EU battery rules, US tariffs, and Australia modern slavery

July 31, 2026 | Market Trends for the NQC Community

Global regulatory & macroeconomic overviews

In this edition of The Briefing, we report on three key macroeconomic and regulatory developments impacting international supply chains: targeted technical exemptions for industrial equipment under the EU Batteries Regulation, an escalation in US-Canada trade tensions under historic tariff legislation, and a major legislative shift towards corporate criminal accountability in Australia's modern slavery framework.

EU expands battery removability exemptions for industrial ATEX equipment

On 14 July 2026, the European Commission adopted a delegated act establishing targeted derogations from consumer battery removability and replaceability mandates under the EU Batteries Regulation.

Under the baseline regulation, portable batteries in products sold within the EU must generally be removable and replaceable by end-users to extend lifespans and support recycling. While exemptions previously applied to medical devices and wet appliances, the Commission has added 6 new product categories to the exemption framework.

For commercial supply chains and heavy manufacturing, the primary highlight is the inclusion of specialised equipment governed by the ATEX Directive. Products designed for explosive atmospheres, such as explosion-proof motors, industrial sensors, heavy-duty pumps, and forklift trucks, are now exempt from consumer replaceability rules. In these operational environments, requiring end-user battery access introduces critical safety and spark hazards, meaning battery servicing may instead be restricted to independent professionals.

Secondary categories covered under the new act include wearable consumer devices (such as smartwatches and fitness trackers) and select electric toys. The Commission also updated technical guidance to help industrial equipment manufacturers apply these derogations during design cycles.

The delegated act is currently undergoing formal scrutiny by the European Parliament and the Council of the EU. Subject to approval, the measure will enter into force 20 days after its publication in the Official Journal of the European Union.

US announces 50% tariffs on Canadian goods under historic 1930 Tariff Act

On 20 July 2026, the US administration announced 50% tariffs on a broad spectrum of imports from Canada, citing alleged discriminatory trade practices affecting American automotive, alcohol, and dairy exports.

The executive action relies on Section 338 of the Tariff Act of 1930, a statutory mechanism allowing the executive branch to impose punitive tariffs of up to 50% against nations deemed to discriminate against US commerce. This decision marks the first recorded application of Section 338 in nearly a century. The new duties are scheduled to take effect within 30 days of the announcement.

The White House highlighted Canada's dairy supply management framework and differential import quotas on American vehicles as central justifications. In response, Canadian officials stated that actions taken within the automotive sector matched prior US tariffs that Ottawa maintains breached USMCA provisions. Additional friction stems from Canadian provincial restrictions on the retail sale of US alcohol products.

Australia proposes criminal fail to prevent offence for modern slavery

On 16 July 2026, the Australian Federal Government outlined plans for structural reforms to its modern slavery framework.

The centrepiece proposal introduces a new corporate criminal offence targeting large businesses, specifically those with annual consolidated revenue exceeding AUD $100 million, that fail to prevent modern slavery within their supply chains. Under the proposed legislation, companies can establish a legal defence if they demonstrate that reasonable steps were taken to identify and prevent forced labour.

Complementary measures under consideration include:

• • Civil penalties and enforcement: Statutory financial penalties for non-compliance with existing obligations under the Modern Slavery Act 2018.
  • Mandatory due diligence: Direct requirements establishing risk-based due diligence routines for reporting entities.
  • Grievance reporting: Clarifications regarding mandatory disclosures on operational grievance mechanisms.

This statutory turn follows external commercial trade pressure. On 3 July 2026, the US Trade Representative threatened tariffs of up to 12.5% on Australian exports following inquiries into goods produced with forced labour, accelerating Canberra's legislative timetable.

References

1. European Commission (14 July 2026). Commission adds exemptions to portable battery removal rules. Directorate-General for Environment. 
   
2.  Executive Office of the President of the United States / USTR (20 July 2026). Statement on Section 338 Tariff Implementation regarding Canadian Imports. 
   
3.  Australian Federal Government (16 July 2026). Announcement on Reforms to the Modern Slavery Act 2018 and Corporate Accountability Frameworks.