President Trump Issues Sweeping Executive Orders Targeting Nuclear Regulation
The Trump administration has identified growth in the nuclear energy industry as a critical component of the President’s campaign to establish American energy dominance and meet the rapidly increasing need for power. The consistent backing of the White House, coupled with record-breaking investment in nuclear technology from the private sector, has vaulted enthusiasm for nuclear power in recent months. In response to calls for reform, President Trump recently issued four executive orders (EO) designed to bolster domestic nuclear energy development and supply chains and accelerate regulatory timelines for nuclear technology licensing.
Nuclear Energy Overview
Over the last 50 years, growth in US nuclear energy generation has been stagnant and slow. From 1954 to 1978, 133 nuclear reactors were authorized to operate at 81 facilities across the country. Since 2012, over a dozen reactors have been closed. Yet, efforts are now underway to restart some of these reactors. Plus, the Nuclear Regulatory Commission (NRC) has approved three new reactor designs, two of which have been advanced reactors using new technologies. Two nuclear reactors have also recently been constructed and placed into commercial operation, suggesting the long-awaited nuclear comeback may be at hand.
In recent years, support for nuclear energy has gained newfound momentum in the federal government and from private investment. Congressional efforts, including legislation like the Nuclear Energy Innovation and Modernization Act (NEIMA), the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act, and the Inflation Reduction Act (IRA), have sought to energize nuclear development through regulatory reform, support for advanced reactor technologies, and federal tax incentives. These nuclear bills passed Congress with overwhelmingly bipartisan support and strong support from the nuclear industry.
Until the election of President Trump, nuclear advocates in Washington, D.C., had largely organized support for commercial nuclear around the unique benefits of providing clean baseload power and carbon-free energy. Now, support for nuclear is increasingly being reframed around the Trump administration’s commitment to establishing American energy dominance and capturing the promise of commercial nuclear technological innovation. In addition, the onset of artificial intelligence (AI) technology and the enormous projected power demands required to operate data centers and quantum computing capacity across the country have made nuclear energy a critical component of US energy planning. The Trump administration has identified winning the global race for AI capabilities as perhaps the most important national security concern, and competition in AI will require an unprecedented expansion of energy generation. After a decade of flat energy consumption rates, demand for power is expected to skyrocket in the coming years, up 25% by 2030 and 78% by 2050.1
Executive Order Summaries
The President’s nuclear EOs are focused on transforming the government’s role in how nuclear power plants are regulated, permitted, financed, and built—all with an eye towards rapidly and dramatically reversing the trends of minimal nuclear growth—and even some plant shutdown—to an explosion of new production, new reactors, license extensions, and uprates of existing facilities. To that end, the orders promise to ”facilitate the expansion of American nuclear energy capacity from approximately 100 GW in 2024 to 400 GW by 2050.” This target would require a four-fold increase in nuclear capacity in the next 25 years and would reverse a four-decade trend of minimal nuclear capacity growth.2
The EOs focus on several challenges, including time- and cost-prohibitive licensing and permitting, insufficient federal financing support and nuclear fuel supply, nuclear waste management, and domestic nuclear workforce issues. They also address government utilization of nuclear power on military and federal installations. The EOs address both the projected role of nuclear technology in US energy generation as well as US nuclear arsenal capabilities.
Reinvigorating the Nuclear Industrial Base
The “Reinvigorating the Nuclear Industrial Base“ EO states that US nuclear capacity has declined compared to the rest of the world and targets key areas of the nuclear industry to “jumpstart,” including fuel availability and production, secure supply chains, licensing efficiency, and workforce support.
Strengthening the Domestic Nuclear Fuel Cycle
Directs the Secretary of Energy to prepare and submit within 240 days a report that audits previous nuclear procedures with respect to spent fuel and provides recommendations for transport, disposal, and reprocessing of spent nuclear fuel.
Directs the Secretary to develop a plan within 120 days to expand the domestic uranium conversion capacity and enrichment capabilities sufficient to meet projected civilian and defense reactor needs and to halt the surplus plutonium “dilute and dispose” program and establish a program to dispose of surplus plutonium by processing and making it available for industrial use.
Directs the Secretary within 90 days to update the Department of Energy’s (DOE) excess uranium management policy to modernize the US nuclear weapons stockpile.
Directs the Secretary within 30 days to seek voluntary agreements with domestic nuclear energy companies.
Funding for Restart, Completion, Uprate, or Construction of Nuclear Power
The Secretary, through the DOE Loan Programs Office, shall prioritize funding for activities that support nuclear energy.
The Secretary shall also coordinate with the Secretary of Defense to assess the feasibility of restarting or repurposing closed nuclear power plants for military microgrid support.
Expanding the Nuclear Energy Workforce
Directs the Secretary of Labor and the Secretary of Education within 120 days to seek to increase participation in nuclear energy-related apprenticeships and career and technical education programs and consider these areas as primary areas for investment when distributing educational grants.
Reforming Nuclear Reactor Testing at the Department of Energy
The “Reforming Nuclear Reactor Testing at the Department of Energy“ EO directs DOE to utilize existing national laboratories to test advanced reactor technology, concluding that the testing of advanced reactors over which DOE has “sufficient control” are for research purposes and thus fall within DOE’s research and development jurisdiction.
Reform National Laboratory Process for Reactor Testing
Directs the Secretary of Energy to establish procedures that significantly expedite review, approval, and deployment of advanced reactors to enable operational test reactors within two years after a completed application.
Nuclear Reactor Pilot Program
Directs the Secretary of Energy to create a pilot program to construct and operate at least three advanced reactors outside the National Labs, but under DOE contract. The goal is to achieve criticality for these advanced reactors by 4 July 2026.
Streamlined Environmental Review
Directs the Secretary of Energy in conjunction with the Council on Environmental Quality Chair to reform DOE’s National Environmental Policy Act (NEPA) regulations and use all available authority to expedite environmental reviews for advanced reactor applications.
Such measures shall include identifying DOE functions not subject to NEPA requirements and creating categorical exclusions for reactors, when appropriate.
The EO does not address NRC NEPA-related regulatory reform.
Ordering the Reform of the Nuclear Regulatory Commission
The “Ordering the Reform of the Nuclear Regulatory Commission“ EO responds to criticism that NRC has received from the public, nuclear developers, and Congress for long licensing timelines and expensive, seemingly inefficient reviews. The EO specifically calls for facilitating increased development of Gen III and Gen IV reactors, small modular reactors (SMR), and microreactors, and sets an energy capacity target for nuclear generation of 400 GW by 2050, an ambitious four-fold increase.
The EO seeks to address identified obstacles to the development of commercial nuclear power at NRC in three ways:
Reform NRC’s Culture
Directs NRC to implement the 2024 ADVANCE Act objective to promote nuclear power by reforming NRC’s culture and realigning its organization and personnel to achieve expeditious review of license applications.
Reform NRC’s Structure
Directs NRC, in coordination with the assigned Department of Government Efficiency (DOGE) Team, to reorganize NRC’s organizational structure to promote “expeditious processing of license applications and the adoption of innovative technology.” This reorganization shall include reductions in force, including a reduction of personnel at the Advisory Committee on Reactor Safeguards (ACRS) to the minimum level required by statute, but includes a provision that permits increases in personnel and size for functions related to new reactor licensing.
Modernize NRC Regulation
Directs NRC, in conjunction with DOGE and the Office of Management and Budget, to review all regulations and guidance documents within nine months and, within 18 months, issue final rules and guidance that comprehensively revise them to balance safety concerns with the benefits of nuclear energy to the economy and national security. The revisions will establish fixed deadlines for licensing, including an 18-month deadline for construction and operation of new reactors and a 12-month deadline for continued operation of existing reactors. These deadlines are to be enforced by a fixed cap on NRC recovery fees.
Directs NRC to adopt “science-based radiation limits.” This includes reconsidering the linear no-threshold model for radiation exposure and the “as low as reasonably achievable” standard.
Directs NRC to coordinate with DOGE, Department of Defense (DOD), DOE, Environmental Protection Agency, and others to develop and adopt “appropriate” radiation standards.
Directs NRC to establish expedited licensing pathways for reactor designs that have been safety tested by DOD or DOE.
Directs NRC to establish a process for licensing large numbers of microreactors and modular reactors, including the use of standardized applications.
Directs NRC to revise and reconsider current NRC policies and regulations pertaining to changes to reactor design, reactor oversight, license terms, reactor license renewal, and the public hearing process.
Deploying Advanced Reactor Technologies for National Security
The “Deploying Advanced Reactor Technologies for National Security“ EO identifies advanced nuclear reactor technology as critical infrastructure to US national security. Specifically, the EO states that advanced reactors offer a high-density power source for military installations and National Laboratories that cannot be “disrupted by external threats or grid failures.”
Deployment of Advanced Reactor Technology on Military Installations
Directs the Secretary of the Army to establish a program to build a nuclear reactor at a domestic military base and commence operation by 30 September 2028.
Seeks recommendations for legislative proposals or regulatory actions necessary to accomplish this goal within 240 days of the EO.
Deployment of Advanced Reactor Technology at DOE Facilities
Directs the Secretary of Energy to designate AI data centers operated on or in coordination with DOE facilities as critical defense facilities and further identify the electrical infrastructure—including nuclear infrastructure—necessary to power those defense facilities as critical electric infrastructure.
The Secretary shall designate at least one DOE AI data center for the use and deployment of advanced reactor technology within 90 days of the EO.
The Secretary shall utilize all available legal authorities to approve the construction and operation of privately funded advanced reactors to power AI infrastructure on DOE owned or controlled sites.
Nuclear Fuel Availability
Requires the Secretary of Energy to identify all uranium and plutonium in DOE inventories that can be processed into fuel for reactors and release at least 20 metric tons of high assay low-enriched uranium (HALEU) in an available fuel bank for approved private sector projects. The Secretary is directed to retain stockpiles necessary to support tritium production, naval propulsion, and nuclear weapons.
Directs the Secretaries of Defense and Energy to develop privately funded nuclear fuel recycling, reprocessing, and fabrication facilities on controlled sites.
Nuclear Exports
Directs the Secretary of State to actively pursue at least 20 new Agreements for Peaceful Cooperation under Sec. 123 of the Atomic Energy Act to enable the US nuclear industry to access new markets.
Directs all relevant agencies to expeditiously review and facilitate authorization to export nuclear technology to facilitate US technological leadership.
Directs the development of a strategy to leverage the International Development Finance Corporation and the Export-Import Bank to provide financial support for US nuclear energy technology.
Looking Ahead: Impacts of Changes in Nuclear Policy
The EOs represent a significant shift from decades of federal positioning towards nuclear energy and the development of nuclear technology. Notably, President Trump appears to be addressing the perceived obstacles to nuclear expansion by creating new opportunities for DOE and DOD to take the lead on developing and demonstrating SMRs and other advanced nuclear reactors within their operations and under their jurisdiction, elevating the role of those agencies and perhaps diminishing the role of NRC with regard to a new reactor’s testing, planning, and maybe even its licensing and regulation. The EOs prioritize the development and deployment of public “test” and “government service” nuclear reactors under the authority of DOE and DOD rather than strictly commercial or private sector reactors under the authority of NRC. For example, the EOs require NRC to conduct a “wholesale revision” of its rules and guidance, including establishing “an expedited pathway to approve reactor designs that the DOD or the DOE have tested and that have demonstrated the ability to function safely,” and NRC’s review of such designs “shall focus solely on risks that may arise from new applications permitted by NRC licensure, rather than revisiting risks that have already been addressed in the DOE or DOD processes.”3
An effort to streamline and standardize aspects of new reactor licensing is a challenge based on the breadth of technologies involved. There is such a diversity of proposed new designs in the SMR and microreactor category that the NRC may struggle to meet this directive, at least with respect to certain types of reactors and with anticipated reductions in workforce.
The EOs’ effort to address the issue of spent fuel is laudable; however, the political implications of executing on such a plan have proved extremely difficult with no real progress on storage and disposal solutions having been made since the suspension of the Yucca Mountain project.
As NRC, DOE, DOD, and the nuclear energy industry respond to the EOs, several questions and developments will be critical to continue monitoring:
Are DOE and DOD now the lead agencies for reactor technology demonstration?
What does the future of the NRC look like, and how will these orders affect NRC leadership, organizational structure, responsibilities, and funding?
How will the wholesale review of NRC regulations impact permitting, environmental review, application costs and timelines, and nuclear safety?
Can NRC meet the aggressive deadlines set in the EOs, especially given the anticipated workforce needs?
What will the regulatory and legislative responses to these orders be—and how will NRC and others meet their new requirements?
Can DOE meet the aggressive deadlines for strengthening the domestic nuclear fuel and related nuclear infrastructure needs?
How much capital support and investment will the financing opportunities included in the EOs provide?
How will the EOs affect the nuclear power industry, such as interaction between established nuclear companies, start-ups with new technologies, utilities, and large consumers (such as hyperscalers)?
How will the EOs affect nuclear development overseas and nuclear exports?
As these EOs are implemented and the nuclear industry reacts, the firm will continue to actively monitor these developments. Our legal, regulatory, and policy professionals have considerable experience across the spectrum of nuclear issues and are eager to help you navigate these evolving and fast-paced changes.
1 Lalit Batra, Deb Harris, George Katsigiannakis, Justin Mackovyak, Himali Parmar & Maria Scheller, Rising current: America’s growing electricity demand, ICF International, Inc. (Apr. 2025),
2 US Energy Information Administration, https://www.eia.gov/energyexplained/nuclear/us-nuclear-industry.php (last visited Jun. 4, 2024).
3 “Ordering the Reform of the Nuclear Regulatory Commission,” Executive Order Issued by President Donald J. Trump, May 23, 2025.
Katie E. Spring contributed to this article
Competition and Consumer Law Round-Up June 2025
What’s Inside This Issue?
This edition of the K&L Gates Competition & Consumer Law Round-Up provides a summary of recent and significant updates from the Australian Competition and Consumer Commission (ACCC), as well as other noteworthy developments in the competition and consumer law space.
Key Developments in Environmental / Greenwashing Guidance and Enforcement
EnergyAustralia Settles Greenwashing Action Brought by Advocacy Group
AU$8.25 Million Penalty Ordered Against Clorox for Misleading Greenwashing Claims
Enforcement
Oil and Gas Company Qteq Found to Have Engaged in Cartel Conduct
Federal Court Orders Captain Cook Vocational College to Pay AU$30.4 Million in Penalties for Unconscionable Conduct and Misleading Representations
ACCC Commences Proceedings Against Retailer City Beach for Noncompliant Button Battery Products
Mergers and Acquisitions
ACCC Raises Concerns With Rural Merchandiser Elders’ Proposed Acquisition of Delta
Qube’s Acquisition of MIRRAT Not Opposed by ACCC
Notifications and Authorisations
ACCC Proposes to Grant Authorisation to Australian Payment Network to Facilitate Wind Down of Cheque Industry
Noteworthy Developments
Mandatory Information Standard for Toppling Furniture Brought into Effect
Click here to view the Round-Up.
What Every Multinational Company Should Know About … The Likely Landing Spot for the Trump Tariffs
One of the most common questions we get from clients is, “What is the future of the Trump administration’s tariff strategy?” With President Trump having issued over 50 tariff proclamations — a six-month sprint of more major changes to the tariff system than occurred over the prior 90 years — it can be hard to keep in mind that there will eventually be a landing spot for the tariffs. That landing spot likely will be along the lines of some combination of baseline global and sectoral tariffs, alongside a varying country-by-country tariff regime in place of the former slate of low and similar tariffs for all WTO signatories. So as an aid to helping importers risk-plan for the uncertain international trade and tariff environment, here are 16 fearless attempts to step back from the day-to-day static of new tariff proclamations to try to predict the likely landing place for the tariffs.
Where Are We Going on the Tariffs?
Fearless Guess #1: Plan for Permanent Global Tariffs. The Trump administration seems to view the global 10% tariff as a long-term revenue measure and the “price of admission” for companies to sell into the U.S. market. Even the United Kingdom, which is one of the few countries that has a trade deficit with the United States, announced a negotiated framework settlement that preserves the 10% global tariff. The same was true for the 90-day pause for China, which eliminated the high reciprocal tariff rates but still left the global 10% tariff in place. Our best guess is that the U.S. government will become accustomed to collecting an additional $300 billion or more in tariffs and will maintain this as an ongoing revenue source, regardless of who occupies the White House in four years.
Fearless Guess #2: The Tariffs Continue Despite the Court of International Trade Ruling. The U.S. Court of International Trade on May 28, 2025, struck down all of the Trump tariffs issued under the International Emergency Economic Powers Act (IEEPA), including the global and reciprocal tariffs and the 20% fentanyl-based tariffs, ruling they exceed the president’s legal authority. But the Trump administration already has appealed this decision and has received a stay from the Court of Appeals for the Federal Circuit, meaning the tariffs are still being collected. Our expectation is these tariffs will stay in place until the U.S. Supreme Court rules on the issue, and that as a backup plan the Trump administration will launch investigations to support alternative bases for tariffs, under either Section 232 and Section 301.
Fearless Guess #3: Notwithstanding the foregoing, Canada and Mexico will be the exception as they reduce or even eliminate the 10% global tariff, as part of the 2026 review of the U.S.-Mexico-Canada Agreement, but only for USMCA-compliant goods that meet strengthened country-of-origin requirements.
Fearless Guess #4: There will be Partial Rollbacks for Reciprocal Tariffs that Still Leave Fairly High Tariffs in Place. Despite the 90-day pause representing a potential off-ramp to permanently higher tariffs, the reciprocal tariff pause should not be viewed as a dialing down of the trade war until we see concrete evidence of negotiated and lowered long-term tariffs. There are several reasons to believe that while negotiated tariffs will decline, they will bottom out at a fairly high level:
The reciprocal tariffs are based on trade deficits, not actual tariff barriers. This is why countries like Switzerland and Korea, which impose very low tariffs on imports, were still hit hard with big reciprocal tariff numbers. The administration appears to view any trade deficit as needing major correction, which implies the need to maintain much more than just 10% global tariffs.
The originally announced vision for the reciprocal tariffs, which was to go subheading-by-subheading and identify areas where the United States was charging less than foreign countries, has gone by the wayside. Instead, there is a general sense that the reciprocal tariffs are intended to counteract any and all potential forms of favoring foreign industries (subsidized electricity, manipulated currency, and maintaining a Value-Added Tax, which generally exempts exports from paying any VAT, which President Trump views as an export subsidy), as well as any tariff or non-tariff barriers that make it harder for U.S. firms to export abroad.
The Trump trade officials seem to view any pain that U.S. importers are seeing as being short term, believing that there will be a renaissance of made-in-USA manufacturing that will “fix” all tariff issues in fairly short order.
The Trump administration views tariffs as helping with a different administration priority, which is to provide revenue to partially offset the cost of extending the 2017 tax cuts.
Fearless Guess #5: Plan for Very High Tariffs for the Reasonably Foreseeable Future. Tariff rates are still very high, even after the reciprocal tariff pause. As a rough approximation, U.S. imports totaled $3.3 trillion last year. A 10% tariff, even taking into account the certain coming decline in imports, implies a $300 billion tax increase paid by U.S. importers. Adding in steel, aluminum, automotive tariffs, and likely Section 232 tariffs raises the total to well over $400 billion, and this is before accounting for wherever the reciprocal tariffs end up. Add it up, and CBP is on track to be collecting over $1.5 billion dollars per day in duties.
Fearless Guess #6: Retaliation Will Not Be a Major Factor. The EU and others have announced that they will not retaliate (other than retaliating against steel and aluminum tariffs, as previously announced) — for now — given the decision to pause the reciprocal tariffs. This puts the focus squarely on negotiating reciprocal tariff reductions, not escalation, for the 90-day pause. Our prediction is that most countries will choose to negotiate the best deal they can rather than risk the type of retaliation that the Trump administration imposed against China when China originally retaliated against the U.S. tariffs.
Fearless Guess #7: Product-Specific Exclusions Will Be Rare and Based on National Security Reasons, Not Economic Ones. It is tellingthat one of the very first tariff actions taken by the Trump administration was to wipe out all accumulated product-specific exclusions that had built up over the years from the 2018 steel and aluminum exclusions. In the current tariff proclamations, the impetus has been in the opposite direction, which is to give U.S. producers opportunities to expand the number of products covered, with no provision for any exclusions. We anticipate that few (if any) exclusions will be granted, and any that come on board will be for reasons of national security for critical items in short supply rather than for economic reasons. Importers should be looking to build flexibility, resilience, and agility into their supply chains and should be risk-planning how they would negotiate a new normal of permanently higher tariff rates, rather than hoping for the administration to reinstate the type of product exclusions seen in the first Trump administration for steel and aluminum products.
What Are the Key Concerns for Importers and Manufacturers?
Fearless Guess #8: The Tariff Proclamations Represent a Permanent Attack on a Dominant U.S. Manufacturing Model. Many U.S. manufacturers rely on global parts and components for domestic assembly. The business strategies of multinationals often depend on purchasing parts and components through carefully thought-out international supply chains and then adding value and further manufacturing in the United States. These carefully engineered supply chains took decades to build, and tariffs threaten to upend this entire business strategy, not just margins.
Fearless Guess #9: Recognize that Tariff Uncertainty Is a Huge Business Risk for the Reasonably Foreseeable Future. A common theme we see when engaging in tariff risk-planning exercises with clients is the difficulty of reacting to rapidly changing tariff announcements and the uncertainty of not knowing which countries will end up with high or low tariffs. This leads to delayed investments, frozen M&A activity, and general investment and planning paralysis. Companies are spending resources on cost-passing strategies and supply chain triage, not growth. This means the tariffs will have an impact far beyond the direct bottom-line impact for companies that depend on imports.
What Is the Outlook for the China Tariffs?
Fearless Guess #10: Recognize that the Trade War Has a Sharper China Focus. Though also broad-based, the trade war has a clear China focus, which is the only country with triple-digit tariff rates. Although some of these tariffs are now temporarily suspended to support a negotiated settlement, even the remaining tariffs still add up to more than the highest reciprocal rate imposed on any other country. With China and the United States comprising 40% of global GDP, the escalation in tariffs between these two economies introduces significant systemic global trade risks. Supply chains can’t shift overnight, and companies report that for many items, including basic parts such as capacitors or resistors, no alternative sourcing exists outside of China. Even if relocation were possible, it could take years and raise permanent costs. With China preparing its producers for a long trade war, there may be a long and uncertain path toward resolution. We also would not be surprised to see the administration push other countries to take coordinated actions against China or to look for ways to impose a tariff on all Chinese-origin content, even if the good is substantially transformed in another country, as a means of pushing back on Chinese efforts to use non-U.S. markets as a way to indirectly sell to the United States.
What Is the Outlook for the USMCA review?
Fearless Guess #11: USMCA Survives — but with Strengthened Originating Content Requirements and New Anti-China Provisions. At this point, it is clear that Canada and Mexico are receiving preferential trade treatment, as most tariffs aimed at Canada and Mexico are paused — but only for USMCA-compliant goods. Because so many U.S. companies have integrated supply chains across North America — particularly within the politically powerful automotive industry — it is likely that the administration will ultimately seek to preserve the USMCA. We do anticipate, however, that there will be substantial revisions, including strengthened country of origin rules, new measures restricting the use of Chinese parts and components, and potential new unified tariff barriers against China.
What Is the Outlook for the Automotive Tariffs?
Fearless Guess #12: Recognize that the Automotive Sector Still Faces Major Disruption. Automotive tariffs remain a flashpoint, with ripple effects across the U.S.-Canada-Mexico supply chain. These tariffs will continue to disrupt the largest U.S. manufacturing sector, especially with the administration launching a new Section 232 investigation into medium- and heavy-duty trucks. Because of the integrated U.S.-Canada-Mexico automotive supply chains, it is impossible to divorce the upcoming 2026 USMCA review from the automotive sector, as it is the main determinant of the trade deficit with Mexico. Chinese investment in Mexico, and the use of Chinese-origin parts and components in Mexico, have been major trends over the last six years as Chinese companies have reacted to the Section 301 tariffs imposed in the first Trump administration. So one likely area of compromise will be limitations on Chinese investment in North America and the use of Chinese-origin parts and components to qualify for USMCA-compliant status.
What Is the Outlook for Additional Section 232 Tariffs?
Fearless Guess #13: Plan on More Section 232 Tariffs. We do not believe the incessant drumbeat of new Section 232 investigations is at an end. Expect the administration to continue to announce more investigations, particularly in light of the Court of International Trade striking down the expansive use of IEEPA to support general tariff increases.
Fearless Guess #14: Recognize that Lobbying Will Be Intense — and You May Need to Get Involved. All or nearly all countries are negotiating. Industries will jockey to receive favorable treatment for their own concerns. Thus, with global tariffs on the table, expect a surge of special-interest activity, as industries and companies race to secure carveouts, exemptions, or favorable tariff treatment. Negotiations will open a free-for-all of companies and industries pushing to get favored status. The same will be true as various Section 232 investigations play out.
What Coping Mechanisms Should Importers Be Taking?
Fearless Guess #15: Recognize that the Risks of Being an Importer Have Sharply Risen — and that Customs Compliance and Accuracy in Import Operations Is More Important than Ever. In a high-tariff environment, it is essential to have complete accuracy for all imports, as errors can quickly result in large underpayments, associated interest, and penalties. Further, the Trump tariff proclamations have directed Customs to focus on ensuring full collection and compliance with the new tariff requirements, often directing Customs to impose penalties at the maximum level allowed without considering any mitigating factors. As a result, it is essential that importers carefully review the accuracy of all import-related information, especially for the critical areas of country of origin, valuation of the product, and USMCA compliance. This is especially important when importing goods made in third countries using Chinese parts and components, as these goods could be considered to still be Chinese in origin and thus subject to the high Chinese tariffs unless they were substantially transformed in the third country. Because Customs is carefully scrutinizing all imports for potential underpayments of the new tariffs, importers should be doing the same.
Fearless Guess #16: The Importance of Filing Voluntary Self-Disclosures Has Never Been Greater. Importers are required to file all import-related information electronically in the Customs entry portal known as the Automated Commercial Environment (ACE). Customs uses sophisticated data mining to find anomalies and potential tariff underpayments. With Customs being directed to emphasize enforcing the new tariffs, and to apply the maximum penalties without considering mitigating factors, Customs will be using ACE data frequently to target tariff underpayments and to initiate investigations to seek the recovery of underpaid tariffs. The only way to avoid these high penalties is for importers to file voluntary self-disclosures, which lock in the ability to close out administrative disclosures with the payment of back duties and interest but with no penalty. We accordingly expect disclosures will sharply increase as importers take steps to avoid potential penalties.
What Every Multinational Company Should Know About … The Recent Court Decisions Striking Down the IEEPA Tariffs
This year, U.S. trade policy has undergone a dramatic shift, driven by a series of presidential proclamations that have raised tariff rates sharply. Some tariffs (such as the global and reciprocal tariffs, and the special tariffs relating to fentanyl and unauthorized immigration) have been issued under the International Emergency Economic Powers Act (IEEPA), and others have been issued using Section 232 (the sectoral tariffs on steel, aluminum, and passenger vehicles and light-duty trucks). Recently, the validity of the entire tariff structure has been thrown into doubt, when first the Court of International Trade and then a D.C. district court issued determinations finding that IEEPA could not be a basis either for longstanding broad-based tariffs or the imposition of tariffs as a means of creating negotiating leverage.
In light of this decision, we have received numerous requests for further information regarding the impact of these decisions. As an aid to the importing community, this article provides an overview of: (1) the current status of existing and proposed tariffs, in light of these two decisions; (2) the impact of these two determinations; and (3) coping mechanisms for importers to manage and mitigate exposure in the current environment.
The Current Tariff Landscape
To appreciate the impact of the recent court decisions, it is helpful to provide some context regarding the current structure of U.S. tariffs. The table below outlines the six main “buckets” of tariffs currently shaping the trade environment:
Bucket
Description
Current Status
1
Normal (Chapters 1–97): Standard duties (generally 0%–7%) under the HTS.
Permanent (0%–7%).
2
Global 10% Tariffs: Broad, across-the-board duties on all non-exempt goods. Issued under IEEPA.
Still in place; likely permanent.
3
Reciprocal 50% Tariffs: Suspended pending negotiations; could ultimately decline, but terms uncertain. Issued under IEEPA.
Paused for country-by-country negotiations.
4
China (up to 170%): Includes 25% Section 301 duties (7 years in place) plus additional levies on critical sectors. All tariffs other than the original Section 301 duties under IEEPA.
Permanent for Section 301; IEEPA tariffs still in place; global and reciprocal tariffs suspended for 90 days.
5
Sectoral 232 Tariffs (25%): Steel & aluminum (permanent); autos (suspended for USMCA-origin goods); future sectors under review. None are issued under IEEPA.
Potential expansion of steel and aluminum derivates; ongoing investigations for copper, lumber, semiconductors, civilian aircraft, pharmaceutical, and certain minerals.
6
Canada & Mexico Goods: Subject to global and reciprocal tariffs of 10% and 25%, as well as 25% tariffs relating to fentanyl and unauthorized immigration (all issued under IEEPA). All tariffs suspended for goods meeting updated Rules of Origin (75% North American content, 40% labor rule).
Remains suspended; subject to USMCA review.
Litigation Challenging the Use of IEEPA As Authority to Impose Tariffs
On May 28, 2025, the U.S. Court of International Trade (CIT) and the D.C. Circuit issued parallel rulings holding that IEEPA does not confer “unbounded” authority to impose tariffs; nor does it authorize the use of tariffs to create leverage in broader trade negotiations. As a result, several IEEPA-based measures were enjoined. A U.S. District Court judge issued a similar ruling the next day. The CIT directed that the tariffs be eliminated within ten days, prompting the Trump administration to file an immediate appeal and an emergency motion seeking a stay of the CIT directive, which the Court of Appeals for the Federal Circuit (CAFC) granted. The CAFC also established an aggressive briefing schedule, with the last brief due June 9, 2025. The Trump administration has indicated that it will take the issue to the Supreme Court if necessary (and we expect the same is true of the parties challenging the tariffs).
Tariffs Impacted by the CIT Decision
The CIT’s decision invalidated key tariffs imposed under IEEPA. Specifically, the ruling struck down:
The fentanyl-related tariffs targeting Canada and Mexico (25%) as well as China (20%).
The 10% global tariffs applied across a wide range of non-exempt imports.
The reciprocal tariffs of up to 50%, which have been suspended for China but remain in place for other trading partners.
Soon after the CIT’s decision, on May 29, 2025, the U.S. Court of Appeals for the Federal Circuit granted a temporary stay of the CIT ruling, leaving the IEEPA-based tariffs in place until the Federal Circuit hears arguments and rules on the merits.
Notably, not all Trump tariffs were affected. Section 301 tariffs on China and Section 232 tariffs on autos/auto parts and on steel and aluminum remain intact, as they are grounded in separate statutory authorities.
The Likely Future of Tariffs
Rather than await final judicial outcomes, the administration has pursued or indicated that it will pursue multiple “Plan B” approaches including aggressively seeking stays of CIT rulings and expediting appeals through the Federal Circuit. These include the following:
The CIT decision has been appealed to the Court of Appeals for the Federal Circuit, which, as noted above, issued May 29 a temporary stay of that decision pending further proceedings. As a result, the IEEPA-based tariffs remain in effect for now. This includes the reciprocal tariffs, which are currently set at 10% but could rise to as much as 50% by July 9, along with the fentanyl-related tariffs, which range from 10% to 25%, depending on the product and its country of origin. We expect that the administration will continue appealing the decision, potentially all the way up to the Supreme Court.
The CIT noted that there is a provision within the IEEPA that is intended to deal with trade imbalances, which authorizes short-term (150-day) special tariffs. The administration could trigger this authority to buy it time to take action under other trade statutes, which generally require the administration proceed through a series of steps (notice and comment, etc.) before imposing tariffs.
The administration can launch new 270‐day investigations under Section 301, which is a statutory authority that the first Trump administration used to impose the Section 301 China tariffs. This use of the statute was upheld by the CIT (and currently is on appeal at the CAFC).
The administration could expand its use of Section 232 tariffs beyond steel, aluminum, and automobiles to include additional products. The administration already has launched Section 232 investigations relating to critical minerals, semiconductors, pharmaceuticals, civilian aircraft, and pharmaceuticals. The use of Section 232 to impose steel and aluminum tariffs already was upheld by the CIT and the CAFC in the first Trump administration.
The administration can continue engaging trading partners directly to secure country-specific agreements. With the tariffs still in place, and the outcome of the IEEPA litigation uncertain, trading partners have considerable incentive to strike deals with the Trump trade team, especially since there are alternatives ways to support the tariffs.
The administration could push for Congress to endorse higher tariffs. We view this option as unlikely, given opposition in Congress to the increased tariffs.
Key Takeaways: Coping Strategies in the Current Environment
Even as some levies are struck down, others — backed by statute and negotiation progress — remain firmly in place or are likely to be renewed. At this point, we envision that all tariffs, regardless of the governing authority, will remain in place for the foreseeable future (i.e., at least 90 days). For more information on where we predict the likely landing spot on the Trump tariffs will be, see our article, “What Every Multinational Company Should Know About … The Likely Landing Spot for the Trump Tariffs.”
Moreover, to thrive in this uncertain environment, companies must embed robust customs-compliance practices, actively audit supply chains, and maintain rapid-response capabilities for CBP and USTR proceedings. As tariff regimes continue to evolve through litigation, negotiation, and statute, organizations that invest in proactive import governance will be best positioned to mitigate costs, avoid enforcement penalties, and preserve their competitive edge in global markets. For detailed advice on coping strategies, please see the latest update of “evergreen” our article, “What Every Multinational Company Should Know About … The Current Trump Tariff Proposals (June 2025 Update)”, and our white paper on Managing Tariff Risks During a Trade War.
What Every Multinational Company Should Know About … The Current Trump Tariff Proposals (June 2025 Update)
Less than five months into the new administration, we have already seen more than 50 tariff proclamations. With new tariffs being proposed, imposed, revoked, suspended, and sometimes reimposed, it can be difficult for importers to keep up with all the proclamations. So, as an aid to the importing community, we have put together an “evergreen” tariff article, which contains three key items for importers:
A summary of the key tariffs and tariff proposals, including their current status[1] and the key issues for each.
A list of resources for importers looking for aids to cope with tariff and international trade uncertainty; and
A list of the most common questions we are receiving from clients regarding the new tariffs and their implementation.
We also note that on May 28, 2025, the U.S. Court of International Trade struck down many of the new Trump tariffs (i.e., those based on the International Emergency Economic Powers Act (IEEPA)), ruling that they exceed the president’s legal authority. Commerce Secretary Lutnick recently emphasized that “tariffs are not going away,” citing multiple statutory authorities available to maintain them. The Trump administration has already appealed the CIT’s decision to the U.S. Court of Appeals for the Federal Circuit and has obtained a stay. Our expectation is that these tariffs will stay in place until the U.S. Supreme Court rules on it, which will take time to occur. We also anticipate that the Trump administration will likely launch investigations to support alternative bases for the IEEPA tariffs, including under Section 232 and Section 301. We will be regularly updating these resources to reflect new tariff proposals and modifications, which are in some cases being updated or changed daily.
Where Are We on the Various Tariff Announcements?
The state of play for each tariff is as follows:
Bucket 1: Chapter 1-97 Pre-Existing Tariffs
What Are They? The first set of tariffs are the “normal” tariffs that have existed for decades.
Are they Permanent? Yes.
How Much Are They? Generally, in the range of 0%–7%.
Do They Stack? These tariffs are the starting point for stacking, as all tariffs are added to these initial normal tariffs.
Bucket 2: Global 10% Tariffs
What Are They? The “price of entry” for selling to the United States.
Are They Permanent? Unlikely to be negotiated away, with the possible exception of Canada and Mexico as part of USMCA review.
How Much Are They? 10%.
Do They Stack? Yes, the global tariffs stack on top of the Chapter 1-97 tariffs.
Bucket 3: Reciprocal Tariffs
What Are They? Tariffs against the entire world, based on the level of trade surpluses with the United States.
Are They Permanent? Currently suspended for country-by-country negotiations. They are likely to return but at lower, negotiated levels.
How Much Are They? Up to 50%.
Do They Stack? The reciprocal tariffs stack on top of the Chapter 1-97 tariffs. The announced reciprocal tariff rates include the 10% global tariff. The reciprocal tariffs, however, carve out any goods that are subject to any Section 232 sectoral tariffs, making the reciprocal and sectoral tariffs an either-or set of tariffs.
Bucket 4: China Tariffs
What Are They? The fourth set of tariffs comprises those imposed specifically against China, which include both the global and reciprocal tariffs and additional, China-only tariffs. Thus, calculating the total tariffs on China requires adding up the following tariffs:
Section 301 Tariffs: The first China-specific tariffs were imposed on Chinese-origin goods in the first Trump administration. About half of trade with China is exempt from these tariffs (the so-called “List 4B”); the other half of imports from China pay a tariff of between 7.5% and 25%. These tariffs stack on top of the Chapter 1-97 tariffs. These tariffs are carryovers from the first Trump administration and continued through the Biden administration, and thus are likely permanent unless negotiated away as part of the current negotiations with the Chinese government (unlikely).
IEEPA 20% China Tariffs: The second China-specific tariffs are the 20% tariffs relating to what the Trump administration characterizes as the Chinese government’s failure to halt the shipment of fentanyl precursors used to support the export of fentanyl into the United States. These tariffs are not currently paused and stack on top of the Chapter 1-97 and the Section 301 tariffs. There is some chance that these tariffs will be diminished or removed based on the progress in negotiations and perceptions of the administration regarding whether China has taken sufficient steps to address concerns relating to the export of fentanyl precursors. The fentanyl tariffs stack on top of the Chapter 1-97, Section 301, and global tariffs. These tariffs are not paused and are likely to be permanent.
Reciprocal Tariffs: The fourth set of China tariffs are the reciprocal tariffs. After China retaliated against the U.S. tariffs, the Trump administration raised the China IEEPA reciprocal tariff to 125% (which includes the 10% global tariff). The reciprocal tariffs stack on top of the Chapter 1-97, global, and Section 301 tariffs. The China reciprocal tariffs are currently paused and are subject to negotiations with China. It is likely that these tariffs will return at the end of the 90-day pause period, albeit at a lower negotiated rate.
Total China Tariffs/How They Stack: Thus, all China-origin goods have a tariff rate of 145%. These goods are still subject to the original Section 301 tariffs, which means the stacked tariffs on Chinese-origin goods range from 145% to 170%, plus the normal Chapter 1-97 tariff rates for the specific product. With the paused reciprocal tariffs, the current baseline is the Chapter 1-97 tariffs, plus the global 10% tariff and the 20% fentanyl-based tariff, with the addition of any applicable Section 301 tariff.
Bucket 5: Section 232 Sectoral Tariffs
The fifth set of tariffs are the sectoral tariffs imposed under Section 232 on specific products.
What Are They: These sectoral tariffs currently include steel and aluminum tariffs (50% as of June 4) and the automotive(25%) sectoral tariffs, with the latter currently suspended for USMCA-compliant goods. Because the sectoral tariffs are either-or with the reciprocal and global tariffs, where these tariffs apply, they replace those tariffs.
Future New Sectoral Tariffs: The administration has announced or clearly telegraphed new Section 232 investigations covering medium- and heavy-duty trucks and parts; copper and derivative products; critical minerals; lumber and timber; aircrafts, jet engines, and parts; pharmaceutical; and semiconductor goods.
Expansion of Sectoral Tariffs: For Section 232 tariffs currently in place, the administration has announced there will be opportunities for U.S. producers to request additional derivative tariffs.
How They Stack: Where the Section 232 tariffs apply, the global and reciprocal tariffs do not. Thus, they stack on top of the normal Chapter 1-97 tariffs. For China, they stack also on top of the 20% fentanyl-based tariffs and the Section 301 tariffs.
Bucket 6: IEEPA 25% Canada and Mexico Tariffs
The last set of tariffs are the 25% tariffs imposed on Canada and Mexico, relating to what President Trump characterizes as those countries’ insufficient efforts to halt the flow of fentanyl and unauthorized immigrants into the United States. These tariffs are suspended for any goods that are USMCA-compliant.
Frequently Asked Questions
After presenting at numerous seminars and webinars, and in discussions with clients, we have noticed certain recurring questions. To aid the importing community, we have compiled a list of these, which include the following:
General FAQs
Do the tariffs stack? Yes, all tariffs stack, with the exception of the Section 232 sectoral tariffs and the global/reciprocal tariffs, which are either-or. The full stacking details are above. In addition, if the product is covered by an antidumping or countervailing duty order, then those duties also stack.
Is the stacking compounded? No. The tariffs add up without compounding. If both a 20% and a 25% tariff apply, the result is a 45% increased tariff.
Are you seeing clients pursue a China +1 strategy to cope with the new tariffs? Yes. Many clients have been pursuing a strategy of adding additional capacity outside of China since the imposition of the original Section 301 duties. These efforts appear to be accelerating, as there is a growing realization that high tariffs for China are the new normal. In this regard, it is important to note the original Section 301 tariffs remained in place even under the Biden administration. Further, China is likely to see the greatest amount of increased tariffs under the reciprocal tariff proposal because it hits so many categories — it heavily subsidizes its industries, it has been tagged as a currency manipulator by the Department of Treasury for years, and there are numerous countervailing duty findings by the Department of Commerce that provide a clear roadmap to identify subsidy programs.
One caution is that when companies move production out of China, they often continue to use Chinese-origin parts and components. Companies pursuing this strategy need to do a careful analysis to ensure they are “substantially transforming” the product by doing enough work and adding enough value in the third country to create a new and different article of commerce with a new name, character, or use, thus giving it a new, non-Chinese country of origin.
Will there be exceptions for goods like medical devices in the proposed tariffs? Medical devices that fall under Chapter 98 continue to maintain duty-free status under the Nairobi Protocols. Whether further exceptions will be granted is unclear, as the tariffs have veered toward being universal due to concerns that exceptions (like those granted for steel and aluminum under the original sectoral tariffs) tend to undermine the efficacy of the new tariff measures. As a result, one purpose of the aluminum and steel tariff announcement was to wipe out the list of accumulated product-specific exceptions that had grown over the years. These factors work against an announcement of tariff-specific exceptions.
Will there be exemptions for goods being imported for use in the U.S. defense industry? How about shipments to the Department of Defense? At this time, there is no such exemption nor any indication that such an exemption is in the works.
Are there any discussions relating to potential tariff relief for other sectors? So far, the only somewhat industry-specific reprieve has been the lifting of tariffs on USMCA-compliant goods, first for the auto manufacturing sector and then in general. If discussions regarding tariff relief for other sectors are occurring, they have not been announced.
Will the executive orders on tariffs be challenged in litigation? Challenges on behalf of private companies and by states such as California already are filed. But in general, the Court of International Trade and the Court of Appeals for the Federal Circuit tend to defer to the executive branch in matters of international trade policy. Also, the imposition of special tariffs in the first Trump administration were generally upheld by the trade courts. It is almost certain that the core issue of whether the president can broadly expand the definition of a ”national emergency” to support universal tariffs without action of Congress will be decided by the U.S. Supreme Court.
Have you heard of any plans to change Foreign Trade Zones (FTZ) laws? In general, no. Specific tariff announcements, however, have contained provisions relating to the FTZs, including that any goods that go into FTZs need to enter in “privileged foreign status.” This means the duty rate is fixed at the time the goods enter the zone, meaning even if the goods are further manufactured within the FTZ, the duty will be based on the original classification when they entered the FTZ.
Reciprocal Tariff FAQs
What are reciprocal tariffs? As originally announced, “reciprocal tariffs” were intended to equalize tariff rates, such as when a foreign country imposes a higher tariff on the United States than the United States does for the same product category. As actually announced, however, the reciprocal tariffs are almost completely based upon the relative trade deficit with individual countries.
Nonetheless, the original concept of the reciprocal tariffs is being applied in tariff negotiations and could work out in several ways. First, because the United States generally has low tariffs, this could mean that there are many opportunities either for U.S. HTS subheadings to increase or for comparable foreign HS subheadings to be reduced, with the impact varying by country. Second, because the announcement of the coming reciprocal tariffs states that it will take into account any form of discrimination against U.S. companies or programs that favor foreign companies, final reciprocal tariffs could remain quite high even if negotiated down. For example, most countries have Value Added Taxes that rebate any VAT payments when goods are exported. The Trump administration has indicated that this would be considered a form of subsidy that should be counteracted with reciprocal tariffs. Similar reasoning applies to subsidized electricity, currency manipulation, and so forth. Adding these concepts on top of equalizing tariffs across HTS categories could lead to major increases in tariffs — or major reductions in foreign tariffs or trade barriers. The final result awaits the announcement of the results of tariff renegotiations.
When will the negotiated rates be announced? The 90-day reciprocal tariff pause was announced on April 9, 2025 putting the 90-day mark at July 9, 2025. The Trump administration has indicated that it will start with major trading partners with large trade deficits, making it likely that many smaller trading partners will be given an additional 90-day extension to allow negotiation down the line.
Do the tariffs apply based on where the product comes from or the country of export? Tariffs are determined by the country where the product was originally made or where it was last substantially transformed, not the country of export. So, if an item is manufactured in China but sent to Vietnam, the importer still pays the Chinese tariffs. The same is true if it undergoes only a moderate amount of processing and is not substantially transformed in the third country. Importers relying on a China +1 strategy need to be certain they are correctly analyzing the substantial transformation requirements to properly claim tariffs based on the country of final manufacture.
If my product includes U.S.-made components, do I get a tariff discount? Potentially yes. If at least 20% of the product’s value comes from U.S.-origin parts and components (either fully produced or substantially transformed domestically), then only the portion of the product that is not U.S.-origin is subject to the reciprocal tariffs.
Are there any items excluded from these tariffs? Several categories of goods are excluded:
Any goods subject to Section 232 tariffs — even if the goods are currently only under investigation — are excluded, because the carveout includes future Section 232 sectoral tariffs. This includes specific goods like certain types of copper, lumber, pharmaceuticals, and semiconductors, and products detailed in Annex II to the reciprocal tariffs.
Items covered under 50 U.S.C. § 1702(b), such as personal communications, donations, and personal baggage, are excluded.
Products from countries with which the U.S. lacks normal trade relations (Belarus, Cuba, North Korea, and Russia), which are already covered under high Column 2 rates, are excluded.
Energy products and critical minerals that are not sourced domestically are excluded.
Can importers claim duty drawback for the reciprocal tariffs? Yes. Duty drawback allows importers to reclaim up to 99% of duties paid if items do not remain in the U.S. Customs territory because they either were later exported or destroyed. Unlike certain other tariff proclamations, such as the Section 232 aluminum and steel tariffs, the reciprocal tariff proclamation does not specify whether the reciprocal tariffs qualify for duty drawback. However, CBP on April 8, 2025, instructed that drawback is available for reciprocal tariffs.
Are Chapter 98 imports affected by the new tariffs? In most cases, no — favorable Chapter 98 treatment still remains. But there is an exception for Chapter 98 as applied to goods exported for repair/processing and brought back. Here, the tariffs apply only to the foreign work’s value. At the same time, if the work performed abroad includes U.S.-origin parts and components, the tariffs apply only to the non-U.S. portion of the final value.
What about Foreign Trade Zones (FTZs)? Goods with U.S. origin or already-imported goods given “domestic status” under 19 C.F.R. § 146.43 remain unaffected. But beginning on April 9, 2025, any imported goods entering an FTZ are treated as having “privileged foreign status” under section 146.41, which means that the tariff rate that applied at the time of entry is locked in, even if the good is further manufactured or altered after it enters the FTZ.
Steel and Aluminum Tariff FAQs
How have the Section 232 aluminum and steel tariffs changed from the original 2018 version?
The aluminum tariffs increased from 10% to 25%.
All negotiated tariff-rate quotas for the EU, Japan, and the United Kingdom, as well as the quotas negotiated with Argentina, Brazil, and South Korea, are no longer applicable. The previous exemptions for Australia, Canada, Mexico, and Ukraine no longer apply.
All product-specific exemptions that had been granted under the original aluminum and steel program are revoked.
The “derivative articles list” is considerably expanded.
On June 4, the Section 232 tariffs on steel and aluminum increased to 50%.
Are Chapter 72 articles still subject to Section 232 tariffs? Yes. Certain headings in Chapter 72 that were previously subject to the original Section 232 tariffs are still covered. All exclusions that previously applied to certain Chapter 72 products are now revoked.
Are iron products covered? Based on the description of the covered products in the Executive Orders, carbon alloy steel products — not iron — are covered by the exclusions.
How should we treat imports that fall under the “derivative articles” HTS codes but do not actually contain any aluminum or steel? In some cases, certain HTS classifications on the derivative aluminum and steel HTS classifications cover types of products that may not contain any aluminum or steel. For example, certain types of metal furniture are covered, but if these are made out of a metal other than steel, then they would not be covered even though they fall within an HTS that is listed in Annex 1 of the steel proclamation. In these cases, the foreign producer should include a statement on the commercial invoice, providing that the product does not contain aluminum or steel, to support why the tariffs are not due on the entry.
After the elimination of the product-specific exemptions, are there any remaining exemptions? The only exemption remaining is for derivative articles that are manufactured from steel melted/poured in the United States or aluminum smelted/cast in the United States. For such products, the importer should request a statement on the commercial invoice stating that the product contains aluminum smelted/cast in the United States or steel that was melted/poured in the United States. In case of a Customs inquiry, it would be appropriate to include copies of steel mill certificates or aluminum certificates of analysis in the 7501 Entry Summary packet.
For derivative articles, is the Section 232 tariff paid on the full value of the article? The Executive Orders state that the Section 232 tariff is paid on the “value” of the aluminum or steel “content” of the “derivative article.” There are, however, no instructions as to how this value should be calculated. In accordance with normal Customs requirements, the value should be calculated using a reasonable method that is supportable. This could potentially be based on a calculation from the foreign supplier. Frequent importers of derivative products should monitor CSMS announcements to see if CBP issues instructions on this issue.
Is duty drawback available for the aluminum and steel tariffs? No, the executive orders state that duty drawback cannot be used.
Does Chapter 98 provide relief from the Section 232 aluminum and steel tariffs? The executive orders do not list any Chapter 98 exceptions for the new tariffs. This is consistent with the original Section 232 tariffs, which also did not contain any Chapter 98 exceptions.
Will there be an exclusion process? None has been announced or established. It is unlikely that the Trump administration would wipe out all product-specific exemptions, only to build them back up again.
Could the list of “derivative articles” expand? The executive orders directed the Department of Commerce to establish a process by May 11, 2025, to consider requests to add additional “derivative articles.” The established process opens up two-week comment windows several times a year to allow for such comments. We anticipate that U.S. aluminum and steel manufacturers will aggressively use this process to push for additional excluded derivative products.
Do Chinese-origin steel and aluminum products still face the previous tariffs? Yes. Products subject to Section 232 tariffs — like steel and aluminum — will continue to be charged the original 20% IEEPA tariff. However, they’re exempt from the new Reciprocal Tariffs. So for Chinese steel and aluminum, the total tariff remains 20%, plus the additional Section 232 duties as well.
Automotive & Medium- and Heavy-Duty Truck Tariffs
Why were these tariffs imposed so quickly? The automotive tariffs (which cover passenger vehicles, light-duty trucks like SUVs and pickup trucks, and automotive parts) references a 2019 Commerce Department investigation that concluded foreign auto imports, including their parts and components, pose such a threat to U.S. national security. The Trump administration was able to leverage this determination to issue tariffs without further investigation, picking up on the previous findings detailed in Proclamation 9888 (issued May 17, 2019). Other Section 232 investigations are starting from a clean slate and thus require the completion of new investigations.
Can companies get a refund of duties if they re-export the imported goods? No. These tariffs are not eligible for duty drawback.
Is using an FTZ a viable strategy for these tariffs? Yes. Once the tariffs are in force, all applicable vehicles and parts entering an FTZ must be placed under privileged foreign status, pursuant to 19 C.F.R. § 146.41, unless the items qualify for domestic status under section 146.43.
Do these new tariffs stack on top of others already in place? Yes, except for the reciprocal tariffs. The Section 232 auto tariffs stack on existing duties, including those under Section 301, Section 201 (safeguards), and any Chapter 1-97 tariffs. The global and reciprocal tariffs, however, are either-or tariffs that are carved out by the reciprocal tariff announcement.
Will parts and components be added or subtracted? Yes, to the former; unlikely for the latter. The proclamation instructs the Department of Commerce to establish a process, within 90 days, whereby U.S. producers or industry groups can request additions to the original list of covered HTS subheadings. At this time, there has been no announcement of a means for importers to seek product exclusions.
When will the medium- and heavy-duty sectoral tariffs be announced? This Section 232 investigation commenced on April 23, 2025. Section 232 investigations take 270 days under the statute, which would put the announcement day on January 18, 2026. There are indications, however, that the Section 232 announcements may be made earlier than the full 270-day period.
USMCA/Canada and Mexico Tariff FAQs
How will tariffs effect the IMMEX/Maquiladora imports from Mexico? Because the Maquiladora, Manufacturing, and Export Services Industry (IMMEX) program is a figure of Mexican law, we anticipate Mexico will do all it can to protect companies that operate using the program.
Will the Canada and Mexico tariffs be lifted when the USMCA review occurs? Unclear. We do note, however, that the United States lifted the prior aluminum and steel tariffs as part of the negotiation of the USMCA under the first Trump administration. We anticipate that even though the second Trump administration is taking a much harder line on tariff and international trade issues, that there will be a push for a “Fortress North America” to fend off Chinese goods (including Chinese parts and components), resulting in a form of free trade within the USMCA region while erecting mutually reinforcing walls against Chinese goods. The true result will have to wait for the conclusion of the 2026 USMCA review.
Force Majeure and Surcharges FAQs
The Foley Supply Chain team also has published a set of FAQs regarding contractual issues, which we are repeating here for convenience.
What are the key doctrines to excuse performance under a contract? There are three primary defenses to performance under a contract. Importantly, these defenses do not provide a direct mechanism for obtaining price increases. Rather, these defenses (if successful) excuse the invoking party from the obligation to perform under a contract. Nevertheless, these defenses can be used as leverage during negotiations.
Force Majeure
Force majeure is a defense to performance that is created by contract. As a result, each scenario must be analyzed on a case-by-case basis, depending on the language of the applicable force majeure provision. Nevertheless, the basic structure generally remains the same: (a) a listed event occurs; (b) the event was not within the reasonable control of the party invoking force majeure; and (c) the event prevented performance.
Commercial Impracticability (Goods)
For goods, commercial impracticability is codified under UCC § 2-615 (which governs the sale of goods and has been adopted in some form by almost every state). UCC § 2-615 excuses performance when: (a) delay in delivery or non-delivery was the result of the occurrence of a contingency, of which non-occurrence was a basic assumption of the contract; and (b) the party invoking commercial impracticability provided seasonable notice. Common law (applied to non-goods, e.g., services) has a similar concept, known as the doctrine of impossibility or impracticability, that has a higher bar to clear. Under the UCC and common law, the burden is quite high. Unprofitability or even serious economic loss is typically insufficient to prove impracticability, absent other factors.
Frustration of Purpose
Under common law, performance under a contract may be excused when there is a material change in circumstances that is so fundamental and essential to the contract that the parties would never have entered into the transaction if they had known such change would occur. To establish frustration of purpose, a party must prove: (a) the event or combination of events was unforeseeable at the time the contract was entered into; (b) the circumstances have created a fundamental and essential change; and (c) the parties would not have entered into the agreement under the current terms had they known the circumstance(s) would occur.
Can we rely on force majeure (including if the provision includes change in laws), commercial impracticability, or frustration of purpose to get out of performing under a contract? In court, most likely not. These doctrines are meant to apply to circumstances that preventperformance. Also, courts typically view cost increases as foreseeable risks. Official comment of Section 2-615 on commercial impracticability under UCC Article 2, which governs the sale of goods in most states, says:
“Increased cost alone does not excuse performance unless the rise in cost is due to some unforeseen contingency which alters the essential nature of the performance. Neither is a rise or a collapse in the market in itself a justification, for that is exactly the type of business risk which business contracts made at fixed prices are intended to cover. But a severe shortage of raw materials or of supplies due to a contingency such as war, embargo, local crop failure, unforeseen shutdown of major sources of supply or the like, which either causes a marked increase in cost or altogether prevents the seller from securing supplies necessary to his performance, is within the contemplation of this section. (See Ford & Sons, Ltd., v. Henry Leetham & Sons, Ltd., 21 Com. Cas. 55 (1915, K.B.D.).)” (emphasis added).
That said, during COVID and Trump Tariffs 1.0, we did see companies use force majeure/commercial impracticability doctrines as a way to bring the other party to the negotiating table to share costs.
May we increase price as a result of force majeure? No, force majeure typically does not allow for price increases. Force majeure only applies in circumstances where performance is prevented by specified events. Force majeure is an excuse for performance, not a justification to pass along the burden of cost increases. Nevertheless, the assertion of force majeure can be used as leverage in negotiations.
Is a tariff a tax? Yes, a tariff is a tax.
Is a surcharge a price increase? Yes, a surcharge is a price increase. If you have a fixed-price contract, applying a surcharge is a breach of the agreement.
That said, during COVID and Trump Tariffs 1.0, we saw many companies do it anyway. Customers typically paid the surcharges under protest. We expected a big wave of litigation by those customers afterward, but we never saw it, suggesting either the disputes were resolved commercially or the customers just ate the surcharges and moved on.
Can I pass along the cost of the tariffs to the customer? To determine if you can pass on the cost, the analysis needs to be conducted on a contract-by-contract basis.
If you increase the price without a contractual justification, what are customers’ options?
The customer has five primary options:
Accept the price increase: An unequivocal acceptance of the price increase is rare but the best outcome from the seller’s perspective.
Accept the price increase under protest (reservation of rights): The customer will agree to make payments under protest and with a reservation of rights. This allows the customer to seek to recover the excess amount paid at a later date. Ideally, the parties continue to conduct business and the customer never seeks recovery prior to the expiration of the statute of limitations (typically six years, depending on the governing law).
Reject the price increase: The customer will reject the price increase. Note that customers may initially reject the price increase but agree to pay after further discussion. In the event a customer stands firm on rejecting the price increase, the supplier can then decide whether it wants to take more aggressive action (e.g., threatening to stop shipping) after carefully weighing the potential damages against the benefits.
Seek a declaratory judgment and/or injunction: The customer can seek a declaratory judgment and/or injunction requiring the seller to ship/perform at the current price.
Terminate the contract: The customer may terminate part or all of the contract, depending on contractual terms.
[1] Please note that the implementation of the various tariff programs remains in flux, and thus the status of these program should be monitored closely. The included table is current as of the date of publication of this article.
M&A Disputes Set to Rise in Latin America: How Savvy Investors Are Protecting Themselves
As deal activity shows signs of rebounding in 2025, investors are bracing for an increase in M&A-related disputes globally, and Latin America is no exception. It appears to be leading the trend.
According to Berkeley Research Group’s latest M&A Disputes Outlook, more than 80% of investors and legal experts surveyed expect the volume and value of disputes in Latin America to rise this year. The reasons are hardly surprising to anyone following the news. According to Alejandro Martinolich, a BRG associate director based in Buenos Aires, persistent political and economic uncertainty in Brazil and Mexico, the region’s two largest economies, contributes to investor anxiety, making it more difficult to price and structure deals with confidence.
“With highly valuable assets and continuous political and regulatory changes, not to mention macroeconomic uncertainty, Latin America has ideal conditions for a dispute,” said Martinolich. And he’s right. The region has seen volatility in both the Mexican peso and the Brazilian real, partly due to concerns over tariff threats and unpredictable government decisions.
What’s Driving the Disputes?
According to the BRG survey, financial and operational performance issues are the most common flashpoints, followed closely by foreign exchange volatility. Deal terms such as put and call options, redemption rights, and other contract provisions aimed at managing uncertainty often become contentious when the operating environment deteriorates or projections go unmet.
Notably, it’s not the billion-dollar megadeals that are fueling this trend. It’s the smaller transactions, the ones under $50 million, that are seeing the sharpest rise in disputes, likely because these deals often lack the deep due diligence, legal firepower, and sophisticated structuring of larger transactions.
Why Investors Are Structuring Deals to Avoid Local Jurisdictions
Considering these conditions, sophisticated investors now structure their deals to avoid having disputes resolved in the operating country altogether. Instead of relying on local courts in Brazil, Mexico, or other Latin American nations where litigation is often lengthy and sometimes unpredictable and subject to local political winds, investors increasingly route dispute resolution through corporate structures based in the United States or other common law jurisdictions like the U.K. or Singapore. Why?
Speed and Predictability: Courts in common law jurisdictions are known to be quicker and more transparent than their Latin American counterparts. Common law systems, like those in the United States and the U.K., are based on judicial precedents. More importantly, common law generally provides quicker remedies to the parties in equity and law, and this can be faster than relying on codified laws.
Higher Legal Costs as a Deterrent: The expense of litigating in the United States can act as a powerful deterrent against frivolous lawsuits. Courts can impose sanctions, fines, and payment of the other party’s expenses and attorney fees on parties who file frivolous claims or engage in abusive litigation practices.
Perceived Fairness: Investors believe they’ll receive a more balanced hearing in jurisdictions where judges and arbitrators are less likely to be influenced by local politics or pressure.
A Global Trend with Local Nuances
Latin America is part of a larger global uptick in disputes, as seen in BRG’s wider survey of 200+ financial and legal professionals. Globally, several sectors including fintech, real estate, and energy are expected to see a rise in litigation, driven by shifting regulations and deal terms that no longer align with evolving realities.
In the United States, regulatory shifts such as rollbacks of Biden-era clean energy incentives by the current administration would have rippling effects leading to disputes over valuations and government support.
Bottom Line
Latin America remains a region of opportunity with compelling valuations, rising markets, and untapped assets. However, it also comes with particular dispute risks. Dealmakers operating in Latin America have to be especially diligent in crafting precise and adaptable contracts that can withstand economic shocks, currency swings, and regulatory unpredictability to reduce the likelihood of post-transaction disputes. Ultimately, for dealmakers, the solution is not to avoid the region but to structure smarter, recognizing and anticipating instability and making sure any dispute that does arise plays out on their home turf, or at least on more neutral ground.
FTC Revives Orange Book Listing Challenges
On May 21, 2025, the Federal Trade Commission (FTC) issued its third round of warning letters – and its first under the Trump administration – against pharmaceutical manufacturers for allegedly improper listing of patents in the Food and Drug Administration’s (FDA) Orange Book. The FTC made clear that its prerogative under President Trump’s leadership is to seek “transparent, competitive, and fair healthcare markets.”
The FTC issued renewed warning letters to drugmakers that did not delist previously challenged Orange Book listings, disputing more than 200 patents across 17 brand-name pharmaceuticals. The patents relate to device components of combination drug-device products treating asthma, diabetes, and chronic obstructive pulmonary disease (COPD). The FTC alleges the device patents constitute improper listings that allow brand-name manufacturers to delay – or even prohibit – generic competition. These patents were previously the subject of warning letters the FTC issued in November 2023 and April 2024 to more than a dozen pharmaceutical manufacturers. Although some manufacturers delisted patents in response to the initial warning letters, others chose to continue listing the targeted patents in the Orange Book.
In Depth
BACKGROUND
The FTC issued a policy statement in 2023 under Chair Lina Khan declaring that “improper” pharmaceutical patent listings in the Orange Book may constitute an unfair method of competition in violation of Section 5 of the FTC Act. The patents are listed for the purpose of putting generic rivals on notice to deter patent infringement. The FDA, however, takes only a ministerial role as to listing patents and does not assess whether patents are properly listed in the Orange Book. Following the 2023 policy statement, the FTC issued a series of warning letters to manufacturers.
In the FTC’s recent warning letters, the agency cites the December 2024 US Court of Appeals for the Federal Circuit decision in Teva Branded Pharm. Prods. R&D, Inc. v. Amneal Pharms. of N.Y., LLC as support for their assertion that the previously identified patents are improperly listed. The Federal Circuit affirmed a lower court’s order requiring Teva to delist five patents associated with its ProAir® HFA inhaler, a drug-device combination product, from the Orange Book. The court found Teva had improperly listed its ProAir HFA inhaler patents in the Orange Book for primarily two reasons:
First, Teva had misinterpreted the requirements set forth in the listing statute by arguing that the term “drug” encompasses any component of an article that treats a disease, and therefore its patents claiming the device components would also “claim the drug.” The Federal Circuit rejected this argument, holding that determining whether a patent is properly listed “requires what amounts to a finding of patent infringement,” and the mere fact that a product could infringe a patent does not mean the patent “claims” the underlying drug.
Second, Teva argued that a patent can be listed when it claims any part of the product other than the active ingredient, and therefore its patents that claim the device component are valid. The Federal Circuit rejected this argument, holding that in order for a patent to claim the “drug” and be listed in the Orange Book, the patent must claim at least the active ingredient of the approved product, as the active ingredient provides the primary mode of action of the drug.
The Federal Circuit subsequently denied Teva’s request for an en banc rehearing in March 2025. Notwithstanding Teva’s petition seeking Supreme Court review, Teva must now delist the five patents.
WHAT’S NEXT
On the day following the Federal Circuit’s opinion, the FTC issued a press release applauding the Federal Circuit’s holding and reiterating its position that, due to the 30-month statutory stay triggered by listing patents in the Orange Book, improper listings can negatively affect competitive conditions permitting generic entry of competing drug products. The press release, however, was issued in the waning days of Chair Khan’s tenure with a Democratic majority at the FTC, and practitioners and industry stakeholders alike questioned whether the FTC’s policy on Orange Book listings would continue under a Republican-led FTC. The recent warning letters suggest that, under current Chair Andrew Ferguson, the FTC appears to be sticking to the prior administration’s policy and remains focused on enhancing competition between brand-name and generic pharmaceuticals to lower healthcare costs.
The Federal Circuit’s decision vindicated the FTC’s position against improper listings in the Orange Book and likely empowered the agency to undertake the most recent enforcement efforts despite the change in administration. The agency’s continued scrutiny of patent listings in the Orange Book indicates it is possible the FTC may pursue enforcement actions concerning its Orange Book challenges in the future. Therefore, brand-name manufacturers are advised to carefully review their current listings, paying particular attention to the underlying claim of the patent, as patents that do not claim the active ingredient in the drug may be considered improperly listed. Brand-name manufacturers are encouraged to proactively seek counsel when conducting such reviews to ensure compliance.
KOSA is Back and Still Controversial
On May 14, 2025, the Kids Online Safety Act (KOSA), SB 1748, was reintroduced for the fourth time by original sponsor Marsha Blackburn (R-TN), joined by Senators Richard Blumenthal (D-CT), John Thune (R-SD), and Chuck Schumer (D-NY). First introduced in 2022, and then again in 2023 and 2024, KOSA imposes a duty of care on online platforms (including online gaming, messaging applications, and video streaming services) to minimize harms to minors. The history of various iterations of KOSA is of interest as it reflects the ongoing debate about platform obligations and First Amendment rights of platforms and consumers.
As originally introduced, KOSA mandated that platforms “prevent and mitigate the heightened risks of physical, emotional, developmental, or material harms to minors posed by materials on, or engagement with, the platform.” Business associations, members of Congress, and privacy advocates expressed concern that this standard would violate the First Amendment. In 2024, KOSA was amended to clarify that platforms must exercise reasonable care to mitigate harm to minors in the creation and implementation of design features rather than content. The 2024 version of KOSA also raised the age threshold of the Children’s Online Privacy Protection Act (COPPA) from 13 to 17 by folding into its provisions COPPA’s potential successor, the proposed Children and Teens’ Privacy Protection Act (COPPA 2.0), which also banned targeted advertising to minors under 17. Then renamed The Kids Online Safety and Privacy Act (KOSPA), the bill passed the Senate overwhelmingly in 2024 with bipartisan support.
In September 2024, a House Energy and Commerce Committee markup amended KOSPA by narrowing the bill’s “duty of care” provisions and list of potential online harms. Nonetheless, these changes were insufficient to convert some members of Congress who remained concerned that KOSPA’s “duty of care” language still violated the First Amendment. An eleventh-hour revision drafted with input from X owner Elon Musk (December 2024 draft) included new language clarifying that KOSPA would not require platforms to “prevent or preclude” minors from conducting independent research or requesting information on prevention or mitigation of harms such as depression, compulsive behavior, addiction, and sexual abuse. In addition, it barred government entities from censoring, limiting, or removing any content from the internet “based upon the viewpoint of users expressed by or through any speech, expression, or information protected by the First Amendment to the Constitution of the United States.” However, the bill did not pass in the House.
SB 1748, again called “KOSA,” reverts to the Senate version as amended by the December 2024 draft, but with a key difference: the COPPA 2.0 provisions were stripped out in their entirety. (COPPA 2.0 was reintroduced as a standalone bill, SB 836, in March this year). Notably, the duty of care language in SB 1748 remains untouched from the December 2024 draft and KOSA’s broad definition of “covered platform” – defined as “an online platform, online video game, messaging application, or video streaming service that connects to the internet and that is used, or is reasonably likely to be used, by a minor” – was left intact.
New Federal Trade Commission (FTC or Commission) Chair Andrew Ferguson has indicated that children’s privacy and protection online is a chief priority for the Commission this year. And, indeed, the FTC seems to be moving in that direction. On January 16, 2025, the Commission announced finalization of the long-awaited update to the COPPA Rule. While subject to the Executive Order requiring a review of rules, the final COPPA Rule was subsequently published in the Federal Register on April 22, 2025. The new COPPA Rule will come into effect on June 23, 2025. Meanwhile, the FTC has scheduled a June 4 workshop, The Attention Economy: How Big Tech Firms Exploit Children and Hurt Families | Federal Trade Commission, which may shed more light on current FTC thinking on issues that KOSA seeks to address.
The revisions included in SB 1748 do not necessarily resolve concerns about impingement on First Amendment rights, among other issues, and the relatively weak conflict preemption clause of KOSA will not result in the withdrawal or elimination of state age-appropriate design code acts and similar laws. Technology industry organizations have challenged state bills that impose similar restrictions and requirements on platforms that KOSA seeks to address with some success. If KOSA does become law, we can expect further legal challenges to be filed.
The Carbon Border Adjustment Mechanism: How to Navigate a Complex Mechanism
This note is dedicated to importers and producers of specific goods from countries outside the European Union, who will be subject to carbon pricing equivalent to that applied to European manufacturers of the same goods, without using third-country goods.
Regulatory Framework
As a reminder, the Carbon Border Adjustment Mechanism (CBAM or MACF in French) was introduced at European Union (EU) level by three regulations dated 2023:
Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023; and
Commission implementing regulations (EU) 2023/1773 and 2025/486 dated 17 August 2023 and 17 March 2025.
It should be noted that the legal framework applicable to CBAM is likely to be simplified at EU level (see the paragraph below entitled “Potential simplification”).
Objectives
Directly applicable since 1 October 2023, this regulatory mechanism has nonetheless been implemented gradually in order to eventually bring the carbon footprint of imports into line with European standards, notably by requiring economic players to quantify the CO₂ emissions of their imported goods (the idea being to restore the balance between European and non-European producers by applying a carbon price to products imported into the EU).
This environmental policy measure also marks the phasing-out, at the same time, of the free allocation of allowances under the EU Emissions Trading Scheme (ETS) created in 2005. As a result, in the medium term, an importer and a producer established in the EU will both pay the same carbon price.
Conditions of Application
An importer[1] or an indirect customs representative acting as an authorized CBAM declarant at the time of import[2] will have to pay the carbon “tax” at the border if the following cumulative conditions are met:
the imported goods are on the list of products referred to in Annex 1 of Regulation 2023/956 (e.g., steel, aluminum, nitrogen fertilizers, cement, hydrogen or electricity)[3];
the imported goods come from a non-EU country (exemptions: Iceland, Norway, Liechtenstein, Switzerland or certain territories of member states such as Ceuta, Melilla, Livigno, Helgoland, Büsingen);
the imported goods have an intrinsic value of more than €150 per shipment (the Omnibus Proposal proposes to remove this financial threshold); and
the customs procedure applicable to the imported goods corresponds either to “release for free circulation” (i.e., the imported goods will be consumed and/or move freely within the customs territory of the Union), or to “inward processing” (i.e., the imported goods will be processed and ultimately released for free circulation without being re-exported outside the Union, even if the processed goods are no longer included in the list products referred to in Annex 1 of Regulation 2023/956).
Potential Simplification
Less than a year before the CBAM becomes fully operational, at the end of February 2025 the European Commission published a proposal to simplify the system for the benefit of “small” importers, who in reality represent around 90 percent of the economic players affected by the CBAM (Omnibus Proposal).[4]
In other words, economic players whose cumulative imports of iron, steel, aluminum, cement and nitrogen fertilizers (with the exception of electricity or hydrogen) do not exceed 50 tons over the calendar year would be exempt from any CBAM obligation. This Omnibus Proposal should considerably reduce the administrative burden for the majority of importers, while ensuring that 99 percent of carbon emissions remain covered by the CBAM.
Regarding the Omnibus Proposal, requests for “Authorized CBAM Declarant” status and access to the definitive CBAM portal will be processed by the Directorate General for Energy and Climate (called in French “DGEC”) as follows:
priority to businesses that imported more than 50 metric tons of goods in 2024 or that can demonstrate that they plan to import more than 50 metric tons in 2025 or 2026;
access to the portal maintained, but processing of the application for “Authorized CBAM Declarant” status postponed to the secondhalf of 2025 for economic operators who imported between 10 and 50 tons of goods in 2024;
refusal of both access to the registry and processing of applications for “Authorized CBAM Declarant” status for economic operators importing less than 10 tons of goods in 2024.
Since the endorsement of the Omnibus Proposal by the European Parliament on 22 May 2025, all eyes are now on the Council, who will have to examine and validate the Omnibus Proposal by end of 2025/early 2026.
CBAM Obligations
Obligations
From 1 October 2023 to 31 December 2025 (“Transitional phase“)
From 1 January 2026 (“Operational phase“)
Reporting obligations
Quarterly filing report in the CBAM Transitional Registry.
Annual filing report (even if actual imports are zero in a given year). This will be known as a “CBAM declaration” for the year Y-1, and will be made no later than 31 May of each year on the declarant’s account in the CBAM final Registry. The first CBAM declaration is due no later than 31 May 2027.
Please note: the Omnibus Proposal proposes shifting the annual filing deadline to 31 August of each year.
No payments, no adjustments.
Verification report of the CBAM declaration by an independent third-party auditor accredited (by COFRAC[5] in France) becomes compulsory and at the importer’s expense.
Please note: the Omnibus Proposal proposes relaxing the obligation to verify the calculation of imported emissions for goods for which actual emissions data (rather than default data) are used.
Data collected (non-exhaustive and different if the declarant is an importer/producer):
– total quantity of each type of merchandise– total real intrinsic direct emissions (emissions linked to the production process)– total indirect emissions (emissions linked to electricity consumption during the production process)– production process used, information about the production site– details of the emissions calculation method used– carbon price paid in a country of origin, taking into account any rebates or other forms of compensation available
When using default data, a mark-up will be automatically integrated into the data itself, impacting the carbon price.
An implementing regulation specifying the content of the annual CBAM declaration is expected in summer 2025.
CBAM Authorized Declarant” status obtained
As of 31 March 2025, it is recommended to apply for ASAP status directly on the definitive CBAM definitive registry, as this status will become mandatory and will be required prior to all imports.
Please note: the application processing time may vary between 4 and 6 months, if additional information is requested by the DGEC. If an application for CBAM status is in progress on 1 January 2026, it will not be possible to import CBAM goods.
Mandatory Obtaining this status has the value of an import license (also known as an “import permit”) The issuance of this status is conditional upon the submission of the following two documents:– proof of tax status less than 3 months old (available from impôts.gouv.fr); and– if you have been established for more than two years, the tax return; or– if you have been established for less than two years, a financial guarantee such as a surety bond issued by a bank or insurance company (guarantee to be released immediately after 31 May of the second year in which the application was made; exact amount to be specified by the DGEC). Once the status has been obtained, it will be valid in all member states.
Purchase and management of CBAM certificates, via a purchasing platform interconnected with the definitive CBAM registry
N/A
1 CBAM certificate = 1 t CO2eq. Minimum stock required at the end of each quarter corresponding to 80% of intrinsic emissions linked to the import of goods since the beginning of the calendar year. Importers will need to anticipate the number of CBAM certificates they will need to cover the emissions generated by the goods they plan to import. Each week, the Commission calculates the price of CBAM certificates as the average closing price of emission allowances in the European Emissions Trading Scheme (ETS). In the event of an excess of certificates, and up to a limit of one-third of the total number of certificates purchased during year N-1, the excess may be bought back by the DGEC at the price at which the importer purchased it[6] On 1 July of each year, the European Commission cancels the certificates purchased during year Y-2 and remaining in the account.
Please note: the Omnibus Proposal envisages a reduction in the minimum stock of certificates from 80% to 50% (making the financial commitment of the importer represented by these certificates more acceptable), and the obligation to purchase certificates should only begin in February 2027 (it being specified that the deadline for repurchasing certificates would be set at 30 September of each year, while the cancellation of certificates by the Commission would be postponed to 1 October).
CBAM Registry Connection Mode Changes
The CBAM registry connection mode will change on 1 January 2026.
If the importer already has access to the CBAM registry (i.e., by creating an account based on the EORI SIRET number and accessing it via the douane.gouv website), the 2025 quarterly reports must continue to be filed via the current CBAM account. The OLGA online service will remain active to address any problems of access to these “old” CBAM accounts via the douane.gouv website. However, it is recommended that you save the pdf and xml formats of the quarterly reports linked to this account, to keep them after 2026 in view of the future withdrawal of access, the date of which has yet to be determined.
Without waiting for 1 January 2026, you will need to contact the CCE (in French cellule-conseil aux entreprises) within the economic action unit of the regional customs directorate responsible for the company’s head office, to request the creation of a new account on the CBAM registry, based on the EORI SIREN number (accessible free of charge via the SOPRANO online service available on the douane.gouv website). To secure the data in this new account, an EU Login will be needed for each connection to the register
In practice, you will need to email the relevant CCE a completed form requesting the creation of a new CBAM account on the permanent registry (form available on the douane.gouv website), with “UUMDS “CBA/ MACF” account creation request” in the subject line.
If the importer is not located in an EU member state and does not have an EORI, he will not be able to obtain Authorized CBAM Declarant status directly. In this case, an indirect customs representative will be required to take the necessary steps on the importer’s behalf (since the indirect customs representative has an EORI).
Once the account has been created, and from 1 January2026, it will be possible to access the definitive CBAM registry directly via the TAXUD European authentication portal (https://cbam.ec.europa.eu/authorised-declarant).
Takeaway
At this stage, importers should:
Follow up closely the Omnibus Proposal (amendment, adoption, etc.);
Continue to provide information and training to suppliers, to ensure that they receive a satisfactory flow of information on time, and to ensure the quality of reporting.
Contacts
The Carbon Markets Office of the French Directorate General for Energy and Climate (DGEC; [email protected]) is responsible for all practical and methodological questions relating to emissions calculations.
As far as customs are concerned, you should contact the Restrictions and Securing Trade office of the General Directorate of Customs and Indirect Taxation (DGDDI; [email protected]).
[1] Economic actor established in an EU member state identified by a Community identification number called “EORI”; this number has been essential since 2023 to manage relations with intra-Community customs authorities, and you can request it by logging on to douane.gouv.fr via the Soprano platform: https://www.douane.gouv.fr/service-en-ligne/demande-dautorisation-douaniere-et-fiscale-soprano.
[2] In particular, if the importer uses a DDP incoterm (Delivered Duty Paid) and is not established in an EU member state, he will use an indirect representative
[3] The identification of imports covered by CBAM is based on the customs nomenclature. To find the CN product code associated with the imported merchandise, you need to refer to the RITA database (please note that the CN codes 7616 and 7326 refer respectively to “other articles” in aluminum and steel, as these codes are likely to cover a wider range of products; they are referred to as “sweeper” codes, extending CBAM to a large number of merchandise items).
[4] Omnibus I – COM(2025)87
[5] France’s leading certification body. The list of accredited auditors is not yet available.
[6] It will not be possible to trade or sell certificates between authorized CBAM declarants (unlike on the ETS market). However, an authorized CBAM declarant will be able to optimize purchases of CBAM certificates by acquiring hedging products on the ETS market, or by purchasing more CBAM certificates in year Y than anticipated imports, which will enable the registrant to request reimbursement of the most expensive certificates.
Read this article in French
NJ Bill Broadly Banning Non-Competes + No-Poach Agreements Would Impact Employers Immediately
Takeaways
S4385/A5708 would ban non-compete agreements, no poach agreements, and any clause that restrains anyone from engaging in a lawful profession or trade entered into before and after its effective date.
This bill would not apply to non-compete clauses between employers and senior executives if the employer pays the senior executive’s full salary and the restricted period is no longer than 12 months.
The bill would not apply to causes of action related to non-compete clauses that accrued before its effective date or non-compete clauses entered into by an employer pursuant to a bona fide sale of a business.
The New Jersey Legislature is considering a bill (S4385/A5708) banning non-compete clauses, with limited exceptions, and prohibiting no-poach agreements between employers and workers.
Appearing to take a page from the now set-aside Federal Trade Commission final rule, S4385/A5708 would broadly prohibit employers from requiring, enforcing, or attempting to enforce a non-compete clause against any worker who is not a senior executive. The bill defines a “senior executive” as a worker in a “policy-making position” with an annual salary not less than $151,164.
The bill as currently drafted would apply to all non-compete agreements entered before and after its effective date. It would require employers to notify workers subject to existing non-competes within 30 days of its effective date that any such agreements are no longer legally enforceable.
The bill also declares no-poach agreements contrary to public policy and void.
Requirements for Senior Executives
The bill bans non-compete clauses between employers and senior executives unless they meet the following criteria, including but not limited to:
The employer provides disclosure of the terms of the non-compete clause within 30 business days of the effective date, including the requirements of this bill and any revisions required for compliance with this bill.
The non-compete clause is no broader than necessary to protect the employer’s legitimate business interests.
The non-compete clause does not limit the senior executive for a period exceeding 12 months following termination.
The non-compete clause is limited to the geographical areas where the senior executive provided services or had a material presence.
The non-compete clause is limited to services provided during the last two years of employment.
The bill does not apply to non-compete clauses entered into by an employer pursuant to a bona fide sale of a business or if a cause of action related to a non-compete clause accrued before the bill’s effective date.
Penalties
Any worker subject to a non-compete clause or no-poach agreement in violation of the law may bring a civil action against the employer, and the court has jurisdiction to void the agreement and order appropriate relief, including but not limited to liquidated damages and reasonable attorney’s fees.
Finally, the Department of Labor and Workforce Development could impose penalties up to $1,000 on employers for failing to provide the required notice.
Next Steps
The bill will take immediate effect once passed and signed into law. Employers in New Jersey that require employees to sign non-compete and non-poach agreements should keep an eye on developments as significant changes to employers’ practices will be required if this bill becomes law. Jackson Lewis attorneys can assist with any aspect of compliance and answer questions regarding the legislation’s provisions or applicability.
Protecting Sponsors from Emerging Portfolio Company Risks through Insurance
In addition to the normal operational and legal risks associated with owning and managing portfolio companies, 2025 has introduced or exacerbated a wave of geopolitical and macroeconomic risks such as inflation, tariffs, trade, depressed consumer sentiment, political risks, and credit risks. The resulting, increased risks faced by portfolio companies has caused a need for private equity sponsors to focus more closely on the insurance maintained at the portfolio company level, and not only the sponsor’s own policies. It is critical for sponsors to work closely with management of their portfolio companies, insurance brokers, and experienced coverage counsel to review and negotiate strong insurance for their portfolio companies. Savvy sponsors are able to utilize their leverage to negotiate bespoke, manuscript policy forms that can be used across their portfolio to provide consistent, strong protection for each of the sponsor’s portfolio companies.
Legal risks at the portfolio company level can impact sponsors not only by harming the value of their investment but also by leading to direct claims being brought against individuals the sponsor appointed to the portfolio company’s board and against the sponsor itself. These risks are particularly acute during times of economic distress or uncertainty, where creditors and other constituents commonly bring claims for breaches of fiduciary duty against directors and aiding and abetting claims against the appointing sponsor.
Coverage disputes in this scenario are both more likely and more difficult when strong coverage under both sets of policies – the sponsor’s own policy and the portfolio company’s policy – has not been negotiated and attention has not previously been given to ensuring that the two sets of policies work together. For example, careful attention needs to be given to policy provisions addressing whether and how a policy applies when an individual serves in multiple capacities and is sued in both capacities (e.g., as an employee of a sponsor and a board member of a portfolio company) and in what order multiple, potentially implicated policies (e.g., the sponsor’s policy and the portfolio company’s policy) apply. Additionally, particularly careful attention needs to be given to the renewal of insurance policies for portfolio companies experiencing financial distress, as insurers often use those circumstances as a basis for adding exclusions and provisions that can significantly limit coverage, such as exclusions that bar coverage when the company becomes insolvent, exclusions for claims brought by creditors, and other problematic provisions. Careful review, negotiation, and coordination of the language and structure of portfolio company policies and private fund‑level policies can help mitigate the risks arising from portfolio companies to sponsors and their associated individuals.
One promising development we have seen in the last year is that more sponsors (but still a distinct minority) have begun to negotiate strong, manuscript policies for all of their portfolio companies. Historically, the quality of coverage provided under directors and officers (“D&O”) policies issued to portfolio companies has been poor – and that continues to be true of the majority of portfolio company policies – but as more sponsors begin focusing on the quality of their portfolio companies’ policies, that should change.
Relatedly, we have also seen an increased focus on protecting individuals against the legal and regulatory risks they face from serving as directors of portfolio companies. This increased focus on individual protection has included an increased emphasis on obtaining dedicated insurance limits for individuals when the company is unable to provide indemnification (called “Side A” policies”) at the portfolio company‑level and to negotiate enhancements to such policies. It is critically important to ensure that sponsor policies and portfolio company policies respond seamlessly and in a prearranged coordinated fashion in these claims.
Of course, the types of litigation and regulatory risks covered by D&O policies are far from the only risks faced by portfolio companies and that can impact sponsors. For example, the increased frequency and severity of data breaches, ransom demands, and social engineering theft has made protection against cyber risks through strong cyber insurance policies critical for portfolio companies and their sponsors. The market for cyber insurance has hardened in the past several years, however – with increased premium costs and additional limitations on coverage – due to cyber insurers having paid out more and larger claims than they had anticipated for cyber events. The more challenging market has made it even more important for careful analysis and review of potential insurance coverage, particularly because it is rare for all cyber risks of concern to be covered under the same policy. Instead, it is common for cyber “crime” risks (for example, social engineering and fraudulent transfers) to be covered under a crime policy or endorsement to a fidelity bond, with other cyber risks (for example, data breaches and business interruption from cyber events) to be covered under a separate cyber policy. Coordinating these separate coverages is important to ensure that as broad a spectrum of cyber risks as possible are covered.
As the risks facing sponsors and their portfolio companies continues to evolve, the insurance they purchase must likewise evolve to match those risks. It is imperative that sponsors and their portfolio companies work with sophisticated insurance brokers and experienced coverage counsel to ensure that their portfolio companies obtain strong coverage. Sponsors also should enhance their leverage to negotiate manuscript policies that can be used by all of their portfolio companies (rather than placing coverage piecemeal) with additional enhancements added as needed – to help protect the sponsor’s investment and their individuals from the developing risks faced by their portfolio companies. This approach also will provide enhanced commercial leverage and legal protection to resolve claims more expeditiously and efficiently for greater amounts of coverage in order to manage emerging complex risks more effectively.
Additional Authors: Joshua M. Newville, Todd J. Ohlms, Robert Pommer, Seetha Ramachandran, Nathan Schuur, Jonathan M. Weiss, William D. Dalsen, Adam L. Deming, Adam Farbiarz & Hena M. Vora
Can There be Only One? The CFTC Faces an Unprecedented Moment with Potentially One Commissioner
As commissioners continue to depart, the Commodity Futures Trading Commission (CFTC or Commission) may soon find itself in an unprecedented situation – operating with only one sitting commissioner. While the Commission has weathered periods with as few as two commissioners, a one-member Commission would mark uncharted territory. Yet, under the Commodity Exchange Act (CEA), the CFTC may continue to function and make decisions, even with a single member.
A Wave of Departures Leaves the CFTC at a Crossroads
The CFTC is in the midst of a broad leadership turnover. Chairman Rostin Behnam departed earlier this year following the presidential transition. Since then, three additional commissioners have announced their exits: Summer Mersinger has stepped down to lead the Blockchain Association, Christy Goldsmith Romero left the Commission at the end of May, and Kristin Johnson has signaled her intention to depart by year’s end. Meanwhile, Acting Chairman Caroline Pham has indicated she plans to leave the agency once Brian Quintenz is confirmed as Chairman. If these timelines hold, Mr. Quintenz could be the sole commissioner overseeing the CFTC, at least temporarily.
What the Law Allows: One Commissioner Can Act
While this potential scenario is unusual, it is not unworkable. Section 2(a)(3) of the CEA provides that “a vacancy in the Commission shall not impair the right of the remaining Commissioners to exercise all the powers of the Commission.”[1] Unlike the Securities and Exchange Commission (SEC), which has codified quorum requirements under Rule 200.41 (generally requiring three members for official action), the CFTC has no equivalent provision.[2] There is no regulatory minimum for quorum at the CFTC. As a result, one seated commissioner retains the full Commission’s authority to advance rulemakings and oversee all Commission activities.
Why it Matters: Governance, Rulemaking, and Oversight
The Commission’s responsibilities extend beyond rule proposals and enforcement actions. Each commissioner plays a role in shaping regulatory priorities, proposing new rules, overseeing market divisions, engaging with market participants, and working with advisory committees. A single-member CFTC would retain legal authority but might arguably face practical constraints in preserving deliberative rigor and balancing industry input.
Key functions that could be impacted include:
Rulemakings and Settlements: Even with just one vote, the Commission could proceed with notices of proposed rulemaking, adopt final rules, and approve enforcement settlements or exemptive orders.
Strategic Agenda-Setting: The sole commissioner would have discretion to outline policy priorities, propose rulemaking timetables, and shape enforcement strategy.
Division Oversight and Delegation: While core functions could be delegated to staff, ultimate oversight and direction would rest with the remaining commissioner.
Looking Ahead: Quintenz’s Potential Vision for the CFTC
Former Commissioner Brian Quintenz has been nominated by President Donald Trump to return, this time as Chairman. Once confirmed by the Senate, he is expected to bring a pro-innovation, risk-focused approach to CFTC oversight. During his prior tenure, Mr. Quintenz was a strong advocate for regulatory clarity in digital assets and emerging markets. His likely priorities include: supporting responsible innovation, including around digital assets and event contracts; managing systemic risk through targeted, data-informed policies; and enhancing cross-agency coordination with domestic and international regulators.
For more about Mr. Quintenz’s potential agenda, see this Katten post.
Conclusion
Recent announcements by the current Commission make the likelihood of a one-person Commission quite plausible for this upcoming fall. Notwithstanding this unprecedented situation, under its governing statute, the Commission would still be able to continue operating as designed.
Footnotes
[1] 7 U.S.C. § 2(a)(3).
[2] 17 C.F.R. § 200.41.