Tariffs to Stabilize in 2026 as Trump Pivots to Affordability: Flexport

Marcus Eeman, customs director at Flexport, said that while announced tariff rates have at times appeared severe, effective rates across the economy have been more measured, with numerous carve-outs, delays and mitigation mechanisms reducing their overall impact.

“Even though the face of it does seem very much like we’re going to tariff anybody, anytime, in any amount that we want," the administration is "not immune from responding to economic concerns,” Eeman said. “What we may see at the top is not what we actually get at the bottom.”

Eeman identified four categories that the Trump administration is "very sensitive to" when it comes to cost of living: groceries, fuel, healthcare and housing. These categories are a "relevant lens" for understanding tariff policy in 2026, "especially when it comes around concerns of affordability," he said.

Eeman pointed to several recent policy developments as evidence that cost-of-living concerns are acting as a constraint on tariff escalation. One example he cited is the expansion of Annex II under the International Emergency Economic Powers Act reciprocal tariffs, which initially covered “naturally unavailable” products such as bananas, coffee and chocolate, but was later expanded to include beef.

While beef is clearly produced domestically, the U.S. cattle herd is at a 75-year low, pushing prices higher, Eeman said. The exemption reflects an effort by the administration to ease consumer pressure.

A similar dynamic can be seen in the recent reduction of proposed antidumping duties on Italian pasta, Eeman said. Proposed rates that once exceeded 100% were cut to around 15%, with some producers facing rates as low as 2%. “Antidumping is usually very technical,” Eeman said. “They usually have very strict, rigid surveys and processes they follow.” To see such a dramatic drop from the initial proposed rate reflects the cost of living concern for the administration, he said. “They don't want to see a very common staple food in every household in America, all of a sudden having to go up in price.”

Eeman noted that pharmaceuticals, in particular, remain politically sensitive due to their impact on drug prices, which may explain the administration’s decision not to announce the results of its Section 232 investigation, which has gone past the required 270-day window. "Maybe they're waiting to see where these end up," Eeman said, "But I noticed the pharmaceutical one is certainly maybe top of mind for Americans that want to find cheaper drugs, cheaper medications."

Housing-related tariffs have likewise been limited, Eeman said. Planned increases under Section 232 on upholstered furniture and vanities -- expected to rise to 30% and 50% -- were paused for an additional year, leaving rates at 25%, he said. Moreover, only seven Harmonized Tariff Schedule codes were included, despite the ability to broaden coverage significantly.

Other trade actions reinforce the same pattern, Eeman said. A Section 301 investigation determined that Nicaragua engaged in unfair trade practices, yet resulted in a zero percent tariff rate for one year and exempted CAFTA-DR-qualifying goods. "A lot of apparel in the Western Hemisphere comes from Nicaragua," he noted.

Eeman predicted that steel and aluminum tariffs under Section 232 may also see delays or reductions. While the first derivative inclusion list moved quickly to implementation, the latest round has exceeded earlier timelines, leading him to speculate that the administration may trim or delay the next batch of tariff codes due to economic concerns: "One rumor I've heard out of D.C. is that they're actually looking to maybe trim the [Section] 232 in further ways, because of some of the obvious concerns that people have had."

Looking ahead, Eeman said the upcoming USMCA review process may not result in a dramatic rewrite of the treaty, saying that a "very possible option" is that the decision "may end up being no decision." He said all parties may decide not to outright "terminate it," but allow negotiations to "sort of limp on."

Canada and Mexico may be waiting for the possibility of a more favorable Congress, he said, "if they think the midterms are going to go poorly for the President." Similarly, the Trump administration may be waiting to see what the effects of tariffs may be, and "what are the possible concessions maybe we can get out of [Prime Minister] Mark Carney, who's been the much more firmly aggressive negotiator."

While tariff rates themselves may remain restrained, enforcement is expected to intensify in 2026, Eeman said, noting that CBP has expanded its auditing staff across ports of entry and is likely to increase audits and reviews as it seeks to maximize revenue on duties. DOJ also has identified trade fraud as an enforcement priority, he said.

Meanwhile, uncertainty remains around potential refunds related to IEEPA tariffs should they be struck down by the Supreme Court. Jenn Park, trade advisory director at Flexport, said it is unclear what refund mechanisms would apply, and whether companies would need to file protests, pursue litigation at the Court of International Trade, or submit post-summary corrections.

“I don’t foresee that the Supreme Court will provide detailed guidelines on what that refund process will look like,” Park said, adding that the issue would likely be remanded to lower courts.

Eeman cautioned that even if refunds are ultimately ordered, the process may be slow and heavily scrutinized. He predicted that "there's going to be a lot of tomfoolery" in the refund process and that the Trump administration is "going to be a sore loser." He said they may agree to set up an office to issue refunds and then "staff it with one person."

"It does seem like they're not going to want to just very quickly refund all this money very fast," he said. "They very much probably could do it very quickly if they wanted to, but they don't want to, is my assumption."

Park agreed, saying, "I don't think they're going to make it easy."