Section 338 Is Now in Effect on Canada.
Class Certification Rulings Are Still Pending.
The Section 338 tariffs on Canada did not take effect as originally planned. A last-minute proclamation delayed them three days, U.S.–Canada talks then broke down, and the 50% duty took effect at 12:01 AM ET on . On the refund side, CBP's court filing reports approximately $132.5 billion accepted for CAPE processing and roughly $106.6 billion sent to Treasury, covering about 26.4 million entries — but Phase 3 remains undeployed while CBP builds additional validations. Oral argument on class certification was heard in V.O.S. Selections, with a ruling still expected any day; a second argument was calendared for in Freestyle World, and neither ruling has surfaced yet as of this writing. Several new threads have also opened this week — including reports that CBP is offsetting refunds against disputed debts and a judge's inquiry into possible deleted entry records. Here is everything importers need to know right now.
Current Status • August 28, 2026 • The Tariff Bureau Intelligence
Section 338 Landed on Canada After a Last-Minute Pause — Both Class Certification Rulings Remain Open
The picture has moved again since our last update. On August 18, with the original Section 338 effective date just hours away, the administration issued a proclamation suspending the 50% Canada tariffs for three days — citing Canada's stated commitment to remove the underlying discriminatory measures. Talks then broke down on the evening of August 21; Canada suspended negotiations and signaled its own retaliatory tariffs, and the U.S. duty took effect at 12:01 AM ET on August 22, 2026 as originally structured, with no USMCA exemption. Trade lawyers now expect legal challenges to the Section 338 action itself. Separately, CBP's August 25 progress report to the CIT (covering data as of 3:00 PM ET, August 21) shows $132.5 billion accepted for CAPE processing and approximately $106.6 billion certified and sent to Treasury, across roughly 26.4 million entries — but confirms CAPE Phase 3 remains delayed while CBP develops additional system validations, with no new deployment date given. Both pending class-certification rulings — V.O.S. Selections (argued August 6) and Freestyle World (argued August 19) — remain outstanding. And two new fronts opened this week: multiple attorneys report CBP is offsetting IEEPA refunds against disputed and non-fixed debts, and Judge Eaton has asked CBP to respond to questions about whether the agency deleted entry information relevant to IEEPA duties.
⚡ The Tariff Bureau • Current Strategy
Three Recovery Tracks While Phase 3 Stays Court-Gated
Phase 3 was ordered back in July but still has not deployed — CBP's August 25 report attributes the delay to additional validation work, and finally liquidated entries are still not accepted on a CAPE Declaration outside the roughly 3,700 court-assigned cases. Phase 1 and 2 eligibility, protest rights under 19 U.S.C. §1514, and the permanent Section 301/232/338 architecture give importers three sustained recovery and protection tracks regardless of how the certification rulings and appeal resolve.
Critical Developments — Most Recent First
CBP Is Offsetting IEEPA Refunds Against Disputed Debts — and Reportedly Reapplying Full Section 232 Rates
Multiple attorneys report that CBP is netting IEEPA refunds against debts the importer disputes or that have not been finally fixed, rather than paying the certified refund amount outright. Separately, practitioners say CBP is using the IEEPA refund process as an occasion to retroactively apply full Section 232 duty rates to some entries that had been receiving reduced or exempted treatment. Neither practice has been the subject of a formal CBP announcement as of this writing, and the scope of affected entries is not yet clear.
If your certified refund amount does not match what actually lands in your account, check for an offset notice before assuming a processing error. If you see Section 232 duties reapplied on entries you believed were exempted or reduced, flag it immediately — this may need to be challenged separately from your IEEPA refund claim.
Judge Eaton Presses CBP Over Whether It Deleted Entry Information Tied to IEEPA Duties
On August 27, Judge Eaton asked the DOJ attorney handling the case whether the government intends to respond to his August 7 letter, which asked whether CBP has any protocol that could have resulted in the deletion of entry information belonging to importers who paid IEEPA duties. No substantive answer has been filed as of this writing, and the scope and materiality of any deletion — if it occurred — is not yet known. In a related order the same week, the court also rescheduled a separate conference on IEEPA duties imposed on international postal shipments to October 1.
This is an open question, not a confirmed finding. If your CAPE declaration references entries you believe CBP has on record, keep your own copies of entry summaries and supporting documentation independent of ACE — do not rely solely on CBP's system of record while this question is pending.
$132.5 Billion Accepted, $106.6 Billion Sent to Treasury — Phase 3 Confirmed Still Delayed
CBP's latest court-ordered progress report was filed August 25. As of 3:00 PM ET on August 21: approximately $132.5 billion in potential and certified refunds accepted for CAPE processing, of which roughly $106.6 billion in duties plus interest has been certified and sent to Treasury for disbursement. Volume has grown to approximately 26.4 million entries accepted for IEEPA duty removal. The ACH problem has continued to grow as well: approximately 22,170 refunds totaling about $1.7 billion cannot be transmitted because banking information is missing, up from 19,726 two weeks earlier. CBP confirmed that CAPE Phase 3 remains temporarily delayed while it builds additional system validations, with no new deployment date announced.
The ACH gap keeps widening even as total volume grows — enrol for ACH refunds in the ACE Portal under the ACH Refund Authorization tab if you have not already. If you are a plaintiff in one of the roughly 3,700 court-assigned cases still waiting on Phase 3, do not expect a near-term deployment date; CBP's own filing gives none.
Section 338's 50% Canada Tariffs Take Effect After a 3-Day Pause — Talks Collapsed First
The Section 338 tariffs did not land on their original date. Hours before the August 19 effective date, the administration issued a proclamation delaying implementation three days to August 22, citing Canada's stated commitment to remove the discriminatory measures at issue and the public interest in continued negotiation. Negotiations then broke down on the evening of August 21: Canadian Prime Minister Mark Carney announced Canada was suspending talks and recalling its negotiating team, and confirmed Canada intends to respond with matching, dollar-for-dollar tariffs of its own. With no agreement reached, the additional 50% ad valorem duty on certain Canadian-origin goods — covering roughly 554 eight-digit tariff lines across motor vehicles, alcoholic beverages, and dairy annexes, but reaching further into products like wine, cement, furniture, and hockey sticks — took effect at 12:01 AM ET on August 22, 2026. USMCA-qualifying goods are not exempt, the duty stacks on existing duties and fees, and Section 338 carries no statutory expiration date. Trade lawyers now expect lawsuits challenging the action.
Confirm your Canadian-origin goods against all three annexes line by line, and confirm the correct Chapter 99 heading with your broker for entries filed on or after August 22. Watch for litigation developments — trade counsel widely expect a legal challenge, and the President retains authority to modify, suspend, or escalate the duty at any time, including to a full import ban if Canada's conduct continues.
Importers Challenge the Section 301 Forced-Labor Tariffs Themselves — A New Legal Front
Plaintiffs led by Learning Resources filed a motion for judgment on August 24 arguing that the Section 301 forced-labor tariffs — the duties on 60 economies that replaced Section 122 on July 24 — exceeded USTR's statutory authority because the agency did not make the country-specific findings the statute requires, and that the action violated the Administrative Procedure Act. This is a separate case from the IEEPA refund litigation and does not affect CAPE processing directly, but it opens a new track of exposure on duties importers are currently paying.
This challenge targets duties you may be paying right now under Section 301, not past IEEPA duties. It is very early — a motion for judgment is not a ruling — but importers with material Section 301 exposure should have trade counsel track this case separately from the IEEPA refund tracks above.
AGS Company Automotive Solutions Withdraws From Federal Circuit Appeal Proceedings
AGS Company Automotive Solutions notified the Federal Circuit it will not participate further in proceedings on the government's appeal of Judge Eaton's order directing refunds for non-finally-liquidated IEEPA entries (Fed. Cir. No. 2026-1897, one of the appeals consolidated under lead case No. 2026-1895). The consolidated appeal itself continues; this withdrawal affects only one party's participation.
Both Class Certification Arguments Have Been Heard — Neither Ruling Has Issued
Oral argument on Terry Precision Cycling's class certification motion was heard August 6 in V.O.S. Selections; counsel has said publicly it expects a ruling by the end of August. A second argument, on Freestyle World's motions to lift the stay and certify a class, was calendared for August 19 at 11:00 AM ET following a closed pre-argument conference on August 17. As of August 28, we have not been able to confirm a ruling on either motion via the public docket. The government continues to oppose certification in both cases, arguing the motions are untimely and that individualized processing defeats class-wide relief.
With both arguments now heard, rulings could land at any time. Certification remains contested and is not guaranteed in either case — do not plan around it. If you have finally liquidated entries and have not filed a CIT complaint, the safest position is still filing your own protective action rather than waiting on a ruling that may not go your way. The Tariff Bureau can coordinate this referral to trade counsel.
Federal Circuit Dismisses Appeal No. 2026-1898 — the April 7 Injunction Is No Longer Under Appellate Challenge
On July 28, 2026, the Federal Circuit granted the government’s unopposed motion under FRAP 42(b)(2) to deconsolidate and voluntarily dismiss Appeal No. 2026-1898 — the appeal arising from the Euro-Notions case — with the mandate issuing the same day and each side bearing its own costs. The practical effect is that the CIT’s April 7 injunction, which established the CAPE refund process, is no longer under active appellate challenge. This is narrower than it sounds: Appeal Nos. 2026-1895 (lead), -1897 and -1899 remain consolidated and live — those target the refund order’s application to finally liquidated entries held by importers who never sued, and one participant (AGS Company Automotive Solutions, see above) has since withdrawn from -1897 specifically.
The machinery of CAPE itself is on firmer ground — the order that built it is no longer being appealed. The fight that still matters to non-plaintiff importers with finally liquidated entries continues in the consolidated appeals, and we have been unable to confirm via the public docket whether the government's opening brief (due August 3) has been filed.
How the Freestyle World Argument Got Its Date — DOJ's July 28 Opposition
On July 28, the Department of Justice filed its opposition to class certification in Freestyle World, Inc. v. United States (CIT No. 26-01088), arguing that the motion was untimely and that certifying a class of importers who paid IEEPA duties but never filed suit would be improper. Judge Eaton ordered oral argument on July 30, setting Freestyle World's motions to lift the stay and for class certification for August 19 — the argument covered in the update card above.
Section 122 Expired — Replaced Same-Day by New Section 301 Tariffs on 60 Economies (Now Under Legal Challenge)
The Section 122 global 10% tariff expired by statute at 12:01 AM EDT on July 24, 2026, its hard 150-day statutory limit. There was no gap: on July 23, the President signed a memorandum directing USTR to impose new Section 301 tariffs of 10% or 12.5% on imports from 60 economies — covering roughly 99.4% of all U.S. imports — based on forced-labor enforcement investigations USTR opened in March and concluded in June. As reported above, these duties are now themselves being challenged as exceeding USTR's statutory authority. Exempt: USMCA-qualifying Canadian and Mexican goods, CAFTA-DR textiles and apparel, goods already subject to Section 232, civil aircraft, pharmaceuticals, informational materials, donations, most Chapter 98, and 471 additional HTSUS subheadings USTR added after more than 1,600 public comments. Separately, Brazil received its own distinct 25% Section 301 tariff under HTSUS 9903.05.01, effective 12:01 AM ET July 22, from a different investigation entirely.
Do not assume these duties disappear soon — a legal challenge takes months to resolve. Confirm which of the 60 economies applies to your supply chain, check the exemption annexes, and recalculate your landed cost basis under the new Chapter 99 headings. If your goods are already subject to Section 232, confirm the exemption is being applied rather than assuming the duties stack.
CIT Orders CBP to Reliquidate Finally Liquidated Entries — But Only for the ~3,700 Filed Cases
On July 17, 2026, CIT Senior Judge Richard Eaton issued an order directing CBP to reliquidate, without regard to IEEPA duties, any and all entries that have been liquidated for more than 80 days and on which the plaintiffs made estimated IEEPA deposits. The order follows the transfer of more than 3,700 pending IEEPA cases to Judge Eaton’s docket, and explicitly supplies the legal authority CBP said in May it lacked. The order applies only to companies that already filed complaints at the CIT. It is a case-linked procedure, not a public opening of Phase 3: plaintiffs’ counsel must first supply importer of record identification numbers to CBP, which then accepts the resulting CAPE declarations. The lead case is now Freestyle World, Inc. v. United States (CIT No. 26-01088) after Euro-Notions voluntarily dismissed on July 16.
If you have finally liquidated entries and have not filed a CIT complaint, this order does not apply to you. With both class certification arguments now heard and rulings pending, filing your own complaint remains the most reliable path. Talk to trade counsel now rather than after either ruling.
$121.75 Billion Accepted, $86.3 Billion Sent to Treasury — Superseded by the August 25 Filing
In a July 13 status declaration to Judge Eaton, CBP Executive Director Brandon Lord reported that as of 3:00 PM EDT on July 10, 2026, approximately $121.75 billion in potential and certified refunds had been accepted for CAPE processing, and approximately $86.3 billion in refunds had been sent to Treasury for disbursement. The same filing noted 9,837 refunds remained untransmitted solely for missing ACH information.
These are July 10 figures, kept here for the trend line — see the August 25 filing at the top of this feed for current numbers. The ACH backlog has since grown to 22,170 refunds worth about $1.7 billion. If you have not enrolled, do it today.
How the Class Certification Fight Started — a Rule 23(b)(2) Motion Filed in June
On June 4, 2026, plaintiffs in V.O.S. Selections — represented by counsel from the original Supreme Court litigation, including the Liberty Justice Center and appellate attorney Neal Katyal — moved to certify a mandatory class under Rule 23(b)(2) covering all importers whose IEEPA refund claims remain ineligible for CAPE processing. If certified, class members could recover without each filing a separate CIT lawsuit. A parallel motion is pending in Freestyle World. The government opposes both, and both have now been argued (see above).
Refunds Have Reached Only 30% of Affected Entries — Concentrated in Large Importers
A Cato Institute analysis of CBP’s own court filings found that the $104.29 billion in refunds authorized as of June 29 covered only about 30% of all import entries on which IEEPA duties were paid, even though it represents roughly 60% of the total dollar value owed. In practice, the largest, highest-value entries have moved through CAPE fastest, while the much larger number of smaller-dollar entries, more likely held by small and mid-sized importers, remain in the queue.
If you are a smaller importer and your CAPE Declaration has been sitting in validation for weeks, this data suggests you are not alone — and it reinforces the value of a clean, well-documented filing.
Warehouse Entries (Types 21/22) Came Off CAPE July 7 — File Withdrawals Instead
Effective July 7, 2026 per CSMS #69127837, warehouse entries (Entry Types 21 and 22) are no longer accepted on a CAPE Declaration. Warehouse withdrawals (Entry Types 31, 32, 34, and 38) continue to be accepted, with refunds processed upon (re)liquidation of the associated warehouse entry. Warehouse entries accepted on a CAPE Declaration between April 20 and July 6 without a corresponding withdrawal submission will not be (re)liquidated with an IEEPA refund.
If you operate bonded warehouses or filed Type 21/22 entries on CAPE before July 7, audit your declarations now and refile on the withdrawals before your refund stalls. Flag warehouse activity in your free assessment.
CAPE Phase 2 Launched — 2.8 Million Entries, $28.7 Billion in Scope
CAPE Phase 2 went live on June 29, 2026. Phase 2 covers reconciliation-flagged entries (types 01, 02, 06) that have not yet had a Type 09 reconciliation filing — but only where the entry is unliquidated or liquidated within 80 days of the CAPE declaration filing date. CBP’s Executive Assistant Commissioner for Trade, Susan Thomas, estimated Phase 2 covers approximately 2.8 million entries and $28.7 billion in potential refunds. Reconciliation entries filed before roughly May 31, 2025 on a standard 314-day liquidation cycle will generally have liquidated more than 80 days ago and fall outside Phase 2’s scope. AD/CVD-flagged entries were not included in the June 29 deployment and remain pending further CBP guidance.
If you have reconciliation entries from the earliest months of the IEEPA tariff period, do not assume Phase 2 covers them — confirm your liquidation dates and consider an individual CIT complaint in parallel. Start at tariffbureau.com/assessment for a free eligibility screening.
Commissioner Scott Does Not Testify — Government Seeks Mandamus, CBP Discloses Phase 2/3 Scope
Judge Eaton’s Order to Show Cause hearing on June 9 ended without the CIT lifting its stay of the universal refund order. CBP Commissioner Rodney Scott did not testify in person; the government instead filed a petition for a writ of mandamus at the Federal Circuit, which it withdrew the same day. The hearing produced two key disclosures: CAPE Phase 2 was confirmed for a June 29 launch, and Phase 3 was confirmed for late July — but limited to importers who have filed suit at the CIT. That late-July target has since passed, and CBP’s August 25 report still gives no new date.
The government continues to contest both the scope of the refund order and the procedural mechanics of enforcing it. Importers without a filed CIT complaint risk being excluded from Phase 3 for the foreseeable future.
DOJ Appeals CIT’s Universal Refund Order — Opening Brief Status Still Unconfirmed
The Department of Justice filed notices of appeal of the CIT’s universal IEEPA refund order at the Federal Circuit in early June 2026, consolidated under the lead case V.O.S. Selections, Inc. v. Trump, No. 2026-1895. The appeal targets the order’s application to finally liquidated entries for importers who never filed suit at the CIT. The government has indicated it may seek to retain an estimated $30 billion or more in IEEPA tariffs collected on those entries if its position prevails; plaintiffs’ counsel has separately put the duties held by non-plaintiff importers at roughly $11 billion. Per the docket, appellants’ opening brief was due August 3, 2026; as of August 28 we still cannot confirm the filing on the public docket. Appeal No. 2026-1898 was dismissed on July 28 (see above); Nos. 2026-1895, -1897 and -1899 remain consolidated, with AGS Company Automotive Solutions having since withdrawn from -1897.
Importers who have not filed suit at the CIT and hold finally liquidated entries face the most exposure. File a protest under 19 U.S.C. §1514 where the 180-day window is still open, and evaluate an individual CIT complaint with trade counsel. The Tariff Bureau prepares documentation for these tracks on contingency and coordinates with your customs broker or trade counsel of record to file.
CBP Reverses on Finally Liquidated Entries — Asserts It Lacks Authority Without Importer-Specific Orders
In a May 29 motion, CBP asserted for the first time that it lacks authority to reliquidate entries past the statutory reliquidation window without importer-specific court orders. This directly contradicted CBP’s own published IEEPA FAQ, which had promised broader Phase 2 coverage. Judge Eaton denied CBP’s motion to amend and ordered Commissioner Scott to appear June 9 (later superseded by the government’s mandamus petition, which the government itself withdrew on June 9). The July 17 order has since supplied exactly the authority CBP said it lacked — but only for importers who filed suit.
If your entries include any finally liquidated entries (generally 80+ days past liquidation), do not wait for a public Phase 3. File a CIT complaint now through trade counsel. The Tariff Bureau can coordinate this referral.
CIT Ruled Section 122 Global 10% Tariff Unlawful — Relief Limited to Three Plaintiffs, Stayed on Appeal
On May 7, 2026, a divided CIT panel (2-1) held that the 10% global Section 122 tariff imposed via Proclamation 11012, effective February 24, 2026, exceeded the President’s authority. But the injunction and refund order applied only to the three plaintiff importers (Burlap & Barrel, Basic Fun, and the State of Washington). Section 122 expired by statute on July 24, 2026, making the appeal largely moot for ongoing collection — but the ruling remains relevant precedent for refund claims on duties collected during the 150-day window.
No refund path is open yet for non-plaintiff importers — but the ruling is strong precedent. Document every Section 122 duty payment, consider post-summary corrections on unliquidated entries, and calendar protest deadlines.
$90 Billion Accepted, $23 Billion Sent to Treasury — Phase 1 ACH Refunds Actively Hitting Accounts
CBP confirmed to the CIT that it was processing approximately $90 billion in IEEPA refunds accepted for processing — with approximately $23 billion completed and sent to Treasury. Phase 1 ACH payments began May 12. Interest under 19 U.S.C. §1505 continues to accrue, at an estimated $650 million per month industry-wide.
Log into ACE and run the ES-022 report to check your CAPE declaration status, entry validation, and ACH payment tracking.
Cato Corporation Q1 Profit Triples — Directly Credits IEEPA Refund
Cato Corp (NYSE: CATO) reported Q1 2026 net income of $9.3 million vs. $3.3 million a year ago — a 3x increase management explicitly attributed to the company’s IEEPA refund claim. EPS came in at $0.47 vs. $0.17. It validates The Tariff Bureau’s core thesis: every eligible importer should be filing, not waiting.
Tariff Refund Act of 2026 (S.3905) — Legislative Backstop Independent of the Appeal
Senate bill S.3905, co-sponsored by Senator Hickenlooper (CO) and a bipartisan coalition, would require CBP to refund all IEEPA duties within 180 days of enactment with statutory interest — and create a priority queue for small businesses. This legislation would function as a backstop independent of the Federal Circuit appeal. The bill has not been enacted; treat it as a possible backstop, not a plan.
Section 301, 232 and Now 338 Anchor U.S. Tariff Architecture — and All Three Now Face Legal Challenges
The post-IEEPA tariff landscape is organized around three standing authorities: Section 232 as the national security tool, Section 301 as the country and policy unfair-trade tool, and now Section 338 as a discrimination-offset tool used against Canada. Section 122 expired by statute on July 24, 2026 and was immediately replaced by the Section 301 forced-labor tariffs on 60 economies — now themselves under challenge (see above). On the metals side, Section 232 duties on steel and aluminum have been 50% since June 2025 (copper joined at 50% in August 2025), and since April 6, 2026 they apply to the full customs value of covered articles, with 25% on many derivative articles and a temporarily reduced 15% on certain industrial and electrical grid equipment through 2027. Section 338 duties of 50% on certain Canadian goods took effect August 22 after a 3-day delay and collapsed talks, and lawyers expect that action to be challenged as well.
Tariffs are permanent, contested, and multiplying. Importers need ongoing classification analysis, supply chain rerouting advisory, and Section 301/232/338 exposure monitoring — not just a one-time IEEPA refund claim.
30% Error Rate in CAPE Filings — CBP Declares 2026 “Year of the Audit”
Gaia Dynamics analyzed over 300,000 IEEPA entry line items and found a 30% discrepancy rate in CAPE submissions. Common errors: wrong Chapter 99 HTS codes, entries not enrolled for ACH, CSV formatting errors, and mixing non-IEEPA entries into the declaration file. CBP has designated 2026 as “The Year of the Audit.” A rejected declaration does not just delay your refund — it can trigger a full compliance audit of your import history.
The Tariff Bureau • CAPE Phases 1 & 2 Open
File Before the Rulings Land
CAPE Phases 1 and 2 are open and roughly $106.6 billion has already been sent to Treasury. Phase 3 was ordered back in July but still has not deployed, and remains gated to importers who filed at the CIT. With both class-certification arguments now heard and rulings possible at any time, the window to file a protective action is closing. Start your free assessment now — The Tariff Bureau handles eligibility screening, documentation, and preparation on contingency, and coordinates filing with a licensed customs broker.
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