Tariff Watch: Digital Services Tax Threats, New 301 Investigations, and CAPE Phase 2

Welcome back to Tariff Watch, the weekly series from J.M. Rodgers that keeps importers, manufacturers, and supply chain leaders informed on the latest in US trade policies. 

This week, the Trump administration’s focus shifts toward Europe, from aggressive new tariff threats over digital taxation to investigations targeting the pharmaceutical industry. Let’s take a look at what you need to know this week:

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What’s New

• The President threatens 100% tariffs over DSTs: On June 26, President Donald Trump announced that the US would impose an immediate 100% tariff on goods imported from any country that implements a digital services tax (DST) targeting American technology firms. He set a firm July 4 deadline for the US and the EU to finalize a trade deal that would cap tariffs on most EU exports at 15%.
• The USTR initiates a Section 301 investigation into Germany: The Office of the United States Trade Representative (USTR) announced a new Section 301 investigation in response to Germany’s alleged “persistent underpayment for innovative pharmaceutical products.”
• CAPE Phase 2 officially launches: As promised in earlier Customs and Border Protection (CBP) court testimony, Phase 2 of the Consolidated Administration and Processing of Entries (CAPE) portal launched on Monday, June 29. Phase 2 covers IEEPA refund requests for unliquidated entries flagged for reconciliation and antidumping/countervailing duties (AD/CVD).

Who’s Impacted

This week’s stories indicate rocky waters ahead for trans-Atlantic trade, but also offer a lifeline for importers who have been waiting for tariff refunds. Here’s who’s most impacted this week:

• European importers and tech companies: The threat of a 100% retaliatory tariff over DSTs poses a massive, existential risk to any US business importing goods from Europe — particularly as multiple European nations have previously announced plans to tax American digital service providers.
• Pharmaceutical and medical importers: Businesses that source innovative pharmaceutical products or drug ingredients from Germany could face severe, targeted tariffs, depending on the outcome of USTR’s newly launched Section 301 investigation.
• Importers with complex IEEPA entries: With the launch of CAPE Phase 2, US importers previously locked out of Phase 1 because their entries required reconciliation or AD/CVD can finally claim their historic tariff refunds.

What We’re Seeing

Supply chain leaders are always changing up their strategies in response to the latest news, and this week is no different. Here’s how we’re seeing them react as Q2 ’26 closes:

• Businesses look into European sourcing alternatives: Given the recent disputes over digital services taxes and the aggressive July 4 deadline, companies that rely on EU imports are preemptively modeling the financial impact of a potential 100% tariff and identifying short-term sourcing alternatives outside of Europe.
• A surge of activity at the CAPE portal: With Phase 2 now open, eligible importers are rushing to file their refund declarations. They hope to get those funds now, in case any further legal or administrative hurdles emerge.
• Pharmaceutical companies are mobilizing for the German 301 probe: Industry leaders and medical supply chain managers are already preparing to engage with the USTR about the investigation into Germany’s pharmaceutical pricing, as punitive duties could seriously disrupt their supply lines.

What We’re Monitoring

The J.M. Rodgers team continues to keep a close watch on these developing situations and upcoming deadlines:

• The July 4 EU trade deal deadline: We’re keeping an especially close eye on the high-stakes negotiations between the US and the EU. If a broader trade deal is not finalized by July 4, or if European nations proceed with digital taxes, the threatened 100% retaliatory tariffs could ignite a massive trans-Atlantic trade war.
• ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​The July 6 deadline for Section 301 comments: Next week marks the deadline for written comments regarding the USTR’s proposed 10% to 12.5% tariffs on 60 economies for forced labor violations. Highly anticipated public hearings will follow on July 7, and we’re monitoring which industries are pushing back the hardest.
• The Section 122 expiration clock: We are now under a month away from the July 24 statutory expiration of the Section 122 global tariffs. We’re anxiously waiting to see whether Congress will attempt to extend the 150-day authority or if the Trump admin has another plan to keep the worldwide surcharge in place.

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Sources

• Trump Vows Immediate 100% Tariff if Countries Levy Digital Services Tax, CBS News
• USTR Announces Initiation of Section 301 Investigation, USTR.gov
• CBP Confirms June 29 Phase 2 Launch, Thompson Hine
• Section 301’ing the World (or 99.4% of It), Sheppard Global Trade Law Blog