Trade Policy

July 2026: A Dense Wave of New Trade Policies Reshapes Global Trade Rules – How Should Exporters Respond?

     July 2026 has witnessed a dense wave of global trade policy adjustments. From a comprehensive upgrade of China's outbound investment management system, to the EU's abolition of tariff exemptions for low-value parcels, and the US administration's launch of a new round of global tariffs under Section 301, multiple major regulations took effect in quick succession this month. These policy changes bear not only on compliance costs and market access for foreign traders, but also reflect a profound transformation in the global trade governance landscape.

I. China: First Administrative Regulation on Outbound Investment Takes Effect, Raising the Compliance Bar for Overseas Expansion

     On 1 July, the State Council Provisions on Outbound Investment (State Council Decree No. 837) officially came into force. This is China's first administrative regulation in the field of outbound investment, extending its scope to cover individual resident investors as well as enterprises, and encompassing scenarios such as direct overseas investment by both companies and individuals, and round-trip investment through red-chip structures. The new rules strengthen filing and registration requirements for overseas investment, risk monitoring and early-warning mechanisms, and the investigation system for investment barriers.

     In terms of specific constraints, when carrying out outbound investment, enterprises are prohibited from illegally exporting controlled or prohibited goods, technologies, services and related data, nor may they circumvent export control restrictions through cross-border personnel assignments, technical guidance, overseas training or similar means. Where enterprises encounter trade restrictions or operational obstacles in the investment destination, the competent commerce authority under the State Council may initiate investigations in accordance with the law, and may take measures such as adjusting country-specific investment policies or restricting the import and export of relevant goods and technologies, depending on the circumstances. Failure to fulfil the prescribed nuclear-approval and filing obligations for overseas investment, or submission of false materials, will result in corrective orders and potential fines, confiscation of illegal gains, and other penalties.

     Xu Qiang, Director-General of the Bilateral Cooperation Department of the China Chamber of International Commerce, commented that the implementation of the Provisions marks a shift in China's overseas expansion from a phase of encouraging broad-based growth to a high-quality development stage centred on compliance, standardisation, and efficiency enhancement. Zhang Jianping, Deputy Director of the Academic Committee at the Chinese Academy of International Trade and Economic Cooperation (CAITEC), noted that the risk profile for overseas investment continues to escalate, with multiple pressures – geopolitical rivalries, green trade barriers, and shifting local policies – making compliance a core competitive advantage in cross-border operations.

     Other domestic regulations that took effect in the same period include: the social co-governance system for export controls (establishing a reward system for reporting violations concerning the export control of dual-use items for strategic minerals); paperless processing for the entire tax-refund procedure for departing tourists; the "two-certificate integration" for imported motor vehicles; and Zhejiang Province's unified standard for issuing general VAT invoices for export businesses.

     In addition, the General Administration of Customs stated at a State Council Information Office press conference on 22 July that over the next five years it will continue to carry out special campaigns to facilitate cross-border trade and improve overall port clearance efficiency. Customs will adapt to the characteristics of cross-border online transactions, promote collaborative governance between customs and enterprises, and explore direct data connectivity between customs and e-commerce platforms. In terms of fostering new drivers of foreign trade, Customs will optimise regulatory systems for new business models such as cross-border e-commerce, market procurement, and overseas warehouses, and will innovate supervision methods for AI products and green-transition goods.

II. United States: Section 301 Tariffs Take Over, Ensuring "Seamless" Global Trade Barriers

     On 23 July, the US Trade Representative (USTR) issued a notice announcing additional tariffs of 10% to 12.5% on 60 countries and regions under Section 301 of the Trade Act of 1974, citing alleged "forced labour" concerns. The new tariffs took effect on 24 July US Eastern Time.

     Specifically, the 60 economies were divided into two tiers: 14 economies – including Canada, the United Kingdom, and Mexico – deemed by the US to have "implemented some control measures" are subject to a 10% tariff rate; while 46 economies deemed "not to have implemented bans" – including mainland China and Hong Kong, Japan, South Korea, Vietnam, and India – face a 12.5% rate. Exemptions are available for oil, natural gas, fertilisers, and certain food products. The new tariffs will cover approximately 99% of US trade volume.

     Notably, this new tariff precisely replaces the 10% global temporary import surcharge implemented under Section 122 of the Trade Act of 1974, which expired on 24 July. Peng Bo, a researcher at the Chinese Academy of International Trade and Economic Cooperation, pointed out that from a policy-continuity perspective, the expiry of the 10% temporary surcharge was immediately followed by the new 10% and 12.5% tariffs – a “seamless” transition that signals an attempt to institutionalise what was originally a temporary tariff tool into a permanent feature of US trade policy.

     China has made its opposition clear. A spokesperson for China’s Ministry of Commerce stated on 27 July that the US unilateral imposition of tariffs on China is a typical act of trade protectionism, to which China is firmly opposed.

III. European Union: Low-Value Parcel Tariff Exemption Abolished, Foreign Investment Screening Tightened

     On 1 July, the EU officially abolished its tariff exemption policy for e-commerce parcels valued below €150. Under Council Regulation (EU) 2026/382, during a transitional period from 1 July 2026 to 30 June 2028, a fixed temporary tariff of €3 per category of goods will be applied based on the customs tariff subheading classification. Goods of different categories within the same parcel are taxed separately. At the same time, cross-border e-commerce platforms are explicitly designated as the legal importers of record. From November 2026, the EU will also mandate product identifiers and introduce a new unified customs processing fee.

     According to European Commission data, in 2024 the number of cross-border low-value parcels (below €150) entering the EU reached 4.6 billion, of which 91% originated from China. The impact of the new rules has been immediate – multiple cross-border sellers have reported a varying degree of sales decline in the EU market after 1 July, with some seeing orders drop by more than 30%. Cirrus Global Advisors, an air cargo analytics firm, predicts that cross-border e-commerce airfreight volumes could fall by 10% to 35% in the weeks following the tax reform.

     Meanwhile, the EU's new Foreign Direct Investment (FDI) Screening Regulation entered into force on 16 July, replacing the six-year-old previous framework. This represents the most significant overhaul of the EU's foreign investment screening mechanism since the establishment of the cooperation framework in 2020. The new regulation requires all 27 member states to establish screening mechanisms covering sensitive sectors, technologies, and infrastructure. At the EU level, a list of priority sectors subject to mandatory screening has been identified, including dual-use and defence items, semiconductors, quantum technologies, specific AI applications, and strategic raw materials. Member states may expand the scope of screening beyond this baseline but cannot fall below the minimum standard.

     In addition, the EU's steel safeguard measures were simultaneously upgraded – the annual tariff-rate quota ceiling was set at 18.3 million tonnes, with the out-of-quota import tariff raised from 25% to 50%, and a new "melted and poured" rule of origin was introduced to curb transhipment circumvention.

IV. Policy Updates from Other Major Markets

     United Kingdom: From 1 July, duty-free steel import quotas were cut by 51%, with a 50% additional tariff applied to volumes exceeding the quota, and a transition period until 30 September 2026.

     Brazil: From 1 July, a zero-tariff import quota for fully knocked-down (CKD) electric vehicles was reinstated, with a total quota of $463 million for a six-month period; fully assembled vehicles and semi-knocked-down (SKD) EVs exceeding the quota are subject to a uniform 35% import tariff.

     Malaysia: From 1 July, all new imported fully assembled battery electric vehicles (BEVs) must simultaneously meet two conditions for customs clearance: motor power ≥180 kW and CIF value ≥200,000 ringgit; vehicles failing to meet either criterion are prohibited from entry.

     Japan: From 1 July, the single-entry visa fee was raised from 3,000 yen to 15,000 yen, and the multiple-entry visa fee from 6,000 yen to 30,000 yen; the international tourist tax (departure tax) was increased from 1,000 yen to 3,000 yen.

     US CPSC: From 8 July, all imported consumer products subject to CPSC jurisdiction must complete electronic filings through the Customs ACE system prior to arrival; paper certificates will no longer be accepted as independent customs clearance documentation.

V. RCEP Continues to Deepen: From Tariff Reductions to Industrial Synergy

     At the regional cooperation level, 2026 marks a critical year for the continued deepening of RCEP implementation. After more than four years of ground-level implementation, the dividends of the agreement have undergone a profound shift from "short-term tariff reductions" to "long-term industrial synergy". The 2026 RCEP Business Cooperation and Development Initiative, released in June, emphasises the implementation of high-level consensus, the strengthening of regional coordination systems, the full extraction of agreement dividends, and the smoothing of regional industrial chains. Together with the advancement of the China-ASEAN Free Trade Area 3.0 Upgrade Protocol, regional trade facilitation continues to improve.

Closing Remarks

     The concentrated policy adjustments of July 2026 reveal a clear trend: whether it is China's compliance-oriented outbound investment framework, the EU's tightening of tariffs and screening mechanisms, or the continued escalation of US tariff instruments – major global economies are all accelerating the reconstruction of their respective trade governance architectures. For businesses, these changes represent both challenges and opportunities. Compliance capability is evolving from a "nice-to-have" to a "must-have" for market entry, and the ability to anticipate policy directions in advance and adjust market strategies accordingly will be the key differentiator for foreign traders navigating an increasingly volatile landscape.