Bipartisan Push to Strengthen American Supply Chains
Members of the Senate Commerce Committee have demonstrated an early bipartisan interest in continuing to promote U.S. supply chain resilience, highlighting an avenue for bipartisanship in the Trump Administration’s foreign policy agenda.
Sen. Marsha Blackburn (R-Tennessee) has partnered with Democratic colleagues as an original cosponsor on the reintroduction of two pieces of legislation aimed at coordinating the U.S. government’s focus on supply chain resilience: the Strengthening Support for American Manufacturing Act (S. 99); and, the Promoting Resilient Supply Chains Act(S. 257).
The Strengthening Support for American Manufacturing Act would require the Secretary of Commerce and the National Academy of Public Administration to produce a report on the effectiveness and management of the Department of Commerce’s various manufacturing support programs. Notably, the report is tasked with identifying relevant offices and bureaus within the Department of Commerce with responsibilities related to critical supply chain resilience, and manufacturing and industrial innovation, and make recommendations on improving their efficiency by identifying gaps and duplicative duties between offices.
Sen. Gary Peters (D-Michigan), who introduced the Strengthening Support for American Manufacturing Act, explains the legislation is intended to streamline various manufacturing programs offered by the federal government. Specifically, in a press release associated with the bill, Sen. Peters highlights a 2017 report released by the Government Accountability Office that identified 58 manufacturing related programs across 11 different federal agencies that serve US manufacturing, several of which are managed by the Department of Commerce.
The Promoting Resilient Supply Chains Act (the “PRSCA”) would establish a Supply Chain Resilience Working Group (the “Working Group”) comprised of federal agencies – including the Departments of Commerce, State, Defense, Agriculture, and Health and Human Services, among others. Moreover, under the PRSCA, the Assistant Secretary of Commerce for Industry and Analysis would be required to designate “critical industries,” “critical supply chains,” and “critical goods,” and the Working Group would be charged with mapping, monitoring, and modeling U.S. capacity to mitigate vulnerabilities in these areas.
Notably, during the Commerce Committee’s January 29, 2025, hearing to consider the nomination of Howard Lutnick to become Secretary of Commerce, Sen. Lisa Blunt Rochester (D-Delaware), the author of the PRSCA, asked Mr. Lutnick whether the Department of Commerce would maintain the agency’s supply chain mapping initiatives under his direction. Mr. Lutnick replied in the affirmative.
In discussing the merits of the PRSCA, Sen. Blackburn stated: “To achieve a strong, resilient, supply chain, we must have a coordinated, national strategy that decreases dependence on our adversaries, like Communist China, and leverages American ingenuity.” This claim is particularly relevant in the PRSCA’s promise to design and implement an “early warning supply chain disruption system” that would employ artificial intelligence and quantum computing to identify and mitigate potential supply chain shocks. As a crisis response measure, the platform would locate alternative sourcing options for supply chains under imminent threat and press private sector to shift their supply chains toward “countries that are allies or key international partners” of the United States. Secretary of State Marco Rubio has emphasized that the Trump Administration’s foreign policy program will prioritize “relocating [U.S.] critical supply chains closer to the Western Hemisphere,” namely in Latin American countries, as a means to enhance “neighbors’ economic growth and safeguard Americans’ own economic security.”
Sen. Blackburn’s willingness to support these Democratic pieces of legislation reflects an increasing bipartisan sense that the impacts of recent geopolitical conflicts, natural disasters, and the COVID-19 pandemic highlighted the fragility of U.S. supply chains. Additionally, the PRSCA has been endorsed by the private sector, including the Information Technology Industry Council, the National Association of Electrical Distributor, the National Association of Wholesaler-Distributors, and the Supply Chain Resiliency Consumer Brands Association.
It remains uncertain whether either the PRSCA or Strengthening Support for American Manufacturing Act can advance this Congress as standalone bills, as the Trump Administration’s tariff and foreign assistance actions deepen partisan trends. Still, the bills’ emphasis on government efficiency, prioritizing American manufacturing, and near-shoring may be able to leverage Trump Administration “America First” and “Department of Government Efficiency” themes to ride momentum into FY 2026 annual appropriations legislation under a national security title. Accordingly, importers interested in the U.S. market would likely benefit from reviewing their supply chains with a long view that seeks to leverage opportunities to reinvest in American manufacturing and looks to near shore material supply chains, particularly in the Western Hemisphere – where the Trump Administration has underscored its interests in boxing out Chinese investment.
FCA Publishes Policy Statement on UK’s Commodity Derivatives Regulatory Framework Reform
On 5 February 2025, the UK Financial Conduct Authority (FCA) published a policy statement (PS25/1) setting out its response and final position in relation to reforming the UK’s commodity derivatives regulatory framework (Framework).
Background
The FCA consulted on the changes to the Framework in December 2023 (CP23/27), proposing key changes regarding commodity derivatives transactions in the UK. These proposals related to the shift in responsibility for setting position limits from the FCA to trading venues, enhanced position management controls and monitoring, a narrower application of position limits to only certain commodity derivatives contracts, and available exemptions, including the potential removal of the ancillary activities test.
CP23/27 formed part of the UK’s Wholesale Markets Review, enacted by the Financial Services and Markets Act 2023 and was intended to be a review of the UK’s secondary market structure which the FCA has been conducting with HM Treasury (HMT).
Further details on CP23/27 can be found in our previous article (available here).
Reforms to the Framework
In PS25/1, the FCA has amended the following proposals in CP23/27:
Trading Venue Position Limits. Trading venues will continue to set position limits with minor technical changes implemented by the FCA. Position limits in both ‘spot months’ and ‘other months’ will now be required.
Exemptions. After concerns were raised regarding trading venues granting hedging exemptions only when satisfied that such positions can be reasonably managed, the FCA amended the risk management control to be less prescriptive – trading venues will be expected to assess their own indicators as to whether such positions can be liquidated in an orderly way.
Position Reporting. Trading venues must have the power to obtain over-the-counter (OTC) position data, however, in relation to the circumstances when such reporting is required, trading venues are expected to consider the risk that positions in OTC markets pose to their markets and satisfying the FCA that their powers are used appropriately. The FCA is also awaiting a further broadening of powers from a legislative standpoint by HMT to provide directions in relation to OTC position reporting.
Ancillary Activities Exemption (AAE). PS25/1 confirms that the FCA’s earlier proposals relating to AAE, including the issuance of guidance on its application, will not be implemented. Instead, the AAE quantitative test and RTS 20 will continue to operate until at least 2027 as the FCA considers a permanent solution.
UK vs EU Reforms
The UK is treading a fine line in diverging from the EU, and the AAE changes no longer being implemented will mean the UK’s opportunity for more significant divergence has passed for now, until a permanent solution is brought forward.
However, the passing of position limits responsibilities from the FCA to trading venues compared to the EU’s approach where they are set by the relevant national competent authorities reinforces the UK’s principles-based approach.
The UK and EU appear to be aligned on fundamental principles in relation to commodities derivatives, especially on agricultural contract position limits still applying and positions held to meet liquidity obligations. The slight deviation in the UK will give its market participants somewhat of a competitive advantage by being able to take higher risk positions.
The UK Chancellor, Rachel Reeves, continues to apply pressure on the FCA to prioritise growth. The FCA must therefore balance its approach to commodity derivatives regulation between maintaining the UK’s competitiveness in the global market while minimising disruption to market participants through divergence from EU rules.
Next Steps
The rules set out in PS25/1 will come into force on different dates, with the last such date being 6 July 2026. Rules enabling trading venues to receive and process applications for exemptions from position limits will commence from 3 March 2025. Hedging exemptions granted under the current regime will continue to apply until 5 July 2026. Lastly, transitional provisions relating to trading venues will commence on 3 March 2025 to allow notification to the FCA of various arrangements prior to implementation.
PS25/1 is available here.
Tariffs Paused in Mexico and Canada, but not China
What Happened
On February 1, 2025, President Trump issued three executive orders (EO) imposing new tariffs on imports from Mexico, Canada and China, each originally slated to go into effect on February 4, 2025. On February 3, President Trump agreed to suspend the tariffs against Mexico and Canada by one month after negotiations with his counterparts in each nation, but the Chinese tariffs went into effect at 12:01 am ET on February 4.
Each EO directed the Department of Homeland Security (DHS) to issue notices in the Federal Register outlining changes to the Harmonized Tariff Schedule of the United States (HTSUS) necessary to implement the tariffs. On February 5, 2025, DHS published the China notice, entitled Implementation of Additional Duties on Products of the People’s Republic of China. Absent from the Federal Register were notices for Mexico and Canada.
The EOs state that the tariffs will remain in place indefinitely once imposed, or until the President decides to remove them. The EOs also state that the President may raise the tariffs further if Canada, Mexico and China retaliate. At the same time, as evidenced by the agreements reached between the United States and Mexico and Canada, tariffs could also be delayed, rescinded, or otherwise modified or reduced before fully going into effect.
China Tariff
The China notice sets out the specific rates of duty on the import of articles that are products of China, and modifies Chapter 99 of the HTSUS to provide specific article descriptions that are subject to the new tariffs, as well as a subset of exempted items such as those related to humanitarian relief, informational materials, and personal use and baggage of people arriving in the United States. With the notice identifying HTSUS codes subject to the tariffs, Customs and Border Patrol (CBP) was able to begin implementing the tariffs against China, beginning at 12:01 a.m. Eastern Standard Time on February 4, 2025, as called for in the China EO.
Chinese articles imported into the customs territory of the United States are now subject to a 10 percent tariff, to be imposed on top of the other tariffs issued on certain Chinese goods, such as the tariffs imposed on China under Section 301 of the Trade Act issued under the first Trump and Biden Administrations (the “China Section 301 Tariffs”).
Mexico and Canada Tariffs
The tariffs announced in the Mexico and Canada EOs have been delayed until March 6, 2025. Should the Mexico and Canada EOs go into effect next month, the EOs will apply a 25 percent ad valorem rate of duty on all articles imported from Mexico and Canada, which in recent years have enjoyed duty-free trade with the United States under the United States-Mexico-Canada Agreement (USMCA), and its predecessor, the North American Free Trade Agreement. There is an exception for Canadian energy resources, which will face a 10 percent tariff.
Statutory Authority
The EOs were issued pursuant to the International Emergency Economic Powers Act (IEEPA) in response to national emergencies declared at the border related to fentanyl, synthetic opioids, drug trafficking and illegal immigration concerns. This is a stark departure from traditional tariffs such as those under Sections 201 and 301 of the Trade Act of 1974. Indeed, this is the first time a president has issued tariffs using authority under the IEEPA. The closest analog is President Nixon’s 10 percent tariff that he imposed in 1971 on all imports under a different law, the Trading With the Enemy Act, considered the predecessor statute to IEEPA. In recent years, IEEPA has been used by the executive branch to impose a wide range of economic sanctions, including trade embargos and prohibitions on imports from sanctioned countries, but the EOs are the first time the statute has been used to impose tariffs in response to a national emergency.
Tariff Mitigation Considerations
Section 1321 De Minimis Exception
The EOs explicitly state that the duty-free de minimis treatment under 19 U.S.C. 1321 shall not be available for the articles covered by the tariffs. The de minimis exception authorizes CBP to allow duty free imports when the articles are valued below certain thresholds. The most widely known de minimis exception allows products with a value less than $800 to be imported duty free—which Chinese retailers have increasingly relied on over the last 10 years to individually import products directly to customers. The exclusion of the de minimis exception in the EOs signals an awareness of e-commerce strategies to work around tariffs for retail goods.
Duty Drawback
Since the founding of the country, the government has provided domestic entities with options to recover or avoid tariffs on products that are ultimately exported out of the United States. Under duty drawback, companies can be reimbursed for up to 99 percent of the duties paid on imported products that are: manufactured and then exported, unused, or returned or destroyed. The new EOs, however, specifically prohibit duty drawback on tariffs thereunder, although duty drawback remains available for the previously imposed China Section 301 Tariffs. Companies looking to mitigate the impact of the new tariffs on Chinese imports under the EO should explore whether they can offset their other tariffs under a duty drawback program.
Foreign Trade Zone (FTZ)
Like the duty drawback, an FTZ also effectively exempts companies from tariffs on items that are exported from the US. Rather than getting a refund on tariffs, establishment of an FTZ causes a company’s facility to be treated as if it were not in the United States for customs purposes. If a product leaves the FTZ and enters the US, it is assessed tariffs. However, products that are instead exported are not assessed tariffs. There can also be benefits where the final product produced at the FTZ is substantially transformed such that it is classified differently than its inputs and potentially subject to lower tariffs. However, the EOs require that articles assessed tariffs be admitted as “privileged foreign status,” meaning that the tariffs will continue to apply to Chinese imports even if substantially transformed in an FTZ.
Temporary Import Under Bond
The EOs do not mention any changes to the treatment of merchandise entered under Temporary Importation under Bond (TIB) programs as outlined in HTSUS Chapter 98. Additional details may be provided in forthcoming technical annexes. Previous actions by the Trump Administration, including the China Section 301 Tariffs and the tariffs imposed on steel and aluminum from China under Section 232 of the Trade Expansion Act, permitted importers to continue using TIB, though the required bond amount had to reflect the higher duty rates.
Other Potential Tariff Actions
Businesses should anticipate continued uncertainty and potential escalation in the coming days and weeks as China retaliates against the United States or negotiates a pause to the dispute, as is currently the case with Mexico and Canada. At the time of this writing, China has already announced some retaliatory tariffs. It is also possible that the tariffs on imports from Mexico and Canada will be reinstated in a month’s time.
The three executive orders indicate that the United States may raise its tariffs further if the targeted countries retaliate. Additionally, the President has recently raised the possibility of tariffs against other economies, including the European Union and BRICS member countries (Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates). Beyond country-specific tariffs, President Trump has also suggested the possibility of new global tariffs on semiconductors, pharmaceuticals, oil, steel, aluminum and copper.
These actions illustrate the new Administration’s willingness to use tariffs to pressure other countries over policy disputes that extend beyond traditional trade policy concerns, including national security concerns. Historically, the United States has reserved the use of tariffs for trade disputes. However, President Trump is now adopting an expansive approach to tariffs, treating them as potential tools to address foreign policy disputes generally. Further, the imposition of tariffs on Mexico and Canada indicates that free trade agreement partners may not be immune from these actions, raising questions about the reliability of trade commitments previously made by the United States, including those made under the USMCA.
New FTC Chairman Signals Change
Andrew Ferguson officially took over as Chairman of the Federal Trade Commission (FTC) on January 20, 2025.
The former Solicitor General for the Commonwealth of Virginia was initially sworn in as an FTC Commissioner last April after being nominated by President Biden to fill one of the FTC’s two vacant Republican seats. Chairman Ferguson’s term expires on September 25, 2030.
Before his promotion, Commissioner Ferguson was openly critical of actions taken under the prior FTC leadership. By way of example, shortly before becoming Chair, Commissioner Ferguson dissented (joined by fellow Republican Commissioner Melissa Holyoak) from the FTC’s issuance of the replacement of the 2016 Antitrust Guidance for Human Resource Professionals, declaring that it was a “senseless waste of Commission resources” for the Biden-Harris FTC to be “announcing its views on how to comply with the antitrust laws in the future. . . .”
In one of his first press releases following the effective date of his promotion, Chairman Ferguson announced an “end [to the] previous administration’s assault on the American way of life. . . .” Time will tell as to the scope of the change of direction of the FTC under his leadership and whether it will, as many of his prior statements suggested, include a return to enforcement under a more traditional approach to competition law.
USPTO’s Proposed Terminal Disclaimer Practice
On May 10, 2024, the United States Patent and Trademark Office (“USPTO”) published a new proposed rule that would require when a patent applicant submits a terminal disclaimer to obviate non statutory double patenting that the applicant agrees:
that the patent in which the terminal disclaimer is filed, or any patent granted on an application in which a terminal disclaimer is filed, will be enforceable only if the patent is not tied and has never been tied directly or indirectly to a patent by one or more terminal disclaimers filed to obviate nonstatutory double patenting in which: any claim has been finally held unpatentable or invalid as anticipated or obvious by a Federal court in a civil action or by the USPTO, and all appeal rights have been exhausted; or a statutory disclaimer of a claim is filed after any challenge based on anticipation or obviousness to that claim has been made.
The USPTO has promulgated this rule to prevent inventors from attempting to receive multiple patents directed to “obvious variations” of an invention. The USPTO believes that this proposed rule will deter anticompetitive behavior and promote innovation by “allowing a competitor to avoid enforcement of patents tied by one or more terminal disclaimers to another patent having a claim finally held unpatentable or invalid over prior art.”
Currently, when a terminal disclaimer is filed to obviate nonstatutory double patenting, a patent applicant is disclaiming any overlapping subject matter with an already existing patent owned by the patent applicant and is designed to prevent a patent applicant from improperly extending a patent’s term beyond its statutory limit. If a patent challenger wants to invalidate a family of related patents connected through terminal disclaimers, the patent challenger must invalidate each patent individually. Under the proposed rule, when a patent challenger is challenging a patent family, the patent challenger would need to successfully invalidate only one claim of a patent to invalidate that patent and any related patent that is tied to the invalidated patent through a terminal disclaimer.
On July 9, 2024, public comment closed for the proposed USPTO rule. Over 350 public comments were submitted giving feedback on the proposed rule. The public commentors’ opinions ranged from supporting the USPTO’s proposed rule to arguing against the USPTO’s proposed rule. Those submitting comments included private individuals, practicing attorneys, trade and policy organizations, and corporations.
Those against the proposed rule raised many concerns. The main issue with the proposed rule was the concern about the consequences of having a single patent claim invalidating an entire patent family. Other concerns raised included the potential of increased cost during patent prosecution and concerns about the potential to hurt small businesses by incentivizing companies to invalidate one claim instead of licensing patents.
Additionally, others argued that the USPTO does not have the authority to promulgate the proposed rule and that the USPTO is exceeding its statutory authority. For example, former USPTO directors Andrei Iancu, David Hirshfeld, David Kappos, Laura Peter, and Russell Slifer submitted a joint comment against the proposed rule noting many issues with the proposed rule including noting that the proposed rule would “render unenforceable entire patents if a single claim in a different patent is found to be invalid,” that the “proposal hands a powerful cudgel to infringers,” and that the USPTO is “evidently attempting to significantly deter, if not eliminate, continuations practice– a right that inventors are given by statute.”7 Others submitting comments against the rule included the American Intellectual Property Law Association and the American Bar Association Intellectual Property Law Association.
Those supporting the USPTO’s proposed rule argued that the proposed rule would promote competition and lower the cost to consumers by removing unnecessary patents and those supporting the rule believe that it allows smaller businesses to compete with larger corporations who are using “gamesmanship” to receive unmeritorious patents. For example, the Federal Trade Commission (“FTC”) issued a public comment supporting the USPTO’s proposed rule. In the support of the rule, the FTC explained that terminal disclaimers are used to “overcome the USPTO’s rejection of patent claims that are essentially the same as those in an existing patent,” that “[t]he use of terminal disclaimers linking similar patent claims can exacerbate the exclusionary impact of patent thickets by forcing potential market entrants to incur the high cost of challenging multiple duplicative patents,” and that “[t]he [FTC] believes the proposed rule will reform terminal disclaimer practice in a manner that reduces gamesmanship by patent holders, as well as the number, size, and impact of patent thickets. Intellectual property policy that promotes competition and market entry will foster vibrant markets that promote innovation and lower prices for businesses and consumers.”
Administrative Deference
While public comment was open for the proposed USPTO rule, the Supreme Court issued its decision in Loper Bright effectively eliminating Chevron deference for administrative agency action. The Supreme Court’s decision in Chevron, required courts to give “Chevron deference” to an agency’s administrative interpretation of a statue if the agency’s interpretation of an ambiguous statute was “rational” or “reasonable” and Congress had not spoken directly on that issue. However, in Loper Bright the Supreme Court found that Chevron deference “defied the command” of the APA and violates the court’s responsibility to interpret statutes and decide questions of law. This now means that Skidmore Deference will apply. Skidmore Deference means courts should judge an agency’s actions based on “the thoroughness evident in [an agency’s] consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” Skidmore v. Swift & Co., 323 US 134. 140 (1944)
The PTO’S primary statutory authority for rule making comes from 35 USC Section 2(b)(2), which provides that the USPTO “may establish regulations, not inconsistent with law, which—(A) shall govern the conduct of proceedings in the Office. . . .” The Federal Circuit years before Loper Bright issued already found that the PTO’s rulemaking authority authorizes them to create regulations regarding proceedings at the PTO and does not give the PTO the authority to issue substantive rules. See, e.g., Merck & Co., Inc. Kessler, 80 F.3d 1543, 1549-50 (Fed. Cir. 1996) (emphasis in original) (finding that the USPTO’s rulemaking authority authorizes the USPTO to create regulations regarding “the conduct of proceedings at the [PTO]” and “it does NOT grant the Commissioner the authority to issue substantive rules. . . . Thus, the rule of controlling deference set forth in Chevron does not apply.”); Animal Legal Defense Fund v. Quigg, 932 F.2d 920, 930 (Fed. Cir. 1991).
Therefore, with the stricter standard when judging agency action and the Federal Circuit finding the rule making authority for the PTO limited to proceedings at the PTO, it is likely that the proposed rule will not be passed. If it is passed, the courts will likely invalidate it finding that the PTO did not have authority to pass such a rule.
UK Sanctions Update: New OFSI Reporting Requirements for High Value Dealers and Art Market Participants
Late in 2024, the UK’s Office of Financial Sanctions Implementation (“OFSI”), the agency within His Majesty’s Treasury that is charged with the implementation of financial sanctions in the UK, introduced new sanction measures aimed generally at augmenting the operation and enforcement of UK financial sanctions and targeted specifically at High Value Dealers (“HVDs”) and Art Market Participants (“AMPs”).
These new measures come into force in May 2025—just two months from now—making time very much of the essence.
To Whom do the New Sanctions Measures Apply?
The new measures extend the existing statutory definition of “Relevant Firms” to include HVDs and AMPs.
HVDs are defined as firms or sole traders whose business is trading in goods and who make or receive payments of at least EUR 10,000, whether executed in one transaction or a series of linked transactions. HVDs typically sell luxury goods, high-end vehicles, and jewelry, and encompass anyone manufacturing, selling and/or supplying any articles made from gold, silver, platinum, palladium, or precious stones or pearls. Auctioneers, who facilitate the sale and purchase of these items, are considered HVDs.
AMPs include firms or sole traders whose business is trading in, or acting as an intermediary in the sale and purchase of, works of art, where the transaction value or the value of a series of linked transactions is EUR 10,000 or more.
What are the Key Requirements under the New Sanctions Measures?
The effect of extending the definition of “Relevant Firms” to include HVDs and AMPs is to subject them to a range of mandatory reporting requirements.
Specifically, starting May 14, 2025, HVDs and AMPs will be required to inform OFSI “as soon as practicable” if they know or have reasonable cause to suspect that a person:
is a “designated person” (i.e., an individual or entity subject to financial sanctions imposed by the UK government); or
has violated UK sanctions regulations.
With respect to the UK’s Russia sanctions regime (the Russia Regulations), HVDs and AMPs also will have to inform OFSI as soon as reasonably practicable if they know or have reasonable cause to suspect that they hold or control, in any jurisdiction, funds or economic resources for a designated person.
What must Reporting to OFSI Include?
When reporting to OFSI, HVDs and AMPs must include:
the information or other matter on which the knowledge or suspicion is based; and
any information the HVD or AMP holds that may identify the relevant person or designated person.
If a person or firm knows or has reasonable cause to suspect that a person is a “designated person” and that person is also a client, then details of the nature and amount of any funds or economic resources held for that client must also be provided.
What are the Consequences of Non-Compliance?
Violating UK financial sanctions, including by failing to report, is serious. OFSI may impose a civil penalty of up to GBP 1 million or 50% of the total value of each violation, whichever is higher, on a strict liability basis.
Additionally, OFSI may refer cases to law enforcement agencies for investigation and potential prosecution, and anyone convicted of violating UK financial sanctions is liable on conviction to imprisonment for up to seven years and/or a fine.
Additional Considerations
Recent Guidance issued by OFSI[1] makes clear that high value and luxury goods are extremely susceptible to misuse by malign actors, particularly those seeking to circumvent UK financial sanctions. The susceptibility is due in part to the following factors:
the art market’s penchant for anonymity, including the common use of shell companies and intermediaries;
the relative ease with which many of these goods are concealed and/or transported internationally;
the subjectivity of their value, meaning prices and payment amounts can be easily manipulated; and
the relatively unregulated nature of international markets for some high value goods.
Given the severe criminal, civil and reputation harm that flow from sanctions violations, it is imperative for HVDs and AMPs to carefully assess their business operations and implement robust compliance programs prior to May 14, 2025. In particular, HVDs and AMPs would be well-served by:
conducting risk assessmentsto evaluate exposure to common sanctions evasive practices;
developing, implementing, and adhering strictly to written compliance policies, procedures, processes, and standards of conduct;
conducting appropriate due diligence on customers, including ownership and control structures, and all participants in trades and related transactions;
providing updated compliance trainingto relevant personnel; and
conducting regular audits, including periodic external audits,to ensure that compliance programs remain effective.
[1] UK Government, Financial Sanctions Guidance for High Value Dealers & Art Market Participants, (November 14, 2024).
Consultation: Ofcom to Auction More Spectrum for 4G and 5G Mobile Use
Ofcom has announced its intention to auction the upper block of 1.4 GHz band (1492-1517 MHz) for 4G and 5G mobile use. It expects that further deployment of the upper block of the 1.4 GHz band will help improve the performance of mobile services, particularly in areas where coverage is patchy, such as some indoor areas and in remote parts of the UK. To avoid potential disruption to Inmarsat satellite receivers on board maritime vessels and aircraft, Ofcom is also proposing to limit the power that mobile networks can transmit around certain ports and airports for an initial period, relaxing this limit later on.
To award the 1492-1517 MHz spectrum, Ofcom plans to use a sealed-bid, single round auction format, with a ‘second price’ rule – where winning bidders pay fees based on the second highest price bid.
Ofcom’s proposals (including a draft license template) are available here and any interested party can provide comments until 25 April 2025. Ofcom also intends to consult separately on its competition assessment for this award once any spectrum trades, which are being considered as part of the merger between H3G and Vodafone, have been completed. Potentially interested parties should bear in mind the potential risk of antitrust liability arising from the exchange of competitively sensitive information in connection with auctions of this kind.
Strategic Dialogue With The European Automotive Industry
As announced by President Ursula von der Leyen to the European Parliament on 27 November 2024, and as formally incorporated into the Communication A Competitiveness Compass for the EU (COM(2025) 30 final), published on 29 January 2025, the European Commission launched a Strategic Dialogue with the European automotive industry, social partners, and other key stakeholders on 30 January 2025. This initiative responds to growing concerns from EU Member States and industry stakeholders regarding the declining competitiveness of the European automotive sector. The EU faces mounting competitive pressures from third-country manufacturers and the necessity of meeting increasingly stringent decarbonization objectives.
Pursuant to point 1.2, page 10 of the Communication Competitiveness Compass for the EU, the strategic dialogue will directly contribute to the development of an EU Industrial Action Plan for the automotive sector. This plan is expected to incorporate ambitious supply- and demand-side initiatives, including a proposal on greening corporate fleets. In this context, President von der Leyen has tasked Commissioner Apostolos Tzitzikostas with presenting an Automotive Industry Action Plan on 5 March 2025. It is anticipated that the findings of the Strategic Dialogue will be integrated into this Action Plan, ensuring a coherent and forward-looking strategy for the sector.
The inaugural high-level meeting of the Strategic Dialogue convened on 30 January 2025 and brought together 22 key industry organizations, including leading manufacturers, suppliers, trade unions, and consumer representatives. Participants included ACEA (The European Automobile Manufacturers’ Association), BEUC (The European Consumer Organisation), BMW Group, Robert Bosch GmbH, ChargeUp Europe, CLEPA (The European Association of Automotive Suppliers), Daimler Truck, ETF (European Transport Workers’ Federation), Forvia, IndustriAll European Trade Union, IVECO Group, MAHLE Group, MILENCE, RECHARGE, and Renault Group, among others.
The Strategic Dialogue will continue with a series of regular meetings and workshops that will engage industry representatives, social partners, and policymakers, as well as broader consultations involving additional stakeholders from across the automotive value chain.
The discussion will focus on the following key themes and priorities:
Innovation and future technologies – Address the EU’s lag in key technologies (e.g., batteries, software, autonomous driving) by fostering R&D collaboration, talent acquisition, and risk-sharing models
Clean transition and decarbonization – Focus on regulatory revisions, charging infrastructure expansion, and demand-stimulation measures to accelerate the shift to clean mobility while addressing affordability and equity issues
Competitiveness and resilience – Tackle high input costs, supply chain vulnerabilities, and workforce upskilling to ensure the sector’s long-term resilience
Trade and global competition – Address unfair practices in global markets, strengthen EU trade policies, and monitor foreign investments in the supply chain
Regulatory streamlining – Optimize the EU’s regulatory framework to enhance coherence, reduce industry burdens, and promote common technical standards
Upon completion of these discussions, the European Commission is expected to present a report to the European Parliament and the Council, outlining the challenges identified by stakeholders and proposing corresponding policy actions. In accordance with the Competitiveness Compass, this report is expected to be published in the first quarter of 2025.
For operators in the automotive industry, this is a critical moment that necessitates close monitoring of ongoing developments at the EU level. These developments include, in summary: the adoption of a report that will be submitted to Parliament and the Council, incorporating the challenges identified by stakeholders and the recommended policy actions arising from the Strategic Dialogue; the presentation of an Automotive Industry Action Plan, the precise scope of which remains undetermined, though it is anticipated to serve as a strategic political directive for the sector; and the introduction of a legislative proposal concerning the greening of corporate fleets, which is expected to be part of the Automotive Industry Action Plan.
Once the Automotive Industry Action Plan is published, we will have greater clarity on the specific regulatory measures that the European Commission intends to pursue. While the precise scope of the plan remains to be seen, it is already known that it will include a legislative proposal on greening corporate fleets. This proposal is expected to play a significant role in shaping industry obligations and opportunities in the transition to more sustainable mobility.
We will continue to monitor these developments and provide clients with timely insights and strategic guidance on how these forthcoming regulatory changes may impact their business operations.
Managing Employee Assets: HR Strategies for the Entire Employment Lifecycle
In today’s complex regulatory environment, businesses encounter numerous legal challenges in hiring and in connection with employment agreements. From non-compete clauses to background checks and worker classification issues (to name just a few such contexts), employers must balance protecting their interests with adhering to federal, state and local laws.
This article delves into key hiring challenges and best practices, featuring insights from employment law professionals.
The Changing Landscape of Non-Compete Agreements
Employment agreements, especially those involving non-compete and non-solicitation clauses, have faced increasing scrutiny. States across the US, as well as federal agencies like the Federal Trade Commission (FTC) and the National Labor Relations Board (NLRB), are moving toward stricter regulations on these restrictive covenants.
Amit Bindra, a partner at the Prinz Law Firm, highlights that various states have enacted laws limiting the use of non-competes, initially for low-wage workers, and then expanding these laws to apply to more employees. For instance, Illinois passed the Freedom to Work Act, which banned non-competes for workers earning close to minimum wage. A few years later, Illinois amended its law to set a salary threshold for non-competes and non-solicits, while including other provisions in the amendment to tighten enforcement. After setting salary thresholds, some states attempted to ban most non-competes. Minnesota successfully passed such a law. Other state legislatures also passed such a ban (for example, New York), but governors vetoed a ban.
In May 2024, the FTC issued a final rule prohibiting most non-compete agreements, citing their negative impact on competition and worker mobility. The rule defines a non-compete clause as a term that prevents a worker from seeking or accepting employment or operating a business after the conclusion of their current employment. Employers are required to rescind existing non-compete clauses and notify employees of the change.
However, legal challenges have arisen regarding the FTC’s authority to implement this rule. In August 2024, a federal judge in Texas issued a nationwide injunction blocking the rule, stating that the FTC lacks the statutory authority to promulgate such a regulation.
The NLRB has also stepped into the fray. The NLRB’s General Counsel issued two memorandums regarding the intersection of restrictive covenants and the National Labor Relations Act, and one administrative law judge determined certain covenants were too broad.
Given these developments, Bindra suggests that “the legal people and the business people should always talk” to find alternative or creative ways to protect legitimate business interests beyond boilerplate non-compete agreements.
What Employers Should Do:
Review Existing Agreements: Ensure non-compete clauses comply with current state and federal laws.
Consider Alternatives: Non-disclosure agreements (NDAs) or trade secret protections might better serve business interests.
Stay Informed: Keep abreast of ongoing legal developments regarding non-compete clauses.
Background Checks and Compliance: Avoiding Pitfalls
Conducting thorough background checks is essential but comes with legal challenges. Employers must comply with laws such as the Fair Credit Reporting Act (FCRA) and state-level ‘ban-the-box’ laws, which regulate when and how an employer can inquire about a candidate’s criminal history.
Helen Bloch, founder of the Law Offices of Helen Bloch P.C., emphasizes the importance of timing in background checks. “You can’t ask that person about criminal convictions in general until you are ready to actually make a job offer.” she explains, and “the criminal conviction history that is permitted by law to investigate would then need to be relevant for the job at issue. So, for instance, in a daycare situation, criminal conviction history is definitely going to be relevant.”
Key Steps for Employers:
Timing Matters: Ask about criminal convictions only after extending a conditional job offer.
Consent is Critical: Obtain written permission before conducting background checks.
Provide Notice and Opportunity to Respond: If adverse action is taken based on a background report, applicants must be given an opportunity to contest inaccuracies.
Failing to adhere to these requirements can expose businesses to significant legal liabilities, including class-action lawsuits.
Classification Challenges: Employees vs Independent Contractors
Misclassification of workers as independent contractors instead of employees remains a major compliance challenge. Employers often misclassify to avoid paying benefits, payroll taxes, and overtime—actions that can result in severe financial penalties if discovered.
According to Bindra, “If a company gets it wrong, it could lead to collective actions, audits by state and federal labor departments and costly litigation.” Employers should determine classification based on the level of control they exert over the worker and the nature of the work performed.
Considerations When Classifying Workers:
Control Over Work: Does the worker control their schedule and methods?
Provision of Equipment: Is the worker using their own equipment?
Integration into Business: Is the work integral to the company’s core business?
Employers are encouraged to err on the side of caution when classifying individuals to avoid ambiguity in wage and hour disputes.
Exempt vs Non-Exempt Employees: Wage and Hour Compliance
Determining whether a worker is exempt or non-exempt from overtime pay under the federal Fair Labor Standards Act (FLSA) is crucial. Some positions, such as executive, administrative, and professional roles, may qualify for overtime exemptions, but employers must ensure they meet the specific criteria outlined by the U.S. Department of Labor. Max Barack, partner at the Garfinkel Group, notes that “the title is not what matters” when it comes to exemption status — it’s about job duties, salary levels, and the degree of independence.
Best Practices to Avoid Wage and Hour Pitfalls:
Conduct Regular Audits: Regularly review employee classifications.
Accurate Job Descriptions: Ensure job descriptions accurately reflect exempt duties.
Meticulous Time Tracking: Track work hours meticulously to avoid unpaid overtime claims
The Growing Role of Social Media and AI in Hiring
Social media has become a valuable tool in recruiting and screening candidates, but it also presents risks if not used appropriately. Employers should avoid requesting social media passwords or attempting to access private profiles, as many states have laws prohibiting such practices. According to Helen Bloch, “employers need to be cautious about how they use social media to evaluate candidates to avoid potential discrimination claims.”
Artificial intelligence (AI) is increasingly used in hiring processes, yet it can unintentionally introduce biases. AI screening tools may disproportionately exclude certain demographic groups if they are not carefully designed and monitored. The Equal Employment Opportunity Commission (EEOC) has issued guidance emphasizing that the use of AI in hiring must comply with anti-discrimination laws. States such as Illinois have also enacted legislation requiring transparency and fairness in AI-driven hiring decisions.
How To Mitigate AI Hiring Risks:
Ensure AI algorithms are regularly audited for potential biases.
Disclose the use of AI in hiring decisions and obtain applicant consent.
Regularly review hiring criteria to ensure compliance with anti-discrimination laws.
Train HR personnel to interpret AI-generated recommendations with a critical eye.
Addressing Salary History Bans and Pay Transparency Laws
Many states and local jurisdictions have enacted laws prohibiting employers from inquiring about a candidate’s salary history to promote pay equity. As Amit Bindra points out, employers must be mindful of these laws to avoid discrimination claims.
Instead of asking about past compensation, employers should focus on salary expectations and provide transparent salary ranges in job postings. This approach aligns with recent pay transparency laws in states like Illinois and Colorado, which require employers to disclose pay ranges upfront.
Best Practices for Compliance:
Remove salary history questions from job applications and interviews.
Clearly communicate salary ranges and benefits in job postings.
Train hiring managers to focus on qualifications and salary expectations.
Key Takeaways for Employers
Charles Krugel, another seasoned labor and employment attorney, emphasizes that “taking a proactive approach and staying compliant with the ever-changing employment laws is crucial to avoiding costly disputes and protecting business interests.” In light of these challenges, employers must stay proactive in their hiring practices by:
Regularly Updating Employment Agreements: Ensure compliance with the latest federal and state regulations regarding restrictive covenants and wage requirements.
Establishing Consistent Hiring Policies: From job postings to interviews, maintain uniform processes to avoid discrimination claims.
Conducting Thorough Due Diligence: Vet third-party background check providers and payroll services to ensure compliance.
Staying Informed on Changing Laws: Employment regulations are dynamic, and businesses must continuously adapt to avoid costly legal consequences.
Balancing Business Needs with Legal Compliance: Engage with legal counsel to ensure hiring strategies align with current regulations and best practices.
By understanding legal requirements and taking proactive measures, businesses can protect themselves from potential liabilities and ensure a smooth hiring process. Whether it’s ensuring compliance with non-compete agreements, background checks, or pay transparency laws, staying ahead of the curve is key to long-term success.
To learn more about this topic view Welcome to the Team! Recruiting & Hiring, Including Restrictive Covenants. The quoted remarks referenced in this article were made either during this webinar or shortly thereafter during post-webinar interviews with the panelists. Readers may also be interested to read other articles about Contractor vs. Employee Classifications.
This article was originally published on Financial Poise.
©2025. DailyDACTM, LLC d/b/a/ Financial PoiseTM. This article is subject to the disclaimers found here.
The First Wave: U.S. Imposes Tariffs on Canada (or not?), Mexico (or not?), and China (well, yeah, probably so)
On February 1, 2025, President Trump issued three executive orders imposing tariffs on nearly all imports from Canada[1], Mexico,[2] and China.[3] However, on February 3, the President said on social media that the tariffs on Canada and Mexico will be suspended for one month while the countries discuss potential agreements to reduce or rescind the tariff imposition.[4] A subsequent federal register notice provides details of the China tariffs.[5]
So, at the time of this publication, only one of the three new sets of tariffs have gone into effect: those adding a 10% duty on nearly all imports from China to the United States. Under the executive order, the 10% additional duty is added to “any other duties, fees, exactions, or charges applicable” to goods from China.
1. The China Tariffs[6]
While the U.S. tariffs on China appear to be a continuation of President Trump’s first-term (Trump I) measures against Chinese imports, they bear some notable differences that may show us much about the tactics and effects of this renewed trade war.
1.1 The Consumer Impact
In 2018, the first Trump administration’s tariffs on China (imposed under Section 301 of the Trade Act) were estimated to have added an additional cost of $14 billion to domestic consumers and importers in that year alone.[7] So we expect that, in the short term, we will see a rise in consumer product prices as importers pass the costs of paying the tariffs on to their customers.
Moreover, many consumer items imported directly from China were protected from the Section 301 tariffs by application of the standard de minimis rule on imports. Under that rule, any import valued at less than $800 is not normally subject to tariffs. The application of that rule to the Section 301 duties eased the effect on many consumers, including the vast quantity of Chinese-origin goods that Americans purchase through e-commerce channels.
By contrast, the executive orders implementing these new tariffs expressly state that the de minimis protection will be unavailable. Moreover, it appears from our reading of the orders that the de minimis rule will be unavailable for the older Section 301 tariffs in addition to the new tariffs. As a result, total tariffs of up to 35% on goods from China (up to 25% Section 301 duties from Trump I, plus the 10% tariffs now imposed in the new administration), will apply to all subject Chinese imports, regardless of how small the value. A trade association has noted that without de minimis the average $50 package would more than double the delivery cost. That means the tariffs are more likely to show up in the bottom line of U.S. households, which purchase billions of dollars in Chinese consumer goods each year.
1.2 National Security Concerns
You may recall that in the first Trump presidency, we reported on several rounds of China tariffs (in fact, we kept a China Trade War Scorecard . . . which will need some updating). As we noted above, those tariffs were imposed under Section 301 of the Trade Act of 1974, which allows the executive branch to respond to foreign countries’ unfair trade practices by imposing measures including substantial tariffs.
Interestingly, President Trump has invoked a different law for the current wave of tariffs: the International Emergency Economic Powers Act (IEEPA).[8] Traditionally, IEEPA is used to impose export controls and economic sanctions to protect U.S. national security. Unlike other tariff laws[9] which impose time-consuming procedural steps, IEEPA allows the president to impose measures quickly and easily, requiring only a declaration of a national emergency under the National Emergencies Act (NEA) and an annual renewal.
But IEEPA has never before been used to impose tariffs. For that reason, President Trump’s use of IEEPA for these tariffs may face legal challenges. Some reports have indicated that certain Trump administration personnel were cautious to impose tariffs under IEEPA, reportedly citing the possibility that opponents of the measure could seek injunctions. However, courts have generally been deferential to a president’s use of national security powers for trade measures.
1.3 Exclusions and a Few Other Details
Humanitarian and Communications Imports. Humanitarian donations, informational materials, and personal baggage are exempted from the tariffs. This is because IEEPA prohibits its use to regulate or prohibit any personal communication “which does not involve a transfer of anything of value”, humanitarian donations, informational materials, and any “transactions ordinarily incident to travel”.
Duty Drawback Unavailable. The Executive Order implementing the China tariffs notes that no duty drawback will be available for duties paid under this Order.
U.S. Foreign Trade Zones. The Order also states that goods subject to the China tariffs and admitted into a U.S. Foreign Trade Zone (FTZ) fall under a “privileged foreign status”. Thus, the new tariffs will not apply until and unless the articles are later withdrawn from the FTZ for consumption.
Entry of Mail. The federal register notice states formal entry would be required for all mail shipments from China and Hong Kong. After suspending service for those regions, the U.S. Postal Service (USPS) announced it would resume accepting inbound mail and packages from China and Hong Kong. USPS posted a notice that it was working with Customs and Border Protection to “implement an efficient collection mechanism for the new China tariffs to ensure the least disruption to package delivery”.
2. The Canada and Mexico Tariffs
2.1 Canada (10% on energy and energy resources and 25% on all other goods of Canadian origin effective March 4, 2025)
Imports from Canada will be subject to an additional 25 percent tariff on “all articles that are products of Canada” other than “energy or energy resources”, which will be subject to a 10 percent rate of duty. See Executive Order Imposing Duties To Address The Flow of Illicit Drugs Across our Northern Border (February 1, 2025). Energy and energy resources means “crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals”. See Executive Order 14156 (January 20, 2025). The effective date of these tariffs was delayed from February 4 to March 4. See Executive Order Progress on the Situation at Our Northern Border (February 3, 2025).
The federal register notice was initially posted, but later withdrawn.
2.2 Mexico (25% on goods of Mexican origin effective March 4, 2025)
Imports from Mexico will be subject to an additional 25 percent tariff on “all articles that are products of Mexico.” See Executive Order Imposing Duties To Address The Situation At Our Southern Border (February 1, 2025). The Department of Homeland Security (DHS) will publish a Federal Register notice shortly with additional details and an update to the Harmonized Tariff Schedule of the United States (HTSUS), but these tariffs appear to apply to all items country of origin Mexican imported into the United States. The effective date of these tariffs was delayed from February 4 to March 4. See Executive Order Progress on the Situation at Our Southern Border (February 3, 2025).
Because of the temporary suspension of the two tariff regimes, we will save further details of those prospective tariffs for another article.
3. International Reactions
3.1 China – Retaliatory Tariffs and More
On February 4, 2025, China announced its own set of countermeasures. Effective February 10, 2025, China will impose a 15 percent tariff on liquefied natural gas and coal and a 10 percent tariff on crude oil, pickup trucks, agricultural machinery and large-displacement cars.
China will also impose additional export controls on several critical minerals essential to U.S. economic or national security including tungsten, tellurium, bismuth, molybdenum and indium.
Other U.S. companies may also get caught in the cross-hairs. China’s State Administration for Market Regulation announced an investigation into a U.S. company and China’s Commerce Ministry placed two additional U.S. companies on its unreliable entities list.
3.2 Canada – Measures to Precipitate a Suspension of Tariffs
On February 1, 2025, Canada announced imposing a 25 percent tariff on an initial list of American goods to be effective February 4, 2025. A second extended list was also reportedly under consideration. Other retaliatory measures were in the process of being implemented in different provinces, such as a ban on American alcohol. However, Prime Minister Trudeau announced that Canada would increase personnel at its border with the United States to combat the flow of fentanyl. Trudeau will also appoint a fentanyl czar and list cartels as terrorists. It appears that those actions precipitated a suspension of the U.S. tariffs which resulted in Canada pausing its retaliatory tariffs.
3.3 Mexico – Measures to Precipitate a Suspension of Tariffs
While Mexican President Claudia Sheinbaum did not initiate any retaliatory tariffs, Sheinbaum announced the deployment of 10,000 National Guard members to Mexico’s northern border to reduce illegal migration and drug trafficking. That action appears to have precipitated a suspension of the U.S. Tariffs on Mexico.
4. What Comes Next
The ever-changing landscape will make it difficult for companies to insulate supply chains from the impact of these new tariffs. The new tariffs may lead to alternative sourcing from non-targeted countries. But for products like batteries, machinery, and toys, we might not see these tariffs soften Chinese imports. We also expect to see CBP increase enforcement on circumvention attempts regarding declared country of origin.
We may expect to see further tariff developments over the next month should the Trump administration determine that the Canadian and Mexican cooperative actions are not sufficient.
In fact, there could be more tariffs on other countries in the horizon.[10] We will continue to monitor developments in tariffs and report them here. For a broader scope on all of Trump’s Executive Orders, please see our dedicated tracker.
FOOTNOTES
[1] Executive Order Imposing Duties To Address The Flow of Illicit Drugs Across our Northern Border (February 1, 2025).
[2] Executive Order Imposing Duties To Address The Situation At Our Southern Border (February 1, 2025).
[3] Executive Order Imposing Duties To Address The Synthetic Opioid Supply Chain in the People’s Republic of China (February 1, 2025).
[4] In fact, we apologize for the delay in publishing this article, but we kept having to go back rewrite the piece a fair few times over the course of 24 hours!
[5] Implementation of Additional Duties on Products of the People’s Republic of China, available here.
[6] We note the executive order and federal register notice imposing tariffs and other measures on China include Hong Kong.
[7] Amiti, Redding, and Weinstein; The Impact of the 2018 Tariffs on Prices and Welfare; Journal of Economic Perspectives vol. 33, no. 4, Fall 2019
[8] 50 U.S.C. 1701 et seq.
[9] Section 301 of the Trade Act of 1974, Section 201 of the Trade Act of 1974, Section 232 of the Trade Expansion Act of 1962, and Section 338 of the Tariff Act of 1930. We note that Section 122 of the Trade Act of 1974 does not require any related investigation or procedural steps, but only allows the president to impose up to a 15 percent tariff on imports for 150 days.
[10] President Trump has recently threated 100 percent tariffs on countries that are members of the BRICS coalition (which includes Brazil, Russia, India and China) should they follow through with their plans to create a gold-backed currency alternative to the U.S. dollar.
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New Antitrust Guidance Provides Ground Rules for Labor Markets—Or Does It?
On January 16, 2025, the Federal Trade Commission (FTC) and the U.S. Department of Justice, Antitrust Division (collectively, the Agencies) released the updated Antitrust Guidelines for Business Activities Affecting Workers (the Revised Guidelines). The Revised Guidelines, which passed the FTC in a 3-2 vote with dissents from current FTC Chairman Andrew N. Ferguson and fellow Republican Commissioner Melissa Holyoak, replaced the 2016 Antitrust Guidance for Human Resource Professionals.
The Revised Guidelines reflect the Agencies’ focus on fair competition in labor markets during the Biden administration. (For more information, see our client alert) However, given Chair Ferguson’s dissent and the Trump administration’s efforts to reshape the federal government, it is not clear that the Revised Guidelines will remain intact. Despite—or because of—this uncertainty, it is critical that businesses take an inventory of their employment policies and educate employees about how well-settled principles of antitrust law apply to the workforce.
Key Changes and Clarifications
The Revised Guidelines set forth the following non-binding guidance:
Focus on Worker Competition: Antitrust law protects workers from anticompetitive misconduct just as much as they protect consumers of goods and services. Practices that harm this competition in the labor market, such as suppressing wages or limiting job opportunities, may be investigated and prosecuted by the Agencies.
Specific Prohibited Practices: Certain business practices may violate antitrust laws, including:
Wage-fixing: Agreements between companies to set or coordinate wages.
No-poach and similar agreements: Agreements between companies not to hire each other’s employees.
Exchange of sensitive information: Exchanging competitively sensitive information, such as compensation details, among competing employers.
Non-compete clauses: Agreements that restrict workers from leaving their jobs or starting competing businesses.
Other restrictive, exclusionary, or predatory employment conditions: Overly broad non-disclosure agreements (NDAs), training repayment agreement provisions, non-solicitation agreements, and exit fee or liquidated damages provisions.
False earnings claims: Making misleading statements about potential earnings to attract workers.
Criminal and Civil Liability: Certain agreements are per se illegal and trigger criminal liability, including agreements between companies to fix wages or not to recruit, solicit, or hire workers.
Scope of the HR Guidelines: The Revised Guidelines apply to employees, independent contractors, and franchisees.
Reporting Violations: The Revised Guidelines provide clear steps on how to report potential violations to the FTC and DOJ and the information to include in a complaint.
The FTC Dissent
Now-Chairman Ferguson, joined by Commissioner Holyoak, issued a strongly worded dissent that focused on the timing and future implications of the Revised Guidelines. Although Chairman Ferguson concurred that antitrust law applies to unlawful restraints in labor markets—and that the Agencies should “promote[] important transparency and predictability”—he denounced the Revised Guidelines as a “senseless waste of Commission resources” by “the lame-duck Biden-Harris FTC.”[1] In a separate statement, Commissioner Holyoak agreed that it was “wholly improper for this lame-duck Commission to expedite law enforcement matters, issue notices and advance notices of proposed rulemakings, [and] release new enforcement policy statements and guidance” rather than facilitate “an orderly transition to the Trump-Vance administration.”[2]
What Does this Revised Guidance Mean for Businesses?Despite the objections to timing, most of the Revised Guidelines are consistent with well-established antitrust principles. Employers should review the Revised Guidelines carefully and then take practical measures to safeguard proprietary information and business interests.
Take an Inventory of HR policies: Review all agreements and practices affecting worker compensation, recruitment, and mobility for potential antitrust violations.
Protect competitively sensitive information: Determine whether restrictive covenants such as NDAs are sufficient to protect legitimate business interests such as intellectual property rights. Restrictive covenants should also be narrowly tailored and proportionate to the risk of disclosure to be enforceable and comply with antitrust law.
Train executives and employees: Invest in training for human resources executives and employees, who may not understand how certain business practices may violate antitrust law—or the ensuing severe penalties.
Seek legal counsel: Consult with counsel to analyze specific situations and ensure compliance with antitrust law.
[1] Dissenting Statement of Commissioner Andrew N. Ferguson Joined by Commissioner Melissa Holyoak Regarding the Antitrust Guidelines for Business at https://www.ftc.gov/system/files/ftc_gov/pdf/at-guidelines-for-business-activities-affecting-workers-ferguson-holyoak-dissent.pdf.
[2] Dissenting Statement of Commissioner Melissa Holyoak Regarding Closed Commission Meeting Held on January 16, 2025 at https://www.ftc.gov/legal-library/browse/cases-proceedings/public-statements/dissenting-statement-commissioner-melissa-holyoak-regarding-closed-commission-meeting-held-january.
This post was co-authored by Managed Care + ERISA Litigation lawyer Stephanie J. Oppenheim
Tariffs Loom on Natural Gas Imports: Be Prepared
If you are a seller or purchaser of natural gas imported from Canada or Mexico, or exported to either country, under an NAESB Base Contract for the Purchase and Sale of Natural Gas (NAESB Contract), you should carefully review such agreements, including any special provisions or transaction confirmations to consider the impact of potential tariffs that may be imposed by the United States on natural gas imported from Canada or Mexico or imposed in retaliatory tariffs by those countries on natural gas exported from the U.S.
On February 1, 2025, the president announced the imposition of tariffs on goods imported from Canada and Mexico. The general tariff would be 25% for goods imported from both countries; however, a subset of defined energy resources imported from Canada would be subject to a 10% tariff.
Originally, the tariffs were scheduled to be effective on February 1, but on February 3, after discussions with both Canada and Mexico, the president announced that the tariffs would be effective March 4, 2025. Although it is not yet clear whether interim negotiations will affect the imposition of these tariffs, it is important to be prepared if the tariffs do go into effect as planned on March 4.
Many purchasers and sellers of natural gas use the NAESB Contract to buy and sell natural gas. Several base provisions of the NAESB Contract, or added Special Provisions, could affect which party is responsible for tariff payments, whether through a posted increase to the applicable published index price or as a tax to be paid in addition to the index price.
If the index price in your NAESB Contract is on the U.S. side of the border with either Canada or Mexico, that posted index price may take into account any U.S. tariffs since the gas has been imported. It is important to note that it is still unclear whether the cost of an import tariff on natural gas will be included in the posted index price, whether the NAESB Contract’s index price is at or near the border, or at a liquid trading hub. Special provisions or transaction confirmations under the NAESB Contract also may address this issue. Further, if your NAESB Contract includes a Canadian Addendum, that should be carefully reviewed as well.
Section 6 of the NAESB Contract defines “taxes” to include: “taxes, fees, levies, penalties, licenses or charges imposed by any governmental authority.” An argument can be made that tariff costs are government-imposed “taxes” under this definition.
Section 6 provides two options for responsibility for taxes. Either the buyer pays taxes at and after the delivery point, or the seller pays taxes before and at the delivery point. We suggest you review the selection box on page two of your NAESB Contract to determine which option applies.
Also, some parties have added a definition of “Applicable Laws” or other special provisions to their NAESB Contract for the purposes of addressing responsibility for new taxes. Accordingly, you should also review any special provisions or transaction confirmations to confirm the agreed-upon structure.
Finally, Section 14 of the NAESB Contract addresses market disruptions and defines “Market Disruption Events.” The definition includes, among other things, “(e) both Parties agree a material change in the formula for or the method of determining the Floating Price has occurred.” This provision may open the door to negotiations if the appliable index prices are adjusted by the index publishers to reflect any tariffs on imported natural gas.
Please note that this alert does not specifically address the terms of the ISDA Gas Annex, frequently used in connection with gas-fired power generation, or bespoke agreements. If you use an agreement other than the NAESB Contract to buy and sell imported gas, you should carefully review the relevant provisions of such agreements to determine the implications of or responsibility for any tariffs.