Tariff Watch: House Passes Trade Bill, New Drone Duties, Canada Strikes Back
This week’s Tariff Watch covers the House passage of the PAIL Act, new Section 232 tariffs on imported drones and components, Canada’s retaliatory tariffs on U.S. goods, and other customs and trade developments affecting importers and exporters.
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Welcome to the latest edition of Tariff Watch, the ongoing weekly series from J.M. Rodgers designed to keep busy importers, manufacturers, and supply chain leaders on top of the latest in US trade policy.
As August gave way to September 2026, Canada plans to roll out a hefty response to the recently enacted Section 338 tariffs. Meanwhile, the White House imposed heavy national security tariffs on imported drones, while the House of Representatives passed a tough trade enforcement bill that, if it becomes law, opens new legal exposure for US importers. Here’s what to know this week.
What’s New
- House passes PAIL Act targeting trade fraud: The US House of Representatives unanimously passed trade enforcement legislation last week. The Protecting American Industry and Labor from International Trade Crimes Act (PAIL Act) resulted from a select committee investigation into duty evasion and trade fraud primarily tied to China. The bill still needs Senate approval but, if passed into law, it would upgrade some violations by US importers from administrative matters to criminal offenses.
- President implements Section 232 drone tariffs: New tariffs went into effect last Thursday, September 3, on imported drones and components following a national security investigation by the Department of Commerce. Imported drones weighing over 25 kilograms or those integrating thermal imagers and docking stations now face a 100% ad valorem duty rate, while smaller models are subject to a 25% tariff. President Donald Trump invoked Section 232 to implement the new duties.
- Canada’s retaliatory tariffs set for this week: In response to President Trump’s unprecedented deployment of Section 338 duties, Canada will impose 15%, 25%, and 50% counter-tariffs on $27.6 billion of US imports starting this Tuesday, September 8.
Who’s Impacted
This week’s stories hit specific parts of the US supply chain particularly hard, including:
- US exporters to Canada: As of early last week, major news outlets were reporting that the US and Canada had effectively given up on trade talks. So now, American exporters of steel, dairy, appliances, agricultural equipment, and other critical goods face matching dollar-for-dollar tariff barriers at the Canadian border starting this Tuesday.
- Drone and tech importers: Companies importing heavy commercial drones or specific components are now subject to a 100% surcharge, fundamentally altering their supply chain economics.
What We’re Seeing
With so many changes to the North American trade environment in a short span of time, here’s how supply chain leaders are reacting:
- Rerouting domestic supply: Now that their products face duties of up to 50% in Canada, many US manufacturers are aggressively looking for ways to divert excess export inventory into domestic channels. Because the new, hefty tariffs on both sides of the border came on quickly, it remains to be seen which American businesses can reroute goods domestically and whether these efforts will help protect their Q3 margins.
- Reviewing drone origin exemptions: Because the new Section 232 drone proclamation caps tariffs at 10% for the UK and 15% for the EU, Japan, Korea, Taiwan, and Switzerland, tech importers are quickly auditing their supply chains to see if they can qualify for these origin-based exemptions.
- Adjusting to mandatory ACH for PSCs: Following early August updates to Post Summary Correction (PSC) procedures, importers are overhauling their payment systems, as Customs and Border Protection (CBP) now requires electronic Automated Clearing House (ACH) payments for any duty increases tied to a PSC.
What We’re Monitoring
This week, the J.M. Rodgers team is paying especially close attention to:
- The Canadian border as retaliatory tariffs hit: We will be closely watching trade flows into Canada once the new duties on US goods take effect on Tuesday. We’ll be monitoring activity reported by the Canada Border Services Agency (CBSA), keeping in mind that any imports already in transit before 12:01 am ET on September 8 will not be subject to the retaliatory tariffs.
- Progress on the PAIL Act: While the trade enforcement bill passed by the House is ostensibly targeted at Chinese exporters, the PAIL Act requires the Department of Justice (DOJ) to form a new task force to help catch US businesses engaged in duty evasion. If the bill becomes law, violations currently handled administratively by CBP will become criminal offenses prosecuted by the DOJ, greatly increasing legal exposure for US importers. We’ll be watching the Senate closely to see whether it intends to pass the PAIL Act. However, given the unanimous vote in the House, it wouldn’t be surprising if the bill reaches the President’s desk soon.
- Updates on Phase 3 of the CAPE portal: Plaintiffs who filed suit in the Court of International Trade (CIT) have been waiting months for a date when they can process IEEPA tariff refunds for finally liquidated entries in the CAPE portal. CBP previously announced an August 20 launch date for Phase 3, but in a court declaration dated August 26, the agency said it needs more time. CBP attributed the latest delay to the need to implement validations that prevent adjustments to duties other than the IEEPA refund once entries are reliquidated. We’ll be keeping our ears to the ground for a revised Phase 3 go-live date.
Sources
- House Passes Legislation to Stop China’s Trade Crimes, House.gov
- President Trump Sets New Drone Section 232 Tariffs, GT Law
- US–Canada Tariffs: Timeline of Key Dates and Documents, Blakes Law
- The US-Canada Trade War in 5 Charts, BBC
- Automation Regarding Post-Summary Corrections, Federal Register
- CAPE Phase 3 Has No Confirmed Opening Date, CAPE Portal Guide