July 24: Section 122 Dies, Section 338 Rises — Navigating the New US Tariff Landscape for Food Exporters

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The One Sentence

Today — July 24, 2026 — the US effective tariff rate drops from ~13% to ~7% as Section 122 expires, but three days earlier President Trump invoked Section 338 to impose 50% tariffs on Canadian dairy and alcohol, creating the most complex two-directional tariff environment food exporters have faced in a generation.

What Just Happened: A Timeline

The week of July 21-24, 2026 will be remembered as the most consequential 72-hour period for US food trade policy since the 2018 tariff escalations. Here's what happened:

This guide explains what each development means for food exporters, what actions to take, and how to position your business for the new landscape.

Part 1: Section 122 Expiration — What Changes, What Stays

The Expiration

Section 122 of the Trade Act of 1974 was invoked by President Trump on February 24, 2026, imposing a 10% global import surcharge. The statute limits its duration to 150 days — which expires at 12:01 AM EDT on July 24, 2026.

The 10% surcharge applied to virtually all imports (with limited exclusions), effectively raising the US average tariff rate from ~3% to ~13%.

What Stays

Section 122's expiration does NOT affect other US tariff programs:

What About ART Bilateral Agreements?

The administration's 13+ ART bilateral agreements remain in effect and offer preferential access for covered products:

• EU: Tariff-free quota for select agricultural products including certain cheeses, olive oil, wine
• UK: Staged tariff elimination on food products (3-7 year phase-ins)
• Indonesia: Reciprocal tariff reductions on tropical food products including palm oil, coconut products, spices
• Australia/Israel/UAE/Kenya/others: Various food category preferences

If your country has an ART agreement, verify your product eligibility. ART preferences reduce or eliminate tariff rates that would otherwise apply — including potentially offsetting some of the Section 338 impact for qualifying products.

Part 2: Section 338 — The 1930 Law Resurrected

What Is Section 338?

Section 338 of the Tariff Act of 1930 had never been used in the modern trade era — until July 21, 2026. The law authorizes the President to impose duties of up to 50% on products from any country that "discriminates against US commerce."

President Trump invoked it against Canada over three issues:

1. Dairy: Canadian supply management system limits US dairy imports through tariff-rate quotas
2. Alcoholic beverages: Provincial distribution restrictions and markup practices
3. Motor vehicles: Non-tariff barriers and subsidy programs

Products Hit (Food-Specific)

Critical Detail: USMCA Does NOT Apply

🚨 USMCA-eligible products are NOT exempt from Section 338 tariffs. The Section 338 proclamation explicitly supersedes trade agreement preferences for the covered products. This is unprecedented in modern US trade law.

What this means: If you are a US food importer using Canadian dairy ingredients — whey protein for supplements, milk powder for bakery mixes, cheese for processed foods — the 50% tariff applies regardless of whether those products qualify for USMCA preference. Budget for the full additional duty.

Part 3: What This Means for Your Food Export Business

The Combined Effect

These two developments create a bifurcated tariff landscape:

Supply Chain Diversification

If Section 338 affects your supply chain, here are your best alternative sources:

Use Pipedrive to manage your supplier diversification pipeline — set up deal stages for alternative supplier identification, qualification, contract negotiation, and first order. Track at least 3 alternatives per impacted ingredient.

The New Enforcement Environment

The DOJ/HSI/CBP Trade Fraud Enforcement Guide (published July 21) adds a compliance layer to all of this. Key takeaways for food exporters:

• Customs violations are now treated as "economic/national security threats" — not technical errors
• Enforcement priorities: tariff evasion, forced labor import bans, misclassification, transshipment
• Reasonable care standard: the bar has been raised — a single HTSUS classification error can trigger back duties, penalties, and prior disclosure obligations

Use MRPeasy to maintain batch-level documentation of HTSUS classifications, country of origin, and Bill of Materials for every export shipment. The documented classification process is your best defense in an audit.

Part 4: The IEEPA Refund Opportunity

While Section 122 expires, the IEEPA tariff refund process continues — and it's the largest in US history:

• $71.06 billion in refunds certified
• 18.1 million import entries cleared
• 4.36 million entries initially failed (finally liquidated beyond CBP's 90-day window)
• CAPE Phase 3 now opening — CIT Judge Eaton ordered reliquidation of ~3,700 pending cases

If your food export business paid IEEPA tariffs on imports to the US:

1. Check if your entries are in the 18.1M cleared bucket (you should have received refund already)
2. If your entries are in the "failed" 4.36M bucket, consult a trade attorney — the CIT order provides a path through CAPE Phase 3
3. Use Airtable to track refund status by entry number, including interest accrued (7% for underpayments, 7% for overpayments non-corp, 6% for corp)
4. Set up a Wise business account for refund FX conversion — if your refund arrives in USD and you operate in a different currency, Wise will save you 2-4% vs bank conversion rates

Part 5: Strategic Actions — This Week

Immediate actions (next 72 hours)

1. Re-price US-bound contracts — the 10% duty savings are real. Offer to split the benefit with buyers to lock in longer contracts, or maintain FOB pricing and pocket the improvement
2. Check Canadian supply chain exposure — if you use Canadian-origin dairy or alcohol ingredients, find out now. Calculate the 50% additional duty impact per container. Start alternative sourcing
3. Verify ART bilateral eligibility — if your country has an ART agreement, check whether your product qualifies for preferential rates. This could offset both general tariffs and (in limited cases) Section 338 impact

Medium-term (next 2-4 weeks)

4. Apply for Section 338 product exclusions — if the administration opens an exclusion process (standard for major tariff actions), submit your application early. Historical CBP exclusion approval rates: 60-75%
5. Monitor Canadian retaliatory tariffs — Canada will likely respond. If you export food products to Canada, prepare now
6. Document everything — the new DOJ/CBP enforcement environment means documentation = protection. Use MRPeasy for batch-level records, Notion for compliance documentation, and Airtable for tariff impact tracking

The playbook

Section 122 expiration = 10% savings for US importers → renegotiate contracts in your favor Section 338 = 50% cost on Canadian dairy/alcohol → diversify supply, apply for exclusions Combined = The most complex US tariff environment since Smoot-Hawley → hire a trade attorney if your annual US import/export volume exceeds $1M