paused — but the Dispute Is Not Resolved

The United States has temporarily paused the planned 50% tariffs on approximately $20 billion in selected Canadian goods that were scheduled to take effect August 19th. President Trump announced a three-day delay after saying the two countries had reached an agreement in principle, while Canadian Prime Minister Mark Carney cautioned that important work remained before a final agreement could be completed. Details of the proposed agreement have not yet been released.

The original tariff package was particularly concerning for the textile and sewn-products industries because it covered a range of textiles, apparel and made-up articles, and covered products would not have been protected simply by qualifying for preferential treatment under USMCA. The pause therefore provides short-term relief, but companies with cross-border supply chains still face uncertainty until the agreement is finalized and its product coverage is confirmed.

The broader USMCA picture also remains unsettled. The agreement continues to be fully in force through 2036, but the United States declined to approve a new 16-year extension during the July 1st joint review. The three countries will now hold annual reviews unless they reach consensus on an extension. For textile and apparel companies, the uncertainty affects long-term investment in regional production, yarn-forward sourcing decisions, and the commercial case for expanding manufacturing in Mexico and Canada.

Resources:

• Trump Pauses 50% Tariffs on Canadian Goods — Reuters | August 19, 2026

• North American Trade Pact Review Unsettles Fashion Sourcing Plans — Vogue Business | July 20, 2026

• Textiles and Apparel Targeted by 50% Tariffs on Canada — Sourcing Journal | July 21, 2026

• Statement Following the CUSMA Joint Review — Government of Canada | July 1, 2026

  
  

Brazil Moves Toward Possible Retaliation

The additional 25% Section 301 tariff on many Brazilian goods — including apparel, footwear, machinery and wood products — has been in effect since July 22, 2026. On August 13th, Brazil initiated a process under its Reciprocity Law that could eventually produce retaliatory tariffs or other restrictions against U.S. interests. Brazil has also requested further negotiations and has described the U.S. tariffs as unjustified.

The development adds the possibility of retaliation to an already complex tariff structure. For footwear and apparel companies, Brazil remains an important example of how duties imposed under separate trade authorities can alter established supplier relationships even when alternative production markets cannot immediately match a country’s capacity, expertise, or product quality.

Resources:

• Brazil Opens Reciprocity Process Against the U.S. — Reuters | August 13, 2026

• USTR’s Final Section 301 Action on Brazil — July 15, 2026

Tariffs Are Beginning To Influence Fiber and Sourcing Choices

The effects of changing tariff rates are increasingly visible in sourcing data. An analysis of June OTEXA figures found that U.S. apparel imports declined 3.5% year over year, while the tariff structure appears to be improving cotton’s relative competitiveness against some man-made-fiber garments. The finding suggests that importers may respond to duties not only by changing supplier countries, but also by adjusting fiber content, product design and assortment strategy.

• U.S. Tariffs Push Apparel Importers Toward Cotton — Just Style | August 11, 2026

Taken together, the latest developments show that tariff exposure is becoming more difficult to separate by country, policy or sourcing decision. Refund litigation, forced-labor tariffs, possible overcapacity duties, geopolitical sanctions and uncertainty surrounding regional trade agreements are all affecting the same supply chains. For the textile and sewn products industries, the central challenge is no longer identifying one “safe” sourcing market, but planning around trade costs and rules that can change during the lifecycle of a purchasing, production or capital-investment decision.