Important Update on U.S. Tariffs Impacting Ontario Businesses
The United States has announced the imposition of new tariffs on Canadian goods, effective immediately as of March 4, 2025. These tariffs include a 25% surcharge on a wide range of products imported from Canada. The products include but are not limited to: steel and aluminum products; automotive parts and vehicles; agricultural products such as dairy, beef, and pork; consumer goods like appliances, electronics, and apparel; raw materials and chemicals.
In response to the announcement, Ontario Premier Doug Ford stated on March 4, 2025, that Ontario would implement a reciprocal 25% surcharge on all energy exported by Ontario to the United States. He stated further that it was expected by the Ontario government that the tariffs would have a significant impact on multiple industries including, in particular, manufacturing.
The Purpose and Potential Impact of the Tariffs
The U.S. government has stated that tariffs are intended to protect American industries and jobs over the long term. However, the immediate impact on businesses and customers will be significant. For Canadians, the tariffs are likely to increase the cost of exporting goods to the U.S., potentially leading to reduced demand for Canadian products, and increasing the overall price of goods for citizens. This could result in financial strain on businesses and may necessitate adjustments to the workforce.
Legal Considerations for Workforce Reduction
The imposition of tariffs will pose challenges for many businesses and the workforce. But as we saw with COVID-19, the fact that there are significant and sometimes societal level impacts on the economy, or a particular industry, will not automatically remove or lessen an employer’s obligations to their employees in Ontario. In this regard, some of the major legal considerations to keep in mind as you contemplate how to weather this storm and manage your workforce are as follows:
Compliance with Employment Standards: Ensure that any workforce reductions comply with Ontario’s Employment Standards Act, 2000 (ESA), including proper notice periods and severance pay requirements. There are options short of termination for temporary reductions in work, including layoffs, which may be available.
Human Rights Legislation: Be mindful of the Ontario Human Rights Code, ensuring that layoffs or terminations are not targeted towards any particular group of employees.
Collective Agreements: If your workforce is unionized, review your collective bargaining agreements to understand the rules and procedures for layoffs or terminations. Many collective agreements contain provisions which deal with temporary interruptions of work, voluntary leaves/layoffs, and notice and severance obligations.
Constructive Dismissal: Although there may be an avenue to lay off employees under the ESA, the common law in Ontario does not automatically allow an employer to layoff an employee. It is important to consider, and avoid, how your actions could be construed as a constructive dismissal which could lead to legal claims from employees.
Record Keeping: It is important that you maintain thorough documentation of the reasons for workforce reductions and the steps taken to comply with your legal obligations. This can be crucial in defending against potential legal claims.
It is recommended that you review your employment agreements, collective agreements, and policies, and formulate a plan now that will allow you to respond quickly to changing economic conditions over the coming weeks. As always, and prior to implementing major changes in your workplace, it is important that you obtain advice and comply with your legal obligations.
A Summary of China’s Retaliation Actions Since The Trump Administration
This summary helps to navigate the various retaliation actions China has taken in the past 50 days after President Trump took office on January 20, 2025, to counter the US trade restrictions, including (i) imposing additional tariff on certain US origin products, (ii) adding 12 US companies to the Unreliable Entity List, (iii) control of export of certain precious minerals, (iv) adding 15 US companies to the export control related Controlled Party List and (v) launching anti-circumvention investigation against US fiber optic products.
1. Tarriffs
The following additional tariffs has been imposed on US origin products:
Effective Date
Tariffs on Goods Originated from the US
February 10, 2025
15% on coal and liquefied natural gas10% tariff on crude oil, agricultural machinery, large-displacement cars, and pickup trucks No reduction or exemption.
March 10, 2025
15% on chicken, wheat, corn and cotton10% on sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables and dairy products No reduction or exemption. *Goods that were departed before March 10, 2025, and imported between March 10, 2025 and April 12, 2025 are not subject to the additional tariffs.
2. Unreliable Entity List
The Unreliable Entity List (UEL) is a blacklist administrated by the China Ministry of Commerce (MOFCOM) pursuant to the Regulation on Unreliable Entity List. Companies placed on the UEL may be subject to the following measures:
Restricted or prohibited from import or export from China
Restricted or prohibited from investing in China
Restricted or prohibited from entering into China
Its personnel may be denied of work permits or residency permits
Be imposed with a fine
Since January 20, 2025, China has added 12 companies to the UEL with the list and the applicable restriction as follows.
Effective Date
Unreliable Entity List
Restrictive Measures
February 4, 2025
PVH group* lllumina, Inc. Reasons of Addition – Discriminatory actions against Chinese companies. Termination of normal business with Chinese companies. *As previously reported, MOFCOM launched an investigation against PVH likely in connection with UFLPA. See our previous post. PVH Facing the Risk of Being Placed on China’s Unreliable Entities List | The Trade Practitioner
PVH – Specific restrictive measures to be announced. Illumina – Prohibited its exporting of gene sequencers to China.
March 4, 2025
TCOM, Limited PartnershipStick Rudder Enterprises LLCTeledyne Brown Engineering, Inc.Huntington Ingalls Industries Inc.S3 AeroDefenseCubic CorporationTextOreACT1 FederalExoveraPlanate Management Group. Reasons of addition were not announced.
Prohibited from import and export with China Prohibited from making new investment in China
3. Export Control of Certain Minerals
On March 4, 2025, MOFCOM released an announcement (10th Announcement) to control certain products relating to tungsten, tellurium, bismuth, molybdenum and indium. The 10th Announcement also updates and supplements the Dual-Use Items Control List that was published December 2024.
To facilitate businesses in making classification and assessment of products, the 10th Announcement includes the HS code of each item under control.
For more information about China’s dual-use control and control list, please refer to our previous article: China Releases Consolidated Dual – Use Items Control List | Publications | Insights & Events | Squire Patton Boggs.
4. Controlled Party List (管控名单)
The Controlled Party List (CPL) was first created under the Export Control Law and supplemented under the new Regulations on the Export Control of Dual Use Items that took effect on December 1, 2024. Companies on ECPL are not allowed to purchase any controlled items without a special approval from MOFCOM.
For more information about Controlled Party List, please refer to our previous article: China Released the First Comprehensive Dual-use Items Export Control Regulations | Publications | Insights & Events | Squire Patton Boggs
On March 4, 2025, MOFCOM, for the first time, used the tool of ECPL and added 15 companies to ECPL.
Effective Date
Controlled Party List
Restrictive Measures
March 4, 2025
LeidosGibbs&Cox, Inc.IP Video Market Info, Inc.Sourcemap, Inc.Skydio, Inc.Rapid Flight LLCRed Six SolutionsShield AI, Inc.HavocAINeros TechnologiesGroup WAerkomm Inc.General Atomics Aeronautical Systems, Inc.General Dynamics Land SystemsAero Vironment Reasons of Addition – Protect national security and interest, perform non-proliferation and other international obligations.
Export of dual-use items to the listed companies are prohibited All ongoing export must be stopped immediately If export is necessary under special circumstances, the exporter shall make an application to MOFCOM
5. Anti-circumvention Investigation
On March 4, 2024, MOFCOM announced an anti-circumvention investigation into certain cut-off shifted single-mode optical fiber, marking the first time that China has initiated such an investigation.
The investigation was initiated after receiving an application from Changfei Fiber Optic Cable Co. alleging suspected circumventing of China’s anti-dumping measures. China currently imposes a 33.3%-78.2% anti-dumping duty on US-originated fiber optic products.
The investigation may affect Corning Incorporated, OFS Fitel LLC, and Draka Communications Americas, Inc., and other related US exporters.
This Week in 340B: February 25 – March 3, 2025
Find this week’s updates on 340B litigation to help you stay in the know on how 340B cases are developing across the country. Each week we comb through the dockets of more than 50 340B cases to provide you with a quick summary of relevant updates from the prior week in this industry-shaping body of litigation.
Issues at Stake: Antitrust; Contract Pharmacy; HRSA Audit Process; Rebate Model
In an antitrust class action case, the court granted the defendant’s motion to dismiss.
In an appealed case challenging a proposed state law governing contract pharmacy arrangements, a group of amici filed an amicus brief in support of appellees.
In an appealed case challenging a proposed state law governing contract pharmacy arrangements, defendants-appellants filed an opening brief.
In a Freedom of Information Act (FOIA) case, the plaintiff filed a reply in support of its motion to strike the government’s motion for summary judgment.
In one Health Resources and Services Administration (HRSA) audit process case, the plaintiff filed a supplemental brief in support of the plaintiff’s motion for preliminary injunction.
A group of 340B covered entities filed a complaint against a group of commercial payors, alleging that the payors were in breach of their contracts by failing to pay the proper amounts for 340B-acquired drugs.
In three cases challenging a proposed state law governing contract pharmacy arrangements in Missouri, the court denied in part and granted in part two separate motions to dismiss and denied plaintiff’s motion for a preliminary injunction in a third case.
In two cases against HRSA alleging that HRSA unlawfully refused to approve drug manufacturers’ proposed rebate models:
In one such case, a group of amici filed an amicus brief in support of defendants.
In one such case, a group of amici moved for leave to file an amicus brief in support of plaintiffs’ motion for summary judgment.
Additional Authors: Kelsey Reinhardt and Nadine Tejadilla
How Alcohol Exporters Can Use FDII and IC-DISC to Maximize Tax Savings
For US alcohol exporters – whether crafting bourbon, brewing craft beer, or bottling fine wines – selling to international markets is a significant opportunity for growth. Two US federal income tax regimes, the foreign-derived intangible income (FDII) deduction and the interest charge-domestic international sales corporation (IC-DISC), offer valuable ways to reduce tax liability and boost profits. Each has unique benefits and trade-offs, making them suited to different business needs. This blog post compares FDII and IC-DISC, helping alcohol exporters decide which tool – or combination – best fits their global ambitions.
Note that all discussions of tax rates are limited to US federal income tax. Additional state and local taxes and excise taxes may also apply.
FDII for Export Income
Introduced under the 2017 Tax Cuts and Jobs Act (TCJA), FDII incentivizes US C corporations to earn income from foreign sales while keeping operations stateside by providing a reduced effective tax rate on eligible export income derived from US-based corporations. It targets “intangible” income – profits exceeding a routine return on tangible assets – and applies a deduction directly on the exporter’s tax return.
How FDII Works
Eligible income comes from selling alcohol (e.g., whiskey or wine) to foreign buyers for use outside the United States.
The FDII deduction is 37.5% of qualifying income (dropping to 21.875% after 2025), reducing the effective corporate tax rate from 21% to 13.125% on that portion of income.
No separate entity is required. Claims are made on the existing C corporation’s Form 1120.
Example: A winery exporting $2 million in Pinot noir with $400,000 in net profit might qualify $300,000 as FDII. A 37.5% deduction ($112,500) lowers the tax from $63,000 to $39,375, saving $23,625.
IC-DISC: A Classic Deferral and Rate Reduction Tool
The IC-DISC, a legacy export incentive from the 1970s, operates as a separate “paper corporation” that earns commissions on export sales. It is available to any US business structure (e.g., C corporations, S corporations, and LLCs) and shifts income to shareholders at a lower tax rate or defers it entirely.
How IC-DISC Works
The exporter forms an IC-DISC and pays the entity a commission (up to 4% of export gross receipts or 50% of net export income).
The commission is deductible for the operating company, reducing its taxable income.
The IC-DISC pays no federal tax; instead, its income is distributed to shareholders as qualified dividends (taxed at 20% capital gains rate) or retained for deferral.
Example: A distillery owned by a closely held pass-through entity with $2 million in export sales and $400,000 in net profit pays a $200,000 commission to its IC-DISC. The operating company saves $74,000 in income tax (37%), while shareholders pay $47,600 in capital gains tax (20% plus 3.8% net investment income tax) on the dividend, netting a $27,600 savings.
Comparing Tax Benefits: FDII vs. IC-DISC
Combining FDII and IC-DISC?
For alcohol manufacturers and distributors, using both FDII and IC-DISC is possible. FDII reduces the corporate tax rate on export income, while an IC-DISC could shift additional income to shareholders at the capital gains rate or defer it.
Conclusion
FDII and IC-DISC are potent tools for alcohol exporters, each with distinct strengths. FDII delivers a lower tax rate with minimal effort, ideal for C corporations riding the wave of global demand for American products. IC-DISC offers flexibility, deferral, and broader eligibility, suiting a wider range of businesses with an eye on cash flow. As the craft beer, spirits, and wine industries expand abroad, choosing the right regime – or blending them – can uncork significant savings. Consult a tax professional to tailor the choice to your operation.
The CFTC’s New Advisory on Self-Reporting, Cooperation and Remediation
In an advisory announced February 25, 2025, the Division of Enforcement of the Commodity Futures Trading Commission (CFTC or Commission) announced a new regime for assessing cooperation credit in determining fines in the settlement of enforcement cases. The advisory expressly revokes and replaces all six prior enforcement advisories on cooperation, as well as the advice in the Enforcement Manual on cooperation. The advisory now formally titles cooperation credit as “Mitigation Credit.” The advisory splits the scoring of Mitigation Credit between a score for a particular quality of self-reporting and a score for a particular level of cooperation during an investigation and remediation. A settling party can be eligible for Mitigation Credit based on either self-reporting or cooperation, or both.
The advisory provides a “Matrix” that assigns specific percentage penalty discounts for each combination of the credit scores. The scoring is structured to encourage both exemplary cooperation and exemplary self-reporting. For example, exemplary cooperation even with “satisfactory” self-reporting results in only a 35 percent reduction; exemplary self-reporting followed by no cooperation results in a 20 percent discount; and both an exemplary self-report and exemplary cooperation results in a 55 percent reduction in penalty.
The advisory might be a harbinger for better clarity and more predictable outcomes, but only time will tell what its future effectiveness will be. It can be hard to measure the extent to which credit is awarded in the current absence of quantified penalty levels for particular types of violations. If the CFTC Enforcement Division’s initial settlement demand seems excessive, it will be difficult to discern the dollar or percentage value of any credit. However, by delineating specific percentage credits for particular Mitigation Credit, the advisory signals a quantitative approach that over time might provide more predictable rewards for self-reporting and cooperation. There will undoubtedly be disagreements over the Division’s assessments but having the advisory’s specific framework could help focus the debates.
Self-Reporting Process Changes
Voluntariness: A self-report must be made voluntarily, meaning that it must be made prior to an imminent threat of exposure of the potential violation. Importantly, a self-report will be eligible for Mitigation Credit even if it may have been required to be disclosed by a futures commission merchant, swap dealer, major swap participant, swap execution facility or swap data repository in its annual chief compliance officer report, if the self-report was made in a timely manner “notwithstanding the timing of the annual report.”
Disclosure to the “Appropriate Division”: The advisory provides that an investigated party can be credited for self-reporting as long as it self-reported to the “Appropriate Division” of the CFTC. Previously, self-reporting would have been credited only if the report was made directly to the Division of Enforcement. The Appropriate Division is defined to be the primary division that is responsible for the interpretation and application of each regulation that is the subject of the potential violation. Disclosure to the Division of Enforcement, however, will be treated as disclosure to the Appropriate Division, so disclosure to the Division of Enforcement will always qualify.
Timing of Self-Reporting: Self-reporting must be “prompt” but promptness will be measured against the reporting person’s efforts to determine whether there was a potential violation and its materiality in a timely manner, including discovery of the potential violation and escalation, investigation, management review and governance requirements.
Qualifying for “Full Credit”: To receive “full credit” for a self-report, the report must be complete including all material information regarding the potential violation known to the person at the time of the self-report, including description of the issue, date and method of discovery, available root cause analysis and remediation, if any.
Rolling Disclosure can Still Qualify for Full Credit: To encourage voluntary disclosure at the earliest possible time, the Division will recommend full credit for the Person where the Person made best efforts to determine the relevant facts at the time of the self-report, fully disclosed the facts known at that time, continued to investigate and disclosed additional relevant facts as they were identified; and demonstrates adherence to the other requirements in this advisory.
Safe Harbor for Good Faith Mistakes in Self-Reporting: Importantly, the advisory makes the commitment that the Division will not recommend charges for fraud or false statements if errors and inaccuracies occur in self-reports if the self-report or voluntary disclosure was made in good faith and if any inaccurate information in the self-report or voluntary disclosure is supplemented and corrected promptly after discovery of the inaccurate information. This might seem to be simply fair government behavior, but it is welcome to have it in writing.
The Matrix for Mitigation Credit
The advisory’s Matrix assigns particular penalty percentage discounts based on the combination of separate scores for: (1) self-reporting; and (2) cooperation and remediation. The Division will evaluate self-reporting on a three-tier scale: No Self-Report; Satisfactory Self-Report; and Exemplary Self-Report. It will evaluate cooperation and remediation on a four-tier scale: No Cooperation; Satisfactory Cooperation; Excellent Cooperation; and Exemplary Cooperation. Mitigation Credit for self-reporting and cooperation are evaluated separately. This is the Matrix:
Tier 1: No Cooperation
Tier 2: Satisfactory Cooperation
Tier 3: Excellent Cooperation
Tier 4: Exemplary Cooperation
Tier 1: No Self-Report
0%
10%
20%
35%
Tier 2: Satisfactory Self-Report
10%
20%
30%
35%
Tier 3: Exemplary Self Report
20%
30%
40%
55%
Scoring Self-Reporting: The Division of Enforcement will evaluate self-reporting primarily on four factors: (1) the voluntariness of the self-report; (2) whether the self-report was made to the Commission; (3) whether the self-report was made in a timely manner; and (4) whether the self-report was complete.
Tier
Self-Reporting
Tier 1: No Self-Report
No timely self-report; or Self-report was information already known from other sources; or Self-report that was not reasonably related to the potential violation or not reasonably designed to notify the Commission of the potential violation.
Tier 2: Satisfactory Self-Report
Self-report to an Appropriate Division Notified the Commission of the potential violation Did not include all material information reasonably related to the potential violation that the reporting party knew at the time of the self-report
Tier 3: Exemplary Self-Report
Self-report to an Appropriate Division Notified the Commission of the potential violation Included all material information reasonably related to the potential violation that the reporting party knew at the time of the self-report Included additional information that assisted the Division with conserving resources in the Division’s investigation
Scoring Cooperation and Remediation: In evaluating a company’s or individual’s cooperation, the Division of Enforcement will study a wide variety of factors, including remediation measures.
Cooperation: The Division of Enforcement will consider such factors as whether the company or individual provided assistance beyond subpoenas and compulsory processes, voluntarily provided documents and information, made presentations, made witnesses available, performed internal investigations or reviews, provided an analysis and identified the root cause of the violation, took corrective action for remediation, significantly completed remediation and proactively engaged and used significant resources to provide material assistance.
Remediation: The Division of Enforcement will also evaluate remediation as part of cooperation and will primarily consider whether a company or individual engaged in substantial efforts to prevent a future violation. The relevant Operating Division will determine whether the remediation plan is appropriate.
Monitors and Consultants: The advisory introduces an important new role for Operating Divisions in fashioning remedial relief. The advisory states that the appropriate Operating Division will determine whether to recommend the use of a compliance monitor or consultant to ensure completion of remedial undertakings. This means that settlements can involve advocacy with Operating Divisions in addition to the Division of Enforcement. The Division of Enforcement will then have to approve the selection of a monitor, who will have to periodically submit progress reports to the Division of Enforcement. Additionally, the monitor, in conjunction with the individual or company’s senior management, must submit a certification of completion to the undertakings of the company or individual.
Tier
Cooperation
Tier 1: No Cooperation
No substantial assistance beyond required legal obligations
Tier 2: Satisfactory Cooperation
Provided substantial assistance Voluntary production of documents and information Arranging for voluntary witness interviews Basic presentations on legal and factual issues
Tier 3: Excellent Cooperation
Meet the expectations for Satisfactory Cooperation Consistently provided substantial assistance Internal investigations or reviews Thorough analysis of potential violation, root cause, and corrective action for remediation Use of internal or external expert resources and consultants as appropriate
Tier 4: Exemplary Cooperation
Meet the expectations for Excellent Cooperation Consistently provided material assistance Proactive engagement and use of significant resources Significant completion of remediation Use of accountability measures, as appropriate
The Division’s advisory opens the door to more predictable credit for self-reporting and cooperation going forward. Time will tell its contribution to fair outcomes.
Meat Industry Pushes Back on Cultivated Meat Bans
While several states are taking legislative action to restrict or ban the sale of cultivated meat, with legislators arguing that the bans would protect the meat industry, there is a different message coming from many groups in the industry itself. Critics of the bans argue that they would “restrict free trade and threaten food safety benefits.”
Nebraska, a state that ranks among the top 10 producers of beef and pork, is among many of the states that has proposed a cultivated meat ban, and the state’s governor issued an executive order in August 2024 barring state agencies from buying cultivated meat. However, ranchers and meat industry groups are pushing back on the ban, saying that “it’s up to the consumer to make the decision about what they buy and eat.” Industry groups say that they are “not worried about competition” from cultivated meat but prefer a different approach that would require the products to be clearly labeled as lab-grown.
The North American Meat Institute has similarly opposed cultivated meat bans, writing a letter in opposition to the Florida ban in February 2024. In its letter, the organization says that the bills would be preempted by the Federal Meat Inspection Act, which regulates the processing and distribution of meat products in interstate commerce. Further, the Meat Institute argued that the bans are “bad public policy that would restrict consumer choice and stifle innovation” and that USDA oversight of cell cultivated meat products places the products on a level playing field in terms of food safety and labeling requirements.
In addition, legislators in Wyoming and South Dakota have voted against cultivated meat bans in their states, citing free trade manipulation and urging instead for more packaging and labeling regulations to support informed decisions.
President Trump’s 4 March Tariffs Against Canada, Mexico, and China
Today, President Trump announced the implementation of new tariffs targeting imports from Canada, Mexico, and China, making good on his promise last month in the event measures were not taken by these countries to stem the tide of fentanyl and illegal migration into the United States.
Details of the Tariffs
The newly enacted tariffs are as follows:
CanadaA tariff of 25% will be imposed on all imports from Canada. This includes a broad range of goods, notably steel, aluminum, and various manufactured products, significantly impacting industries that rely on Canadian materials and components.
Mexico Similar to Canada, imports from Mexico will face a 25% tariff. This measure affects key sectors, including automotive parts, electronics, and agricultural products, posing challenges for businesses that have integrated supply chains spanning both countries.
ChinaAll imports from China will now be subject to a 20% tariff which will be in addition to the Section 301 and Section 232 tariffs. This figure reflects an increase of an additional 10% on top of the 10% duty that was already imposed on Chinese goods last month. This elevated rate applies to various goods, including electronics, machinery, and consumer products, signaling the administration’s intensified focus on addressing unfair trade practices and protecting American manufacturing.
Key Implications for Businesses
Supply Chain Disruptions: The tariffs may cause disruptions to existing supply chains. Companies should assess their current sourcing strategies to identify alternative suppliers and mitigate risks associated with higher costs and import delays.
Compliance and Regulatory Challenges: Importers must navigate new compliance requirements associated with the tariffs. Businesses should ensure they have the correct documentation for customs and be prepared for increased scrutiny regarding product classifications and valuations.
Potential for Retaliation: These tariff measures will likely lead to retaliatory actions from Canada, Mexico, and China, potentially impacting US exports to these markets. Companies should anticipate possible trade barriers that could disrupt their international operations.
Recommendations
Assess Impact on Cost Structures and Explore Supply Chain Alternatives: Consider diversifying your supplier base to include domestic sources or suppliers from other countries, reducing reliance on imports from Canada, Mexico, and China and minimizing exposure to tariffs.
Monitor Trade Developments: Stay informed about future regulatory changes and potential retaliatory measures from Canada, Mexico, and China that could further impact your business landscape and operations.
Conclusion
The implementation of tariffs against Canada, Mexico, and China represents the core tenants imbedded in the America First US Trade Policy with broad implications for businesses engaged in imports. Companies must quickly adapt to these changes to mitigate risks and seize potential opportunities.
Increased Duties on Chinese Imports and Guidance Regarding New Tariffs on Canada and Mexico
Effective today, most U.S. imports from China are now subject to 20% emergency tariffs and imports from Canada and Mexico are subject to 25% emergency tariffs, in addition to any other applicable import duties. These tariffs, while sweeping in coverage, do contain certain exemptions discussed below.
In an Executive Order signed late yesterday, President Trump followed through on his threat to increase tariffs on U.S. imports from China first implemented on February 4, 2025, imposed under the International Emergency Economic Powers Act (IEEPA). This directive increases the tariffs on Chinese products entering the United States from 10% to 20%, but makes no other changes to scope – meaning, that only limited products remain exempt from those duties (generally encompassing informational materials, donations intended to relieve human suffering and items ordinarily incident to travel to or from any country). Imports otherwise qualifying for duty-free entry (or reduced dutiable value treatment) under Chapter 98 may continue to benefit from that treatment; imports eligible for de minimis treatment may continue to benefit from it until such time as “adequate systems are in place to fully and expeditiously process and collect tariff revenue” arising from these new duties.
In addition, President Trump permitted the previously deferred duties on imports from Canada and Mexico to go into effect with an identical scope to the China import coverage. As previously announced, the duty rate for covered imported products of Canada (except for Canadian energy and energy resources) and Mexico will be 25%. Covered imported energy and energy resources of Canada will be subject to 10% duty rate.
Mere hours before these tariffs went into effect, U.S. Customs and Border Protection (CBP) issued Federal Register notices with guidance regarding imports newly subject to the Canada and Mexico tariffs. These notices amend Chapter 99 of the Harmonized Tariff Schedule of the U.S. (HTSUS) to implement the tariffs as previously stated in the Presidential Proclamations.
Flick the Switch Board: Get Plugged into the Latest UK Guidance on EEE and WEEE
Waste treatment, recycling and take back obligations in relation to electrical and electronic equipment (EEE) and waste of such electrical and electronic equipment (WEEE) have long been a focus area for EU regulators, and now we are seeing increased enforcement in the United Kingdom. Although the European Union and United Kingdom are largely aligned in some intention behind the reuse, recycling and recovery obligations applicable to electronic brands, there are also notable differences in implementation which companies should be alive to when operating across both jurisdictions.
To assist with this, the Environment Agency of the United Kingdom recently published four sets of guidance on EEE and WEEE, namely:
Guidance on when EEE becomes WEEE for the purposes of the UK WEEE regulations, to properly classify and manage waste;
Guidance for waste operators and exporters on how to classify some items of WEEE, waste components and wastes from their treatment in England, focusing on identifying hazardous chemicals and persistent organic pollutants;
Guidance on shipping WEEE into and out of England from 1 January 2025; and
Guidance on reporting the placing of EEE on the UK market.
We highlight some key points for consumer electronics brands in this alert.
WHAT PRODUCTS DOES THE NEW GUIDANCE APPLY TO?
EEE is broadly defined as any product that is dependent on electric currents or electromagnetic fields to work properly, and which is designed for use with a voltage rating of 1,000 volts or less for alternating current and 1,500 volts or less for direct current.
This definition therefore includes a wide variety of consumer products, such as large and small household appliances, information technology and telecommunications equipment, lighting, tools, toys, leisure and sports equipment, medical devices and many others. The most recent guidance notes are therefore relevant to many consumer products. For the latest UK guidance on what qualifies as EEE under the regulations, see here.
1. Guidance on When EEE Becomes WEEE
The primary aim of this guidance is to help companies, that hold EEE they no longer need, to prevent that EEE from inadvertently becoming WEEE. These parties include EEE producers as well as treatment facilities, collection facilities, producer compliance schemes and waste carriers. According to the legal definition of WEEE, any EEE which the holder discards, intends to discard or is required to discard becomes WEEE.
However, the guidance provides that EEE intended to be reused can avoid becoming WEEE if all the reuse conditions as described in the latest guidance are satisfied. This is relevant as it could potentially avoid triggering WEEE obligations in some cases (such as registering and reporting the EEE as WEEE, organising or financing its collection, treatment and recycling and so forth).The reuse requirements for this exemption are:
The EEE is reused for the same purpose for which it was designed (the use must not be subordinate or incidental to the original use);
The previous holder intended for it to be reused;
No repair, or no more than minor repair, is required to it when it is transferred from the previous holder to the new holder, and the previous holder knows this;
Any necessary repair is going to be done;
Its use is lawful; and
It is not managed in a way that indicates that it is waste, for example, it is not transported or stored in a way that could cause it to be damaged.
Ultimately, the assessment of whether a substance or object is waste should be made by taking into account all the relevant circumstances.
2. Guidance on How to Classify Some Items of WEEE, Waste Components and Wastes From Their Treatment in England, Focusing on Identifying Hazardous Chemicals and Persistent Organic Pollutants
This guidance is relevant to waste operators and exporters who must classify all the WEEE leaving their premises by way of a waste transfer note or a consignment note.
Certain types of WEEE are known to include hazardous chemicals or persistent organic pollutants, and guidance on classifying such waste has already been produced by the UK Environment Agency previously.
However, there are certain items of WEEE which require the producer or distributor to carry out a self-assessment, for which guidance is provided. These include:
Office equipment – non-household types such as photocopiers and printers;
Medical devices – Category 8;
Monitoring and control instruments – Category 9; and
Automatic dispensers – Category 10.
3. Guidance for Importing and Exporting WEEE
This third guidance, which is intended to ensure compliance with environmental regulations and proper waste management practices, requires companies that are exporting or importing WEEE into or from England, to notify all WEEE shipments for recovery in the European Union and Organisation for Economic Co-operation and Development (OECD) countries using new codes for hazardous and non-hazardous WEEE. Some of the existing waste shipment classification codes will cease to exist from the beginning of 2025. In addition, the guidance reiterates that hazardous WEEE and wastes must not be shipped to non-OECD countries. It is also noted that if any EEE is being exported with a purpose of reusing it, such EEE should not be classified as waste. For any WEEE to be exported out of the United Kingdom, the import requirements of a destination country should also be carefully considered.
4. Guidance on Reporting the Placing of EEE on the UK Market
This guidance details the duty to report how much EEE you place on the market either to your producer compliance scheme or on the WEEE online service if you are a small producer. Placing on the market refers to when EEE becomes available for supply or sale in the United Kingdom. This occurs by sale, loan, hire, lease or gifting of EEE by UK manufacturers, UK distributors, importers and customers. It is important to understand the regulatory obligations at each level of the supply chain and to what extent those can be transferred by way of contractual clauses. This does not encompass EEE products which are made or imported in the United Kingdom and then exported without being placed on the UK market.
If you have placed EEE on the UK market, you must keep accurate records to report the amount of EEE tonnage you placed on the market and exported. Evidence can be taken in the form of invoices, delivery notes and export documentation like bills of lading, customs documents and receipts. You must report your business-to-consumer (B2C) EEE quarterly, and your business-to-business (B2B) EEE annually.
PRACTICAL TIPS
The recent UK guidance on EEE and WEEE is helpful in clarifying certain aspects of its reuse, classification and associated export and import requirements. EEE brands or companies dealing with such equipment should familiarise themselves with these latest rules to ensure compliance, at the risk of prosecution and an unlimited fine from a magistrates’ court or Crown Court. As a first step, producers should consider:
If anticipating the reuse of EEE, make sure they satisfy all of the reuse conditions to avoid it becoming WEEE;
Reviewing their current processes for classifying and handling EEE and WEEE;
Specific classification lists and guidance applicable to the particular WEEE they have or handle;
Before exporting or importing WEEE or its components, verify the requirements for notification of transit and destination countries; and
Keep accurate records of the amount of EEE placed on the UK market and report quarterly for B2C or annually for B2B.
White House Policy Aims to Reshape Foreign Investment in the United States
What Happened
On February 21, 2025, President Trump issued a National Security Memorandum on America First Investment Policy (the Foreign Investment Memo) outlining the administration’s foreign direct investment policy, including initiatives for a regulatory “fast track” process, additional scrutiny for Chinese investors, and key changes to reviews by the Committee on Foreign Investment in the United States (CFIUS), including CFIUS’s use of national security agreements.
The Bottom Line
The Foreign Investment Memo represents an explicit shift in how the United States regulates foreign direct investment. Going forward, partners and allies are likely to see some regulatory burdens ease while investors from China and other countries identified as adverse will see significantly expanded restrictions. Federal agencies have been directed to establish new rules that will specifically target Chinese investment in the United States and new or expanded restrictions on US outbound investment in China in sensitive or emerging technologies. The memo also suggests that the government may reconsider Chinese companies’ access to US capital markets.
The Foreign Investment Memo calls for expanding CFIUS jurisdiction over real estate and greenfield projects. At the same time, the Foreign Investment Memo directs the US Environmental Protection Agency (EPA) and others to reduce barriers to foreign investment from countries that are not identified as foreign adversaries and specifically directs CFIUS to limit the use of national security agreements, which has grown in recent years. Companies and other investors from outside of the United States should carefully consider these changes, which will impact foreign direct investment in the United States going forward.
The Full Story
Upon taking office on January 20, 2025, President Trump issued a Memorandum on America First Trade Policy calling for, among other things, “a robust and reinvigorated trade policy that promotes investment and productivity, enhances our Nation’s industrial and technological advantages, [and] defends our economic and national security.” The issuance of the February 21, 2025, Foreign Investment Memo builds on the January 20 statement by aiming to both promote investment from US allies while at the same time preserving and expanding regulatory controls on investment in the United States from, and investment by US persons in, “foreign adversary” countries—defined in the Foreign Investment Memo as the People’s Republic of China, including the Hong Kong Special Administrative Region and the Macau Special Administrative Region; the Republic of Cuba; the Islamic Republic of Iran; the Democratic People’s Republic of Korea; the Russian Federation; and the regime of Venezuelan politician Nicolás Maduro.
Inbound Investment Promotion for Non-Adverse Countries
The Foreign Investment Memo aims to promote investment from countries that are US allies or other friendly countries in the ways described below, with a number of open questions as to how the policy will manifest for foreign investors.
The Foreign Investment Memo directs federal agencies to implement a “fast track” investment process consisting of expedited national security reviews in some cases and expedited environmental reviews for large investments.
Who is eligible for the “fast track” for national security reviews?
This “fast track” process will apply for “specified allies and partner sources” in US businesses involved with US advanced technology and other important areas. The Foreign Investment Memo does not detail which “specified allies and partner sources” will be eligible for this “fast track” process. The existing CFIUS rules exempt investors from Australia, Canada, New Zealand and the United Kingdom from certain mandatory filing requirements (but maintain CFIUS jurisdiction to review controlling investments from these investors on a non-mandatory basis). Whether these countries will be the starting point for a list of “specified allies and partner sources” or whether government policy will be something else entirely will ultimately be answered by federal agencies’ implementation of these principles.
What will the “fast track” mean for national security reviews?
The current CFIUS rules already provide a less onerous filing option for foreign investors known as a “declaration.” This process has been available for filers since 2020 under the CFIUS rules promulgated under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). In practice, declarations are used for less complex reviews with limited national security implications. At present, the decision of whether to make a filing with CFIUS as a short-form declaration or long-form notice depends on the foreign investor’s own assessment of whether obtaining CFIUS clearance is likely through the declaration process. The Foreign Investment Memo directs the US Secretary of the Treasury (Treasury), in consultation with the US Secretary of State, the US Secretary of Defense, the US Secretary of Commerce, the United States Trade Representative, and the heads of other executive departments and agencies as deemed appropriate by Treasury and in coordination with other members of CFIUS, to take actions to implement the “fast track,” including the promulgation of new rules and regulations. Accordingly, significant implementation of the “fast track” will likely be detailed in forthcoming rulemakings by the US Department of the Treasury. In the meantime, the Foreign Investment Memo is likely to inform CFIUS reviews within the existing regulatory framework. Additionally, the Foreign Investment Memo directs that the “fast track” will be conditioned on requirements that the specified foreign investors avoid partnering with foreign adversaries.
What about the “fast track” for environmental reviews?
The Foreign Investment Memo directs the Administrator of the US Environmental Protection Agency to carry out expedited environmental reviews for any investment over $1 billion in the United States. Although included in the Foreign Investment Memo, environmental reviews are not traditionally a part of foreign direct investment regulation in the United States and the inclusion of this element in the Foreign Investment Memo appears to be a part of the administration’s broader policy to reduce environmental regulatory and permitting requirements.
The Foreign Investment Memo calls for an end to certain CFIUS practices with respect to mitigation agreements.
CFIUS has the authority to negotiate, enter into or impose any agreement, condition or order with any party to mitigate national security risk arising from a covered transaction or covered real estate transaction. In recent years, CFIUS has increasingly relied on these “mitigation agreements” to address perceived national security risks with open-ended obligations for investors. As of 2023 year-end, CFIUS was engaged in the ongoing monitoring 246 mitigation agreements and had begun to assess civil monetary penalties on investors for alleged violations of mitigation agreement conditions. CFIUS practitioners have anecdotally observed that the increasing use of mitigation agreements may in some cases dissuade foreign investors from making non-mandatory filings with CFIUS. Our prior coverage tracking the increasing reliance on mitigation agreements through CFIUS’s annual reports to Congress is available here.
The Foreign Investment Memo acknowledges that the increasing use of mitigation agreements creates uncertainty and administrative burdens for investors and directs that mitigation agreements going forward should consist of concrete actions that companies can complete within a specific time, rather than perpetual compliance obligations.
Inbound Investment Restrictions for China
The Foreign Investment Memo reaffirms and expands on existing US foreign direct investment policy and regulation with respect to investors from “foreign adversaries.” Given that the “foreign adversary” countries identified in the Foreign Investment Memo (other than China) are generally subject to significant economic sanctions that in practice render investment in the United States illegal or impractical, the most significant changes under the Foreign Investment Memo concern China as described below.
Expanding CFIUS jurisdiction over real estate and greenfield investments.
The Foreign Investment Memo announces that the new administration will take steps to protect US farmland and real estate near sensitive facilities such as military, ports and shipping terminals, as well as expand CFIUS authority over “greenfield” investments in order to restrict foreign adversary access to US sensitive technologies, including artificial intelligence and “emerging and foundational” technologies. This announcement aligns with recent actions to expand the scope of real estate under CFIUS jurisdiction, including a rule making late last year that expanded the list of sensitive facilities triggering CFIUS jurisdiction, and efforts by the US Congress and several US states to limit Chinese investments in US agricultural real estate. Notably, the Foreign Investment Memo calls for Treasury to expand CFIUS authority regarding “greenfield” investments to restrict access to US sensitive technologies indicates that the current exception for “greenfield” investments may be limited by a future rulemaking to provide CFIUS with additional authority over investments in potential new businesses that involve US sensitive or emerging and foundational technologies.
Expanding restrictions on investments in US critical infrastructure.
The Foreign Investment Memo provides as a general policy that the United States should not allow China to “take over” US critical infrastructure and states that “for investment in US businesses involved in critical technologies, critical infrastructure, personal data, and other sensitive areas (referred to under the current CFIUS rules as ‘TID US businesses’), restrictions on foreign investors’ access to United States assets will ease in proportion to their verifiable distance and independence from the predatory investment and technology-acquisition practices of [China] and other foreign adversaries or threat actors.” The Foreign Investment Memo specifies that the administration will use CFIUS to restrict China-affiliated persons from investing in US technology, critical infrastructure, healthcare, agriculture, energy, raw materials or other strategic sectors.
In practice, the explicit targeting of China with respect to foreign direct investment does not represent a deviation from current CFIUS practice. CFIUS has historically aggressively scrutinized Chinese investment in US critical infrastructure and technology. Under current CFIUS rules, mandatory filings are required for certain investments in TID US businesses involved in “emerging and foundational” technologies as identified by the US Department of Commerce. In implementing the Foreign Investment Memo, it is likely that Treasury will promulgate rules to expand mandatory filing requirements and potentially promulgates the first CFIUS rules that call out foreign investors from specific countries, crystallizing existing practice into regulations for Chinese investors.
Expanding barriers for Chinese investors.
As noted above, CFIUS has increasingly relied on mitigation agreements in recent years to allow foreign investment to move forward while limiting national security concerns. In practice, investors from China came to expect mitigation agreements in many circumstances where CFIUS was willing to consider mitigation and accepted such conditions as a palatable alternative to having the transaction blocked. Although anecdotal reports indicate that CFIUS has been less willing to rely on mitigation agreements with Chinese investors in recent years, the Foreign Investment Memo’s policy of ending mitigation agreements with ongoing monitoring compliance obligations may remove this option altogether if risks cannot be mitigated by concrete actions within set times.
Outbound Investment Restrictions
The Foreign Investment Memo also addresses US outbound investment in China and Chinese owned entities. Announcing that the administration will use all necessary legal instruments to further deter US persons from investing in China’s military-industrial sector, the Foreign Investment Memo lays out four tools to discourage US investment in China:
Sanctions. Currently, US sanctions on China restrict equity investment in publicly traded companies identified by Treasury as comprising part of China’s military-industrial complex. The Foreign Investment Memo states that the administration will consider actions to deter US investment in China through the imposition of sanctions under the International Emergency Economic Powers Act (IEEPA) through the blocking of assets of identified individuals or entities or through expanding the existing sanctions on China. The Foreign Investment Memo does not itself impose sanctions or announce that sanctions will be imposed. Nonetheless, the administration is signaling that it will consider expanded economic sanctions as a viable means to deter US investment in China’s military-industrial sector.
Outbound Investment Rules. On January 2, 2025, new regulations promulgated by Treasury in accordance with Executive Order 14105 went into effect that regulate US outbound investment in China’s semiconductors and microelectronics, quantum information technologies and artificial intelligence sectors (the Outbound Investment Rules). Our prior coverage of the Outbound Investment Rules is available here. The Foreign Investment Memo states that the new administration is reviewing Executive Order 14105 (as directed in the January Memorandum on America First Trade Policy) and indicates that the purpose of this review will be to expand the Outbound Investment Rules to restrict investment in additional sectors such as biotechnology, hyper-sonics, aerospace, advanced manufacturing, directed energy and other areas implicated by China’s national “Military-Civil Fusion” strategy. The administration considers that the sectors covered by the Outbound Investment Rules should be regularly reviewed and updated and that additional investment types should be addressed by the rules. The Foreign Investment Memo specifically calls out private equity, venture capital, greenfield investments, corporate expansions and investments in publicly traded securities, from sources including pension funds, university endowments and other limited-partner investors. Accordingly, it is reasonable to anticipate that the Outbound Investment Rules will expand under this policy.
US Capital Markets. Notably, the current Outbound Investment Rules include exceptions for certain publicly traded securities. The Foreign Investment Memo appears to target this exception where it states that Chinese companies “raise capital by: selling to American investors securities that trade on American and foreign public exchanges; lobbying United States index providers and funds to include these securities in market offerings; and engaging in other acts to ensure access to United States capital and accompanying intangible benefits.” The Foreign Investment Memo further directs Treasury, in consultation with other federal agencies and law enforcement, to provide a written recommendation on the risk posed to US investors based on the auditability, corporate oversight, and evidence of criminal or civil fraudulent behavior for all foreign adversary companies currently listed on US exchanges.
Trade. The Foreign Investment Memo announces that the administration will review whether to suspend or terminate the 1984 United States-The People’s Republic of China Income Tax Convention, which the memorandum states is partly responsible, along with China’s admission to the World Trade Organization, for offshoring resulting in the deindustrialization of the United States and the technological modernization of China’s military. This appears to align the Foreign Investment Memo within the new administration’s broader trade policy toward China and signals further efforts by the administration to incentivize the de-linking of US firms from China.
Notably, although the Foreign Investment Memo mentions protecting US personal data, it does not mention the new restrictions related to cross-border data transfers (the Bulk Data Transfer Rules) scheduled to go into effect on April 8, 2025, which restrict or in some cases prohibit sharing certain US personal data with Chinese companies.
Considerations
The implementation of the steps outlined in the Foreign Investment Memo will have the greatest impact on Chinese investors and other foreign investors with ties to China seeking to invest in the United States. However, these steps will generally lead to expanded diligence and related compliance obligations on both foreign and US investors broadly.
Retail Competition and Fair Trading, Cost of Living Measures, Unfair Contract Terms, Mergers: ACCC Releases Its 2025-26 Compliance and Enforcement Priorities
In Brief
Australian Competition and Consumer Commission (ACCC) Chair Gina Cass-Gottlieb has just announced the ACCC’s Compliance and Enforcement priorities for 2025-2026.
Ms Cass-Gottlieb highlighted the ACCC’s particular focus on cost of living pressures on consumers by stating that the ACCC:
“would conduct dedicated investigations and enforcement activities to address competition and consumer concerns in the supermarket and retail sector”, including a new priority of addressing “misleading surcharging practices and other add-on costs”; and
focus on “fair trading issues in the digital economy”, including “promoting choice, compliant sales practices and removing unfair contract terms such as subscription traps in online sales.”
The ACCC has announced a number of new priorities, as well as confirming its 2024 priorities and its enduring priorities, including its focus on:
Consumer, fair trading and competition concerns in relation to environmental claims and sustainability, particularly greenwashing;
Unfair contract terms in consumer and small business contracts, with a focus on harmful cancellation terms, automatic renewals, early termination fee clauses and noncancellation clauses;
Improving industry compliance with consumer guarantees, with a particular focus on consumer electronics;
Any conduct that is harmful to consumers experiencing vulnerability or disadvantage;
Cartels and other anticompetitive arrangements, including misuse of market power that may affect any level of a supply chain;
Promoting competition in, and ensuring enforcement in the event of misleading pricing in relation to, essential services; and
Although not being strictly a compliance and enforcement priority, on the successful implementation of mandatory merger clearance that will be in place from 1 January 2026 (and voluntarily from 1 July 2025). In this regard:
Before the end of March 2025, the ACCC will commence consultation on draft process guidelines and analytical guidelines; and
The ACCC has reiterated its expectation that ~80% of notified mergers will be approved within 15-20 business days (following a period of informal pre-application engagement with the ACCC).
Overall, Ms Cass-Gottlieb noted that the ACCC’s
“…complementary mandates across competition, fair trading and consumer law compliance and enforcement support the community to participate with trust and confidence in commercial life and promote the proper functioning of Australian markets.”
We have produced a one-page summary that outlines these priorities and the key takeaways for businesses (click here).
See the full list of the ACCC’s 2025-2026 compliance and enforcement priorities here and Ms Cass-Gottlieb’s speech here.
Another New Section 232 Investigation on Imports of Timber, Lumber and Derivative Products
On March 1, 2025, President Trump signed an executive order directing the Secretary of Commerce (Secretary) to initiate an investigation under Section 232 of the Trade Expansion Act of 1962 (Section 232) to determine whether imports of timber, lumber and their derivative products threaten to impair U.S. national security. An affirmative determination in this investigation could lead to additional duties or other actions impacting imports of lumber products. This is his second such executive order this term; last week President Trump ordered Commerce to investigate copper imports under the same statutory tool.
The executive order sets forth the value of wood products as a key input for the civilian construction industry and the military as indicated by the U.S. military’s spending on construction and investments in innovative building material technology. In the order, the President further noted that the U.S. has been a net importer of lumber despite the fact that the U.S. softwood lumber industry has the practical capacity to supply 95% of 2024 U.S. consumption.
To determine the effects of lumber imports on national security, the Secretary will assess the factors set forth in 19 U.S.C. § 1862(d) such as domestic production needed for projected national defense requirements, the capacity of domestic industries to meet such requirements, and the availability of the resources essential to the national defense. In addition to those statutory factors, the executive order further directs the Secretary to evaluate the following six (6) factors:
The current and projected demand for timber and lumber in the United States;
The extent to which domestic production of timber and lumber can meet domestic demand;
The role of foreign supply chains, particularly of major exporters, in meeting United States timber and lumber demand;
The impact of foreign government subsidies and predatory trade practices on United States timber, lumber, and derivative product industry competitiveness;
The feasibility of increasing domestic timber and lumber capacity to reduce imports; and
The impact of current trade policies on domestic timber, lumber and derivative product production and whether additional measures, including tariffs or quotas, are necessary to protect national security.
This direction that Commerce investigate lumber imports under Section 232, coming on the heels of last week’s direction that Commerce investigate imports of copper, continues to underscore that Section 232 is a preferred import adjustment mechanism for the Trump Administration. These two investigations constitute the ninth and tenth such investigations initiated or ordered to be initiated under the Trump Administration; in context, the Biden Administration initiated only a single investigation under Section 232; no investigations were initiated between 2002 and 2016.
The U.S. Department of Commerce typically invites interested parties to submit written comments or information relevant to the products subject to Section 232 investigations.